This report summarizes salient points of Federal Communications Commission (FCC) actions regarding the creation of a public-private partnership to build and manage a national communications network for public safety use. The Communications Act of 1934, as amended, empowers the FCC to set rules for auctions and to take steps to ensure the safety of the public. The FCC has used this authority to design a governance structure that would allow a Public Safety Broadband Licensee (PSBL) to share spectrum rights with a commercial enterprise and to collaborate in the construction and management of a shared network. As currently proposed by the FCC, a public-private partnership would build a shared network on spectrum capacity assigned to two separate license-holders. In the FCC plan, the PSBL would hold a national license of 10MHz in the 700 MHz band and a commercial partner would hold an adjacent license for 10 MHz, nationwide, designated as the D Block. The two licensees and the network would operate according to requirements set out by the FCC as part of its rulemaking for the auction of frequencies within the 700 MHz band. These frequencies are being vacated by television broadcasters in their switch to digital technologies.
In an auction that ended on March 18, 2008, the one bid for the D Block was well below the reserve price set for that license. The FCC therefore did not assign the license but has proceeded to review its rules regarding licensing, structuring a partnership, setting service requirements, and other rules and obligations established prior to the commencement of Auction 73. It has prepared a further notice of proposed rule-making that seeks comments on identified options that might be pursued in disposing of the D Block. The FCC's current proposals for the creation of a nationwide, interoperable public safety broadband network depend on the successful sale of the D Block to a commercial entity willing to invest in a public-private network partnership. The FCC auction requirements do not reference Congress's requirements for the Department of Homeland Security to provide a national communications capability (P.L. 109-295, Title VI, Subtitle D).
Some of the proposals from the FCC or frequently mentioned by industry experts are reviewed in this report. Some of the possible solutions can be achieved exclusively through the rule-making process but several that address how best to salvage plans for a nationwide, broadband network for public safety would require the assistance of Congress through legislation. A bill that would provide financial assistance to the Public Safety Broadband Licensee through grants made by the FCC has been introduced. The Public Safety Broadband Authorization Act of 2008 (H.R. 6055, Harman) would establish conditions for the operations of the PSBL and would provide $1 million in both FY2009 and FY2010 for expenses. An additional $2 million would be authorized for used by the FCC "to promote the establishment of a nationwide, interoperable broadband public safety communications network." The Reliable, Effective, and Sustained Procurement of New Devices for Emergency Responders (RESPONDER) Act of 2008 (S. 3465, Wicker) would create a First Responders Interoperable Device Availability Trust Fund to provide grants to purchase interoperable radios for the new public safety network.
This discussion of governance for a public-private partnership is based on preparations undertaken by the Federal Communications Commission (FCC) to auction 62 MHz1 of radio frequencies in the 700 MHz band of radio spectrum in conformance with requirements in the Deficit Reduction Act.2 The FCC issued rules, in a Second Report and Order,3 concerning the allocation of this spectrum, the auction, the final disposition of spectrum assigned for public safety use, and the creation of a public-private partnership to build and operate a network for public safety users, with agreements for sharing spectrum. Responding to a requirement in the Balanced Budget Act of 1997, the FCC had previously set aside 24 MHz in the same bandwidth for public safety users.4 In the Second Report and Order, it proposed to set aside 10 MHz from the public safety frequency bands to be paired with 10 MHz of auctionable spectrum to create a shared network of 20 MHz for a nationwide broadband network.
The decision to create a shared network was centered on two conclusions, endorsed by the FCC and the majority of stakeholders: (1) that a network with national coverage would meet public safety needs for robust communications capabilities, information, and interoperability; and (2) that sharing spectrum and network facilities with commercial users would benefit public safety by providing new sources of funding,5 economies of scale in building the needed network, and access to additional spectrum in times of large-scale emergencies, among other benefits.
As structured by the FCC, two adjacent spectrum license-holders would collaborate so that their combined spectrum capacity would be adequate to support a broadband network. In anticipation of obtaining a commercial partner, the FCC assigned a national license for 10 MHz to a not-for-profit corporation formed to represent public safety interests. This public safety license was created from the 24 MHz originally assigned to public safety through regional, state, and local negotiations for spectrum assignments. It is administered by a Public Safety Broadband Licensee (PSBL), chosen by the FCC. From the frequencies intended for commercial use, the FCC designated 10 MHz to be paired with public safety's 10 MHz to create a shared network. This license was to be sold to a commercial enterprise as part of the auction of licenses at 700 MHz, Auction 73. The commercial license, known as the D Block, attracted only one bidder at the auction, which concluded March 18, 2008. Qualcomm, Inc. placed an opening bid of $472 million but there were no other bidders; consequently, the reserve price of $1.3 billion set by the FCC was not met. In an Order adopted and released on March 20, 2008, the FCC directed the Wireless Telecommunications Bureau not to proceed with the re-auction of the D Block because it is "in the public interest to provide additional time to consider all options ..."6
The FCC therefore initiated a review of its rules regarding licensing, structuring a partnership, setting service requirements, and other rules and obligations established prior to the commencement of Auction 73. It prepared a further notice of proposed rule-making that sought comments on identified options that might be pursued in disposing of the D Block.7 From these comments, the FCC prepared a Third Further Notice of Proposed Rulemaking that lays out new auction rules for the D Block.8 For the most part, the new rules represent modifications of the rules prepared for Auction 73. A single, nationwide license has been maintained for the Public Safety Broadband Licensee but the commercial license will be offered as either a national license or in smaller licenses covering 58 regions.9 A number of public safety associations and officials have asked that the PSBL allow local public safety networks to operate on and manage access to the public safety spectrum. The national licensee would assure common standards and interoperability across all systems while allowing local networks to negotiate sharing arrangements and services that met their specific needs.10
From the perspective of Congressional policy, one of the key issues that has emerged from the discussions of the auction is how best to combine public and private spectrum license ownership with the important goal of a national capability for public safety communications support. The FCC and the Office of Emergency Communications at the Department of Homeland Security (DHS) are pursuing separate paths for developing this communications response.11 According to testimony, neither agency has undertaken to incorporate each other's goals in their specific planning.12
Another major policy consideration for Congress is the identification of funding solutions for various parts of the program. As discussed below, the FCC has proposed to resolve these needs through levies on the commercial partner or requirements for performance. Public sector funding is another possibility that may receive renewed interest in the current economic situation. An economic stimulus program that includes funding for improvements to critical infrastructure could include a component for public safety networks. By temporarily assuming the role of the commercial partner, the federal government could preserve the principle of the shared network, assure the construction of the network, and sell the ongoing business to the private sector.
