FCC May Examine ‘D’ Block Auction Fiasco

BOULDER, Colo. — FCC commissioner Jonathan Adelstein said Sunday that he and the agency will “definitely look into the allegations” of rumored shadowy deals that may have led to the collapse of Frontline Wireless and the apparent failure of the “D” Block segment to attract a minimum reserve bid in the ongoing 700 MHz spectrum auction.

First reported by Harold WFeld on the WetMachine blog, the rumor that machinations by Morgan O’Brien of Cyren Call fame may have helped to scuttle the plans of Frontline Wireless — perhaps the most likely bidder on the mixed-use D Block bandwidth — is something Adelstein is taking seriously, following what he called the “great disappointment” of the apparent failure of any winning bid for the D Block spectrum.

Adelstein’s pledge to look more deeply into the matter came during a question-and-answer period following his participation in panel discussions here at the Silicon Flatirons conference, one of the nation’s top telecom policy gatherings.

The FCC’s rules for the D Block spectrum, which would have required the winner to negotiate the building of a network that would be jointly used by public safety entities, apparently were not attractive enough to attract bidders, Adelstein said. (So far, the D Block has only attracted one bid for $472 million, which is far below the reserve price of $1.3 billion set by the FCC.)

“We clearly misjudged the interest [in the D Block] and set rules that apparently inhibited the financing [for bidders],” Adelstein said. “It’s a concern, and it’s something we will re-visit with our friends in public safety.” Since the current auction is not yet completed, Adelstein said there were no plans yet on how to deal with a possible re-auction of the spectrum.

Adelstein and others present at the conference were not hesitant to opine that the apparent failure of the D Block auction was in part an indictment of lawmakers’ unwillingness to fund a public-safety network for first responders.

“It was kind of a jury-rigged public/private system,” said Adelstein of the D Block rules the FCC came up with for the auction in an attempt to finance a first-responders’ network. Congress, he said “should have stepped up to the plate” and funded the network itself, a point several other speakers at the conference agreed with.

“The D Block [situation] is a failure of values,” said Mark Cooper, research director at the Consumer Federation of America. Cooper derided lawmakers for “covering their asses” by authorizing $1.5 billion to fund free set-top-boxes for the upcoming DTV transition while pushing the construction of a first-responders’ network into the uncertain terrain of public-private partnerships and spectrum auctions. “Congress should have just funded it themselves,” Cooper said, noting that the cost of such a network was small in comparison to what is being spent on the war in Iraq.

Paul Kapustka, former managing editor for GigaOM, now has his own blog at Sidecut Reports.