It was noted above that there is general agreement that sharing spectrum and network facilities with commercial users would benefit public safety by providing new sources of funding, economies of scale in building the needed network, and access to additional spectrum in times of large-scale emergencies. These benefits are generally accepted as concrete and desirable and, although there is much discussion about how to achieve the goal of sharing resources between the public and private sectors, the consensus remains that this is the goal. For the purpose of analysis, this report further assumes three needs that must be met for an effective solution. These are
There is also a frequently mentioned assumption that is not associated with a particular solution.
This assumption ignores the projections for significant demand from the business sector for mobile access to data and the requirements of many businesses for security and reliability equal to or greater than those of public safety.
Since the conclusion of the auction, there has been a vigorous public debate about why the D Block license was not successfully auctioned and what steps might be taken going forward to assign the license.13 Some of the reasons why the D Block failed to attract a winning bid have been circulated through the media and presented at congressional hearings.14 Discussion of possible flaws in the structure of the auction, and how some rules may have discouraged potential bidders, is only part of the debate. The debate also encompasses other solutions to meet the goal of proving an interoperable public safety broadband network. Principle points under consideration can be categorized as
These solutions are not mutually exclusive and several proposals combine different elements. In its Second Further Notice of Proposed Rulemaking,15 the FCC seeks comments on a wide range of options and solutions that it has identified. Most of these would fall within one of the categories summarized below.
At a hearing on April 15, 2008, all five FCC commissioners affirmed their support for re-auctioning the D Block under rules that would produce a winning bidder and provide a commercial partner for public safety.16 Their remarks also indicated the intention of the FCC to maintain and increase its oversight role in supervising the public-private partnership. The rule changes for the auction could be modifications of requirements for the D-Block winning bidder—such as lowering the reserve price or eliminating the financial penalty for failure to negotiate a completed Network Sharing Agreement—or they could include, for example, changes in the network sharing agreement or the terms applicable to the Public Safety Broadband Licensee (PSBL).
Another course of action that has been proposed is to re-auction the D Block without encumbrances. These encumbrances include provisions that require paying up to $10 million to cover rebanding costs in the 700 MHz band; expensive build-out requirements; and the network sharing agreement. Some proposals would eliminate the network sharing agreement entirely, offering the D Block as a commercial license under terms similar to the other blocks of licenses assigned through Auction 73.17 It has been suggested by some that the network sharing agreement will be reworked to accommodate the strongest potential bidders.18
In conjunction with recommendations to re-auction the D Block without encumbrances, many are suggesting that surplus funds from Auction 73 and possibly other auctions be used to build a public safety network. In oral testimony, FCC Chairman Kevin J. Martin referred to the Public Safety Interoperability Implementation Act (H.R. 3116, Representative Stupak), which would use spectrum license auction proceeds to fund public safety communications, as an example of a mechanism to provide funding.19 FCC Chairman Kevin J. Martin20 and Commissioner Michael J. Copps21 testified that they preferred a solution that used federal funds to meet public safety needs for a nationwide, interoperable network. Absent financial support from the federal government for a public safety network, they testified, the FCC has sought to craft a solution that would use private sector funds to build the needed network.22 Recommendations for using spectrum proceeds to fund a nationwide interoperable network have generally not provided details about how the funds would be distributed to build such a network.
Some solutions envision a different structure for managing a shared network that would reduce—but not eliminate—the role of the Public Safety Broadband Licensee.
The above is indicative of the possibilities available to the FCC and to Congress. Without additional authority from Congress, the FCC is limited to directing the outcome almost exclusively through modifications to spectrum band plans, auction rules, service rules, and the network sharing agreement.
The FCC seeks opinions and information on a wide range of questions covering such topics as: provisions and eligibility for using the Public Safety Broadband License; revisions to the public-private partnership, negotiation of the Network Sharing Agreement; structuring the new auction of the D Block; relocation costs and deadlines for changes in 700 MHz frequency assignments; service rules for the D Block; and other opportunities for providing broadband wireless access for public safety.27
As envisioned by its advisor, Cyren Call Communications Corporation, the Public Safety Spectrum Trust would have borrowed $197 million secured by projected revenue from its D Block partner in spectrum access fees.28 This sum was for capital expenditures, such as building an overlay for network administration and customer care for public safety customers, and did not include operating costs. In addition to seeking comment on obligations of the D Block to build the entire shared network,29 the FCC has sought opinions on other possible sources of funding for capital expenditures and for operating costs.30
As possible sources of funds to cover operating costs of the Public Safety Broadband Licensee, the FCC has asked for comment on the feasibility of obtaining funding through two existing programs created by the government: the Universal Service Fund (USF) and the Telecommunications Development Fund (TDF).31 The USF was originally designed to assure telecommunications services to rural communities; it is funded through assessments on telephone bills.32 Although the FCC has some say in its management, it is likely that the existing statutes authorizing uses of the fund would have to be amended by Congress. The TDF is a not-for-profit venture capital company created with the passage of the Telecommunications Act of 1996 (Sec. 707) to provide capital—through loans, investments or other means—to small businesses in the telecommunications industry. Its primary source of capital is the interest accrued on deposits held by the FCC as part of spectrum auction procedures.33
This section provides an overview of steps taken by the FCC preceding Auction 73, establishing the key provisions that the FCC is reviewing and may change.
Since it initiated auctions in 1994, the FCC has consistently provided auction rules that allow it to establish financial requirements for potential bidders, to set aside licenses for specific classes of bidders, to provide economic incentives, and to use other tools for managing the auction process.34
In addition to setting up rules for the auctions it conducts, the FCC also establishes and enforces service rules for the use of licenses. Among the provisions of service rules for advanced wireless services there is typically a requirement that licenses be put to use within a specific number of years. Service rules can also be used to specify technologies, uses, or users. For Auction 73, the FCC expanded the scope of its service rules to include a plan that would mandate spectrum sharing between a public safety spectrum license holder and a commercial licensee. The commercial licensee would be obligated to build a network to satisfy public safety needs as well as those of its commercial customers.
The FCC followed past procedures in the creation of service rules to establish the structure for a public-private partnership as part of its preparation for the auction of licenses in the 700 MHz band. In its review of background and discussion of its decisions, in the Second Report and Order, the FCC tried to anticipate the problems that might arise in building and operating a shared network and to preclude difficulties by providing a regulatory framework that sets and enforces rules and requirements. The regulatory framework for a public-private partnership comprises sets of binding requirements for organization, performance, and compliance for three interlocking components:
As elaborated in the rules, all three of these components must be tailored to meet guidelines set by the FCC. Contracts and other legal agreements would be approved by the FCC;35 compliance would be subject to oversight;36 and disputes would be resolved through the FCC, in accordance with the Communications Act of 1934, or through litigation.37
The following overview of the FCC's Second Report and Order, and subsequent orders, highlights issues for policy makers that regard public safety communications. This report is not an exhaustive study of all provisions that pertain to public safety nor does it cover the parts of the order dealing with the purely commercial licenses that were subsequently auctioned.38
Congress directed the FCC to allocate 24 MHz of spectrum within the 700 MHz band for public safety use as part of the transition from analog to digital television, which would free these airwaves.39 The initial planning for public safety use of frequencies at 700 MHz began in 1997 and concluded with the submission of the final report of the Public Safety National Coordination Committee (NCC) in 2003. The NCC operated as a Federal Advisory Committee40 to the FCC, developing technical and operational standards for the 700 MHz band and structuring the management of licenses through regional committees. The existing governance for these channels is made up of 55 Regional Planning Committees (RPCs), loosely coordinated through the efforts of the National Public Safety Telecommunications Council (NPSTC).41
The band plan originally intended to carry public safety radio traffic at 700 MHz has been revised to create two different licensing approaches. With the support of NPSTC42 and others, the FCC negotiated modifications to the band plan that reflect changes in technology and public safety needs. One block of the revised band plan is designated for narrowband (primarily voice) applications and the other for broadband applications. Channels have been reassigned to support narrowband operations in 12 MHz of paired spectrum, at 769 - 775 MHz and 799 - 805MHz.43 These channels will be administered by states and localities through the existing regional committee structure. All RPCs with approved band plans are required by the FCC rule making to submit amended band plans.44 The networks built on the narrowband frequencies will be financed through long-standing procedures that use a combination of local, state, and federal funds.
Spectrum is to be allocated for broadband communications (high speed data transmission, video, and voice) in 10 MHz of frequencies at 763 - 768 MHz and 793 - 798 MHz.45 These frequencies are to be assigned to the Public Safety Broadband Licensee that would also be responsible for the administration of two guard bands, each covering one megahertz, at 768 - 769 MHz and 798 - 799 MHz.46 Guard bands are created to act as buffers against interference from other operations on nearby frequencies.
In order to accommodate the new band plan, some public safety network operators will have to modify equipment already purchased for use on 700 MHz frequencies. Some of the cost of these changes would be covered by the commercial D Block licensee.47 (Discussed below, in section on 700 MHz rebanding.)
The public safety licensee would be obligated to meet a number of requirements. These requirements focus mainly on three areas: the formation of a not-for-profit corporation to hold the license; the responsibilities of this non-profit organization—including establishing standards and participating in the creation of the Network Sharing Agreement; and compliance. The cost of building the national network using the spectrum held by the broadband licensee would be shouldered by its commercial partner, although there could be system enhancements or other components funded by the public sector.
The FCC selected the Public Safety Broadband Licensee, based on criteria such as not-for-profit corporate status; absence of commercial interests, either in the holding of the license or its management; and broad representation of public safety entities.48 In anticipation of receiving the public safety license, a group of public safety associations formed the Public Safety Spectrum Trust Corporation (PSST). The Trust hired Cyren Call Communications Corporation to act as its advisor and liaison in negotiating with the D Block licensee. The PSST was subsequently awarded the nationwide Public Safety Broadband License.49
Representation on the Board of the Directors of the Public Safety Broadband Licensee is to consist of members from named organizations representing public safety. In the Second Report and Order, the FCC provided a list of 11 organizations designated to appoint board members and allowed for two at-large members, creating a board of 13 members.50 In a later Order on Reconsideration,51 the FCC changed the composition of the board, adding three representatives from named organizations, eliminating one representative, and increasing the number of at-large members from two to four.52 Four at-large members were subsequently selected jointly by the FCC bureau for Public Safety and Homeland Security and for Wireless Telecommunications.53 The FCC chose to eliminate National Public Safety Telecommunications Council (NPSTC) as a named member of the board because of the overlap of its membership with the composition of the associations that were given permanent status on the board.54
As part of the FCC's oversight, PSST, as selected licensee, would be required to file quarterly financial reports with the FCC, with copies to the chiefs of the Public Safety and Homeland Security Bureau and the Wireless Telecommunications Bureau.55 This requirement would take affect after the NSA had been negotiated. The licensee must meet criteria for its articles of incorporation and bylaws, as specified in the Second Report and Order rules.56 The FCC has judged that it is appropriate for it to provide, as needed, "extensive" oversight to ensure that these corporate governance stipulations would be met.57
The FCC considered a number of options to assure that the public safety license holder would receive the level of services needed for a robust emergency communications network. Suggestions that the public safety licensee be able to request the reassignment or re-auction of the D Block license, if cooperation and progress was deemed unsatisfactory, were rejected.58 The FCC has reserved for itself the right to re-assign the commercial license, if necessary, under circumstances detailed in the rule making.59 It also has asserted its authority to revoke the license awarded to the Public Safety Broadband Licensee if it fails to meet its obligations under the Network Sharing Agreement or otherwise does not comply with FCC rules and regulations.60
Unless revoked, the public safety license would be valid for ten years, effective February 17, 2009, the scheduled date on which analog television broadcasts on the 700 MHz band must end. The license would be renewable.61
The selected public safety licensee, having met the initial requirements for qualification, would have additional tasks set for it by the FCC. General responsibilities would include:62
The intended commercial partner in the public-private partnership would be the winning bidder for Block D. The FCC ruled that eligible bidders for Block D in Auction 73 that qualified as small businesses under existing FCC rules would be entitled to a bidding credit (a reduction in the amount due on the wining bid) of 15% for companies with average attributable gross revenues of $40 million in the past three years and 25% for companies with average annual earnings of no more than $15 million.63 Many start-up companies could have qualified as designated entities under this designation.
The D Block designates frequencies at 758 - 763 MHz and 788 - 793 MHz, a total of 10 MHz. In Auction 73 it was offered as a single, nationwide license.64
The FCC directed the Wireless Telecommunications Bureau to set reserve prices for each block of licenses to be auctioned.65 It suggested that the reserve price for the D Block be set at $1.33 billion. Based on winning bids for a previous auction, the D Block had a presumed value of $1.7 billion but the FCC rules recommended that the amount be discounted to reflect the additional service rules and requirements for the D Block license holder.66
The winning bidder would not be assigned the D Block license until it had met specific requirements established by the FCC such as completion of a Network Sharing Agreement with the Public Safety Broadband Licensee.67 The negotiations for the NSA were to begin on the date that the winning bidder files its long form application (post-auction, the long form provides additional information pertaining to each license won at auction). The FCC required that, within six months from that date, the NSA was to be completed by the negotiating parties and approved by the FCC.68 The FCC also required a separate agreement that would grant the Public Safety Broadband Licensee 1) right of first refusal if network assets are to be sold and 2) the option to purchase the network assets at fair market value if the D Block license is cancelled or terminated.69
Under the auction rules as they currently stand, the winning bidder for the D Block would be required to file a report with the FCC, within ten days of the commencement of negotiations for the NSA, certifying that good faith negotiations have begun and are being actively pursued. A timetable of at least the first 30 days of negotiation meetings would be provided at that time. After three months, both licensees would begin to provide detailed monthly reports on negotiations. The FCC could demand additional reports as needed. Two members of the FCC staff would be present as neutral observers at all stages of the negotiation.70
Another requirement for receiving the D Block license would be the formation of separate legal entities, one to hold the D Block license, one to own the network assets, and one to serve as an operating company. The operating company would enter into agreements to lease spectrum rights from the company owning the D Block and to lease secondary rights to the public safety spectrum.71 These companies must be "bankruptcy remote," as attested to by bankruptcy counsel retained by the D Block license winner.72 A typical corporate structure that would be bankruptcy remote could consist of a holding company and subsidiary companies with the assets of each company protected from the possible insolvency of any other company in the group. Other specific-purpose companies might also be included within the corporate structure. All must be approved by the FCC.
The commercial partner in the public-private partnership would therefore be a corporate structure comprised of quasi-independent companies, each with a designated function. These entities and any leasing or other commercial agreements created to implement the partnership would be "subject to the Communications Act, as amended, and the Commission's rules and regulations."73 The parties to this corporate structure and its various components, as required or authorized by the FCC, would have the responsibility to build out the shared network, as specified in the Network Sharing Agreement and the FCC rule making.74
Failure to meet the obligations of the NSA, network build out deadlines, or other rules established by the FCC could lead to the revocation of all or part of the D Block license and its reassignment by the FCC.75 Cancellation would be treated as a default on the part of the license-holder, which would be obligated to pay a penalty, set at 10% of the auction price, if successfully auctioned in Auction 73.76
Unless revoked, the D Block license would be valid for ten years, effective February 17, 2009, the scheduled date on which analog television broadcasts on the 700 MHz band must end. As long as the licensee complies with the rules established by the FCC, it would be eligible to apply for license renewal.77
The commercial corporation formed as required by the FCC would be fully responsible for building the public safety network, using spectrum held by the public safety licensee and the D Block license holder.78 This build out would conform to FCC requirements and to specific requirements negotiated with the public safety licensee in the Network Sharing Agreement.79 Modifications to these requirements could be permitted, subject to approval of all parties concerned, including the FCC.80
The FCC established benchmarks for a population-based build out. The first benchmark would be four years from February 2009, by which time the network should reach 75% of the population to be served by the national D Block license. By the end of seven years (2016), 95% of the population, nationwide, could have coverage. At the end of ten years (2019), 99.3% of the population would be covered. Population measurements would be based on currently available U.S. Census data.81
To assure the FCC's minimum standards for coverage would be met, it required the NSA to include a build-out schedule for major highways, interstates, and incorporated communities with a population over 3,000.82 To monitor progress in build outs to specific areas, the FCC further required an estimated cost for each area.83
The D Block licensee would have the responsibility of confirming to the FCC that the benchmarks have been met. Failure to meet benchmark deadlines could lead to cancellation of the license.84
To bolster coverage in rural areas, the D Block licensee would be required to offer at least one handset that included an integrated satellite solution for public safety use.85 The D Block licensee would also have to provide sufficient robustness in signal carriage to assure that population coverage requirements were met, as well as the coverage and availability requirements established in the NSA. The NSA would establish requirements for service to public safety users and for network performance and reliability. The D Block licensee would be prohibited by the FCC from discontinuing or degrading service to its public safety customers unless the change has either been requested by the network users or approved by the FCC.86
The Network Sharing Agreement (NSA) was created to be the keystone of the public-private partnership; its rules are to be the contractual mortar uniting the two licensees. Adherence to the agreement had been set as a regulatory condition for both the commercial and the public safety licensees.87 The FCC would review the NSA and must approve all of its components.88 Although the FCC would allow the two parties leeway in negotiating the agreement, it has set various requirements, such as network coverage requirements noted above, that must be included in the NSA. In particular the FCC included minimum standards for the network as part of the Second Report and Order.89
To assure that the network meets the needs of public safety, the FCC established a list of requirements that it wanted addressed through the NSA. These are:
Guidelines and obligations were stipulated by the FCC in its rule making. Both licensees must agree to act in good faith in their negotiations to create the Network Sharing Agreement.92 Other components of the NSA covered by FCC rules include the establishment of a fee structure and the duration of the agreement.
The FCC ruled that all service fees must be specified in the NSA. These fees would include fees for normal network service and for priority access to commercial spectrum capacity in times of emergency. The FCC opined that the two licensees should be left to negotiate "reasonable rates" in good faith, and provided examples of what it considered to be reasonable. These included expectations that the fee structure would have "financial incentives for the commercial licensee" based on the number of subscribers from the public safety sector and that priority access fees would be structured to protect public safety participants from unforeseen or unbudgeted payment obligations.93 Other guidelines for a reasonable pricing structure would include affordable rates that are priced in line with comparable commercial services, but at lower rates for public safety.94 The FCC's stated expectation was that the D Block licensee, when negotiating fees with its public safety partner, would provide terms that best serve the public safety goals established in the Second Report and Order. The FCC reiterated some of the tools available to it to ensure that NSA disputes would be resolved, which it can apply to assure that the fees charged meet its expectations of what is reasonable.95
The NSA would be in effect for a term not to exceed ten years, beginning February 17, 2009. This term corresponds to the duration of the D Block license. The NSA may be renewed along with the D Block license. The FCC would decide whether to renew or modify the NSA at the same time that it considers renewal of the D Block license.96
Modifications to the NSA or other agreements that are part of the public-private partnership structure must be approved by the FCC Commissioners, in case of major changes, or by the Chiefs of the Wireless Bureau and the Public Safety and Homeland Security. Approval must be received in advance of any action, after both licensee partners have agreed to the modifications.97
Under the current rules, the Public Safety Broadband Licensee is authorized by the FCC to lease access to the frequencies covered by its license exclusively to the D Block licensee, on a secondary, unconditionally preemptible basis.98 This means that the D Block network commercial users would be able to transmit on available frequencies in the public safety band only when there is no demand from the primary, public safety users, and that any demand from public safety is to be immediately met by terminating the commercial traffic and yielding to the public safety user. This privilege of secondary access would be accorded to the D Block licensee as part of the interlocking agreements that constitute the public-private partnership.99 For example, the Public Safety Broadband Licensee would be required to lease spectrum to the D Block licensee, and the D Block licensee would be required to build a network for public safety use.100 The FCC has required a spectrum manager leasing arrangement for the full term of the ten-year license. This form of lease would place the responsibility for compliance fully on the lessee, the D Block license holder.101 As part of its spectrum management obligations, the D Block licensee would be required to assure that public safety users would not experience harmful interference, interruption, or degradation of service due to commercial operations in the public safety spectrum band. One prerequisite for this level of assurance would be a requirement by the FCC that the network be designed to assign priority to first responders automatically, with immediate preemption or exclusion from access to the network by commercial users.102
In return for allowing commercial usage of its bandwidth, public safety would have the right to real time access, on an emergency basis, of the spectrum licensed to the D Block.103 The obligation to provide this priority access was one of the service rules attached to the D Block license for Auction 73. The definition of what constitutes an emergency would be part of the NSA. In situations not covered by the NSA, where an agreement between the two licensees about what constitutes an emergency cannot be reached, the public safety licensee could appeal to the FCC to declare that an emergency exists that requires access to D Block frequencies.104
In order to accommodate both narrowband and broadband networks for public safety, the FCC revised the original band plan for the 24 MHz allocated to public safety.105 In addition to opening the way for a shared spectrum agreement between the public safety community and the private sector, the FCC resolved other spectrum management issues that are not discussed in this summarizing report. Among the FCC decisions of consequence to the operation of public safety networks in the 700 MHz band are:
The new band plan for public safety in the 700 MHz band has created two separate sets of paired spectrum blocks. One set of paired frequencies will be used for narrowband communications, the other set has been designated for the new, broadband network to be built by the public-private partnership. Because parts of the 700 MHz band intended for public safety use are not encumbered by broadcasters, some states have begun to build narrowband networks that use the 700 MHz capacity. Base stations and radios will have to be modified if they have already been programmed to operate on frequencies that are being reassigned to the broadband network. The FCC has required that these frequencies be vacated by February 17, 2009, or as soon after that date as possible, so that they will be immediately available for broadband use.106
As part of the rule making process, Motorola, Inc., a leading provider of public safety equipment, provided the FCC with a cost estimate for a rebanding plan proposed by the NPSTC.107 The NPSTC plan would have covered equipment already installed, on order, or planned. Motorola set the cost of the retuning at $9.45 million, which amount would cover all installations projected to be in place by July 2008.108 The FCC decided that the D Block licensee would be obligated to cover the costs of rebanding 109 but took several measures to control the cost. A cap of $10 million in reimbursements was established. To assure that costs stayed below that threshold, the FCC ruled that only systems and radios in operation as of 30 days after the adoption of the Second Report and Order would be covered. The cut-off date, therefore, was August 30, 2007. By limiting the number of base stations and radios that would have to be reprogrammed, the FCC figured that the estimated cost would be around $6 million, based on a pro-rating of the cost assumptions presented by Motorola. The FCC reasoned that this would provide leeway, if costs had been under-estimated, to assure that the total cost remained under the $10 million cap.110
To further control costs for relocation expenses, the FCC prohibited new operations on affected narrowband frequencies after August 30, 2007.111
The FCC set out rules for calculating actual costs and reimbursements. As with the negotiation of the Network Sharing Agreement, the public safety licensee and the commercial D Block licensee would be obligated to reach an agreement that must be reviewed and approved by the FCC;112 the two licensees must prepare a plan for relocation and an agreement on costs for rebanding. The licensees would be given 30 days to reach agreement on the plan.113
To receive reimbursement, displaced public safety network operators must meet a number of conditions. For example, they must provide information, accurate as of August 30, 2007, accompanied with a certification of accuracy. This information would cover:
The D Block licensee would be responsible for reimbursing only the minimum cost for necessary changes to base stations, mobiles, and portables, and not for any unrelated improvements. Specifically, the FCC would not require the D Block licensee to assume responsibility for costs related to reassigning channels or other changes to the Regional Planning Committee plans.114 The rule making does acknowledge the possibility that some reimbursement may be forthcoming for the Public Safety Broadband Licensee's cost related to the rebanding program.115
The D Block licensee and the public safety licensee are expected to agree on the total costs (not, however, to exceed $10 million) that would be reimbursed for changes necessitated by rebanding. This amount must be submitted to the FCC as part of the required relocation plan, with certification from the two license holders and the relevant equipment vendors that all parties agree to the negotiated prices and that no changes would be made.116 The amount, once approved by the FCC, must be paid into a trust account established by the Public Safety Broadband Licensee, no later than the date of execution of the Network Sharing Agreement. The public safety licensee would have the responsibility of administering the account and making payments in accordance with the agreed reimbursement schedule. No payments can be made from the trust account, however, until the D Block license has been conferred to the winning bidder.117 The winning bidder for the license would be the provisional winner until all requirements set by the FCC have been satisfied.
The FCC has ruled that public safety network operators wishing to operate wideband systems (enhanced capacity for narrowband channels), must obtain a waiver. The waiver request must contain an application for authorization; a letter from the Public Safety Broadband Licensee confirming that the wideband operations would not be inconsistent with broadband deployment plans; agreed upon conditions of operation; a transition plan to the broadband network;118 and certification that it would not seek reimbursement (from the D Block licensee) for costs incurred in a future transition to broadband operations.119 Grants for waivers will only be given for wideband operations within the narrowband frequencies; except under rare circumstances, no wideband operations will be permitted in the broadband frequencies.120 Devices used on the wideband network must be interoperable with the broadband network.121 Licenses for operation granted for wideband operations will be valid for five years.122
In the Second Report and Order, the FCC assigned itself the role of champion and protector for public safety interests, nationwide emergency communications, and interoperable networks. Under the umbrella of the Communications Act, it would undertake to monitor and regulate the actions of the Public Safety Broadband Licensee and the companies formed to manage the obligations of the D Block license holder. Congressional oversight of the public-private partnership therefore would be placed squarely within the jurisdiction of the committees dealing with telecommunications.123
In extending the scope of its authority to write service rules for auctions,124 the FCC has made a commitment to oversee and adjudicate the operation of a network that, when completed, could have an asset value in the tens of billions of dollars. A large part of that asset would be under the control of the Public Safety Broadband Licensee, governed by its Board of Directors in accordance with FCC regulations. Among the voting members of the board, as currently constituted, four have been appointed directly by the FCC. In its plans for oversight of the public-private partnership, the FCC has announced its intention of enforcing existing rules or creating new rules as circumstances warrant in the future. Measures to enforce the rules include litigation, revocation of license, or other means that might be supported by a reading of the Communications Act.125 The role of Congress, in accepting this arrangement, would be to provide guidance to the FCC commissioners through the various means available to it.
Two bills have been introduced in the 110th Congress that would provide solutions to specific problems raised in the debate over creating a shared network.
The Public Safety Broadband Authorization Act of 2008 (H.R. 6055, Harman) would provide $1 million in both FY2009 and FY2010 for operating expenses of the Public Safety Broadband Licensee. The funds would be made available in the form of grants by the FCC, assuming specific conditions were met. Appropriations for an additional $2 million would be authorized for used by the FCC "to promote the establishment of a nationwide, interoperable broadband public safety communications network." The bill puts limits on the activities of the public safety license-holder, reiterating some of the requirements suggested by the FC, such as not-for-profit status and no participation by a commercial entity in its management.
The Reliable, Effective, and Sustained Procurement of New Devices for Emergency Responders (RESPONDER) Act of 2008 (S. 3465, Wicker) would create a First Responders Interoperable Device Availability Trust Fund to provide grants to purchase interoperable radios for the new public safety network proposed for some of the channels being released in the transition to digital TV. The network plan is linked to the auction of a remaining block of analog spectrum, known as the D Block. The RESPONDER Act would place the entire net proceeds of the D Block Auction in the Trust. Additional funds would come from a percentage of future auctions. Auction authority for the Federal Communication Commission would be extended to assure the continuation of revenue-producing auctions.
| 1. |
Spectrum allocations are assigned within bands that are divided into bandwidths or channels based on assigned frequencies. Electromagnetic radio waves are usually identified by frequency, measured in cycles per second, or hertz. Standard abbreviations for measuring frequencies include kHz—kilohertz or thousands of hertz; MHz—megahertz, or millions of hertz; and GHz—gigahertz, or billions of hertz. The 700 MHz band plan (698 MHz to 806 MHz) refers to those channels that are assigned to technologies that transmit signals at speeds within or near 700 million cycles per second. |
| 2. |
P.L. 109-171, Sec. 3003 (a) (2). |
| 3. |
FCC, Second Report and Order, July 31, 2007, WT Docket No. 96-86. The full notice was released August 10, 2007; the Public Notice for comment on proposed auction rules was released August 17, 2007 (AU Docket # 07-157). |
| 4. |
As required by Title III of the Balanced Budget Act of 1997 (P.L. 105-33). |
| 5. |
Cyren Call Communications Corporation, in ex parte comments filed with the FCC on June 4, 2007, set the cumulative capital expenditure for building a public-private network at $18 billion, of which roughly a third of the cost would be for enhancements for public safety use. An estimate from Northrop-Grumman Corporation places the cost at $30 billion, when service applications are included. (Statement by Mark S. Adams, Chief Architect Networks and Communications at WCA 2007, Washington, DC, June 14, 2007.) These estimates do not include the cost of radios. |
| 6. |
FCC, Order, AU Docket No. 07-157, March 20, 2008 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-91A1.pdf. |
| 7. |
FCC, Second Further Notice of Proposed Rulemaking, released May 14, 2008, PS Docket No. 06-229 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-128A1.pdf. |
| 8. |
FCC, Third Further Notice of Proposed Rulemaking, released September 25, 2008, PS Docket No 06-229 at http://fjallfoss.fcc.gov/edocs_public/attachmatch/FCC-08-230A1.pdf. |
| 9. |
FCC News, "FCC Moves a Step Closer to Solving Nation's Communications Challenges Currently Faced By America's First Responders," September 25, 2008 at http://fjallfoss.fcc.gov/edocs_public/attachmatch/DOC-285630A1.pdf. |
| 10. |
This point-of-view was described in testimony by Deputy Chief Charles Dowd, City of New York Police Department, at a hearing of the House Committee on Homeland Security, Subcommittee on Emergency Communications, Preparedness, and Response, on September 16, 2008: "Interoperability in the Next Administration: Assessing the Derailed 700 MHz D Block Public Safety Auction." (Hearing, September 16, 2008.) |
| 11. |
For a discussion of the activities of the Office of Emergency Communications, see CRS Report RL33747, Emergency Communications Legislation: Implications for the 110th Congress, by [author name scrubbed]. |
| 12. |
Oral and written testimony given at the Hearing, September 16, 2008. |
| 13. |
The FCC's Office of Inspector General issued a report that covered some of the reasons cited for non-participation: "D Block Investigation," April 25, 2008 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-281791A1.pdf. Viewed April 28, 2008. |
| 14. |
A hearing on the outcome of the auction, with emphasis on the D Block, was held by the House Committee on Energy and Commerce, Subcommittee on Telecommunications and the Internet on April 15, 2008: "Oversight of the Federal Communications Commission - The 700 MHz Auction." Hearings and comments by members of Congress before the auction occurred also raised concerns about possible problems with auction rules. |
| 15. |
FCC, Second Further Notice of Proposed Rulemaking, Released May 14, 2008, PS Docket No. 06-229 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-128A1.pdf. |
| 16. |
Oral and written testimony, "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 17. |
Among those urging this course in testimony were Coleman Bazilon http://energycommerce.house.gov/cmte_mtgs/110-ti-hrg.041508.Bazelon-testimony.pdf and Steven E. Zipperstein http://energycommerce.house.gov/cmte_mtgs/110-ti-hrg.041508.Zipperstein-testimony.pdf; "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 18. |
For example, Washington Telecom, Media & Tech Insider, by Blair Levin, Rebecca Arbogast, and David Kaut, April 18, 2008. "With competitors either struggling or less motivated to build a new network, AT&T and particularly Verizon appear to be in the best position to negotiate terms and bid on the spectrum." |
| 19. |
"Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. For background, see CRS Report RS21508, Spectrum Management and Special Funds, by [author name scrubbed]. |
| 20. |
Written and oral testimony http://energycommerce.house.gov/cmte_mtgs/ 110-ti-hrg.041508.Martin-testimony.pdf; "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 21. |
Written and oral testimony http://energycommerce.house.gov/cmte_mtgs/ 110-ti-hrg.041508.Copps-testimony.pdf; "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 22. |
For an overview of federal funding for public safety communications, see CRS Report RL33747, Emergency Communications Legislation: Implications for the 110th Congress, and CRS Report RL32594, Public Safety Communications Policy, both by [author name scrubbed]. |
| 23. |
See, for example, testimony of Deputy Chief Charles F. Dowd http://energycommerce.house.gov/cmte_mtgs/110-ti-hrg.041508.Dowd-testimony.pdf; "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 24. |
For information on existing programs, see CRS Report RS22596, FY2008 Appropriations for State and Local Homeland Security, by [author name scrubbed]. |
| 25. |
See, for example, written testimony submitted for the record by Karen P. Tandy, Senior Vice President, Motorola, Inc.; "Oversight of the Federal Communications Commission - The 700 MHz Auction," April 15, 2008. |
| 26. |
Several CRS reports discuss federal government corporations and quasi-governmental organizations, including CRS Report RL30365, Federal Government Corporations: An Overview, and CRS Report RL30533, The Quasi Government: Hybrid Organizations with Both Government and Private Sector Legal Characteristics, both by [author name scrubbed]. |
| 27. |
FCC, Second Further Notice of Proposed Rulemaking, Released May 14, 2008, PS Docket No. 06-229 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-128A1.pdf. |
| 28. |
CRS meeting with Cyren Call executives, March 13, 2008. |
| 29. |
Second Further Notice of Proposed Rulemaking, paras. 106-116. |
| 30. |
Op. Cit., paras. 39-45. |
| 31. |
Op. Cit., para 43. |
| 32. |
For a detailed discussion of the USF, see CRS Report RL33979, Universal Service Fund: Background and Options for Reform, by [author name scrubbed]. |
| 33. |
More information at http://www.TDFund.com. Additional information on TDF and other programs created by the Telecommunications Act are available in CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal Assistance Programs, by [author name scrubbed] and [author name scrubbed]. |
| 34. |
See CRS Report RL31764, Spectrum Management: Auctions, by [author name scrubbed]. |
| 35. |
As stipulated in the rules covering both of the licensees and the Network Sharing Agreement. See discussion in text of this report. |
| 36. |
FCC, Second Report and Order, released August 10, 2007, paragraph 523. |
| 37. |
Ibid., paragraph 529. Possible recourse for failure to complete a Network Sharing Agreement are discussed in paragraphs 508 and 509. |
| 38. |
See CRS Report RL31764, Spectrum Management: Auctions, by [author name scrubbed]. |
| 39. |
The Balanced Budget Act of 1997, 47 U.S.C. § 309 (j) (14). For a discussion of the DTV transition see CRS Report RL34165, The Transition to Digital Television: Is America Ready?, by [author name scrubbed]. |
| 40. |
The role and organization of Federal Advisory Committees is addressed in CRS Report RL30260, Federal Advisory Committees: A Primer, by Wendy R. Ginsberg. |
| 41. |
See http://www.npstc.org/index.jsp. Viewed January 17, 2008. |
| 42. |
See, for example, NPSTC position paper on 700 MHz, released July 6, 2007, at http://www.npstc.org/documents/NPSTC%20Public%20Safety%20700%20MHz%20Position%20Paper%2007052007.pdf. Viewed January 17, 2008. |
| 43. |
Second Report and Order, paragraph 322. |
| 44. |
Ibid., paragraph 346. |
| 45. |
Ibid., paragraph 322. |
| 46. |
Ibid., paragraph 322. |
| 47. |
Ibid., paragraph 322. |
| 48. |
Ibid., paragraph 373. |
| 49. |
FCC, Order, November 19, 2007, PS Docket No. 06-299. |
| 50. |
Second Report and Order, paragraph 374. |
| 51. |
FCC, Order on Reconsideration, September 24, 2007, WT Docket No. 96-86. |
| 52. |
Current list of 15 members provides for a board consists of representatives for: the Association of Public-Safety Communications Officials - International (APCO), the National Emergency Number Association (NENA), the International Association of Fire Chiefs (IAFC), the International Association of Chiefs of Police (IACP), the International City/County Management Association (ICMA); the National Governors Association (NGA); the National Association of State EMS Officials (NASEMSO); the Forestry Conservation Communications Association (FCCA); the American Association of State Highway and Transportation Officials (AASHTO); and the International Municipal Signal Association (IMSA), the American Hospital Association (AHA), the National Fraternal Order of Police (NFOP), the National Association of State 9-1-1 Administrators (NASNA), the National Emergency Management Association (NEMA) and the National Sheriffs' Association (NSA). |
| 53. |
FCC, Public Notice, "Public Safety and Homeland Security Bureau and Wireless Telecommunications Bureau Announce the Four At-Large Members of the Public Safety Broadband Licensee's Board of Directors," November 9, 2007, DA 07-4593. |
| 54. |
Order on Reconsideration, paragraph 5. NPSTC membership includes a governing board with representation from these associations that are to be represented on the board of the public safety licensee organization: AASHTO, APCO, FCCA, IACP, and IMSA. The board is advised by liaison organizations that include, the FCC, the NTIA, FEMA, DHS offices of Emergency Communications and of Interoperability and Compatibility, SAFECOM (also from DHS), the departments of Agriculture, Interior, and Justice, and the Telecommunications Industry Association (TIA). For more information on membership and organizational structure, see http://www.npstc.org/orgchart.jsp. Viewed January 17, 2008. |
| 55. |
Second Report and Order, paragraph 377. |
| 56. |
Ibid., paragraph 375. |
| 57. |
Ibid., paragraph 376. |
| 58. |
Second Report and Order, paragraph 509. |
| 59. |
Ibid., paragraphs 509 and 523 - 526. |
| 60. |
Ibid., paragraph 527. |
| 61. |
Ibid., paragraph 385. |
| 62. |
Ibid., paragraph 383. |
| 63. |
Ibid., paragraph 536. |
| 64. |
Ibid., paragraph 65. |
| 65. |
Ibid., paragraph 304. The Wireless Telecommunications Bureau subsequently set the reserve price for Block D at $1.33 billion in a notice released October 5, 2007: "Auction of 700 MHz Band Licenses Scheduled for January 24, 2008," DA-074171, AU Docket No. 07-157. |
| 66. |
Ibid., paragraph 305. |
| 67. |
Ibid., paragraphs 314 and 448. |
| 68. |
Measures to be taken if the agreement is not completed within six months are outlined in the Second Report and Order, especially paragraphs 504 and 508. |
| 69. |
Second Report and Order, paragraph 525. |
| 70. |
Ibid., paragraphs 506 and 507. |
| 71. |
Ibid., paragraph 520. |
| 72. |
Ibid., paragraph 518. |
| 73. |
Ibid., paragraph 518. |
| 74. |
Ibid., paragraph 519. |
| 75. |
Ibid., paragraph 522. |
| 76. |
FCC, Public Notice, "Revised Procedures for Auctions 73 and 76: Additional Default Payment for D Block Set at Ten Percent of Winning Bid Amount; Disputed Issues in the Negotiation of Network Sharing Agreement," November 2, 2007, DA 07-4514 at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-4514A1.pdf. |
| 77. |
Ibid., paragraphs 457-459. |
| 78. |
Ibid., paragraph 366. |
| 79. |
Ibid., paragraph 438. |
| 80. |
Ibid., paragraphs 386 and 443. |
| 81. |
Ibid., paragraph 437. |
| 82. |
Ibid., paragraph 440. |
| 83. |
Ibid., paragraph 453. |
| 84. |
Ibid., paragraph 443. |
| 85. |
Ibid., paragraph 438. |
| 86. |
Ibid., paragraph 521. |
| 87. |
Ibid., paragraph 448. |
| 88. |
Ibid., paragraph 364. |
| 89. |
Ibid., paragraph 405. |
| 90. |
This and preceding bullet points are covered in Second Report and Order, paragraph 405. |
| 91. |
Ibid., paragraph 364. |
| 92. |
Ibid., paragraph 447. |
| 93. |
Ibid., paragraph 450. |
| 94. |
Ibid., paragraph 451. |
| 95. |
Ibid., paragraph 452. |
| 96. |
Ibid., paragraph 449. |
| 97. |
Ibid., paragraph 454. |
| 98. |
Ibid., paragraph 414. |
| 99. |
Ibid., paragraph 416. |
| 100. |
Ibid., paragraph 415. |
| 101. |
Ibid., paragraph 417. |
| 102. |
Ibid., paragraph 418. |
| 103. |
Ibid., paragraph 426. |
| 104. |
Ibid., paragraph 427. |
| 105. |
Ibid., paragraphs 325 - 326. |
| 106. |
Ibid., paragraph 332. |
| 107. |
Letter from the National Public Safety Telecommunications Council, June 25, 1007, WT Docket No. 96-86. |
| 108. |
Letter filed by Motorola, Inc., June 29, 2007, WT Docket No. 96-86. |
| 109. |
Second Report and Order, paragraph 336. |
| 110. |
Ibid., paragraph 341. |
| 111. |
Ibid., paragraph 339. |
| 112. |
Ibid., paragraph 340. The Chief of the FCC's Public Safety and Homeland Security Bureau is assigned the responsibility of reviewing and approving the rebanding plan. |
| 113. |
Ibid., paragraphs 336 and 504. |
| 114. |
Ibid., paragraph 338. |
| 115. |
Ibid., paragraph 342. |
| 116. |
Ibid., paragraph 342. |
| 117. |
Ibid., paragraph 343. |
| 118. |
Ibid., paragraph 491. |
| 119. |
Ibid., paragraph 495. |
| 120. |
Ibid., paragraph 492. |
| 121. |
Ibid., paragraph 495. |
| 122. |
Ibid., paragraph 496. |
| 123. |
Senate, Committee on Commerce, Science, and Transportation; House of Representatives, Committee on Energy and Commerce. |
| 124. |
The Balanced Budget Act of 1997 gives the FCC authority to conduct auctions, set performance requirements, and evaluate the qualifications of licensees [47 U.S.C. § 309 (j), especially, (3), (4) and (5)]. |
| 125. |
The FCC seems to presume private equity or hedge fund ownership of the D Block companies as it does not mention how it would use the Communications Act to protect the interests of shareholders in a publicly traded company. |