Martin Proposes Regional Licenses for Second D-Block Auction

Martin is proposing regional licenses dividing the U.S. into 58 regions, based on the NPSTC map but with package bidding rules similar to those in the 700 MHz C-block auction. A bidder could buy a national license if the aggregate bid is the highest for the spectrum.

To give potential bidders certainty, Martin said, the draft order would spell out requirements for “hardening” the network. It would also make the Public Safety Spectrum Trust open its meetings to the public and do more reporting. The trust couldn’t create an MVNO. The proposal would cap at $5 million a year what the commercial licensee would pay to use the public safety spectrum block.

A term sheet in the draft order offers detail on the service the licensee would have to provide public safety users, including the charge to a user, $48.50 monthly. Commission officials said they weren’t sure how the price was set. Martin said it reflects what customers will pay to use commercially operated public-safety networks in New York, Washington, D.C., and elsewhere.

The FCC would hold separate auctions - offering regional licenses for LTE and WiMAX service and a separate national license. If not all the regional licenses sell and if a bidder meets the $750 million minimum, the national bidder would get the national license. The commission should go for the most buildout not the most money, Martin said. He clarified that the minimum price is the same as the opening bid price.

Officials of the Public Safety Spectrum Trust and its adviser Cyren Call met last week with FCC officials and essentially signed off on the regional license concept.

The buildout requirements are looser than those for the D-block auction that failed this year. The draft order would set buildout benchmarks that are the same as for the C-block, though with additional requirements varying by state and depending on population for year 15 of the license. Under the original D-block rules, the licensee would have had to be able to provide service to 99.3 percent of the U.S. population within 10 years.

The proposal would give AT&T and Verizon Wireless an advantage over other carriers, a government official said. AT&T and Verizon Wireless bought licenses worth $16 billion, or 84 percent of the auction by value, in the original 700 MHz auction. “They are already building out on that schedule in 700 MHz,” the source said. “It’s going to mean that for them buying the spectrum and complying with the rules is going to be much, much cheaper than for everybody else.”

Martin worries less about promoting wireless competition than about ensuring buildout of a public safety network, he said. “We tried to auction this off before,” he said. “There weren’t any new entrants or anyone else who wanted to participate in this auction and take on the burden of serving public safety. We want someone to build out a nationwide public safety network that will solve our interoperability problem.”

A $1.3 billion reserve was seen widely as a major obstacle to bidding on the D-block in the first 700 MHz auction. The reduction proposed in the minimum means the agency essentially is “giving away” the spectrum, an FCC source said.

APCO counsel Robert Gurss declined to comment until he sees Martin’s proposal. “Regional licenses for the D-block may be a necessity for a successful auction,” Charlottesville, Va., Fire Chief Charles Werner said Friday. “For the regional license concept to work for public safety it must and hopefully will be managed by the PSST -- a single national licensee acting on behalf of public safety. I believe that if it is done in a way that builds the regional licenses so they are regulated under the mantle of a national licensee strategy… that ensures operability and interoperability, it can and will be successful.”

Martin told reporters that he’s not sure when the Office of Engineering and Technology will turn in its report on the last round of white spaces testing to the commission for review. Commissioners are expected to give considerable weight to the office’s recommendations.

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Other items on the agenda include a proposal to change the FCC’s video relay service rules to allow providers to provide emergency calling on an interim basis. It would give providers a waiver allowing them to handle 911 calling now the same way they will once the FCC’s 10-digit plan for relay services takes effect Dec. 31. “There were some carriers who wanted to go ahead and make that change early,” he said. Another agenda item involves a freedom-of-information request by the Wall Street Journal to inspect international settlement agreements of Fusion Telecommunications. -- Howard Buskirk

FCC Notebook…

FCC commissioners hadn’t voted on an AT&T petition seeking forbearance from Automated Reporting Management Information System requirements, said FCC Chairman Kevin Martin said in a phone conference at our deadline Friday. The Republican majority was expected to give AT&T forbearance (CD Sept 3 p1). The phone conference, scheduled for 3:00 p.m., started about 30 minutes late because, Martin said, he had to discuss the ARMIS matter with another commissioner. Martin confirmed that the draft order would give AT&T most of what it asked for, and the provisions also apply to “similarly situated” carriers. The draft wouldn’t remove the requirement to report business line count information, he said. The FCC still uses those data, he said. Martin said many of the reporting requirements are “outmoded” relics of monopoly regulation and can’t be justified anymore. And many don’t make sense applied to one technology, he said. The draft order would call for setting reporting requirements across the industry, he said.

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The Wireline Bureau is working on reforming intercarrier compensation, but FCC Chairman Kevin Martin said it may not be “accurate” to describe the bureau as “feverishly” working on a draft order, as many in the industry are saying (CD Sept 5 p7). The bureau is holding meetings with outsiders, he said. It’s working on a response to a court requirement that the FCC explain by Nov. 5 the statutory basis for ISP-bound traffic compensation, said Martin. He has said he'd like to come up with a revamp for the whole system by then. He said Friday he hasn’t given aides “explicit direction” on the item they're to draft. But he said it would be “very difficult” to deal with intercarrier compensation “piecemeal.” Setting a uniform or unified terminating rate would be a way to go, he said. A uniform rate would be the same for all. It would set a formula giving carriers different rates by study area. “What we need to end up doing is minimize the opportunity for regulatory arbitrage,” Martin said. “I think the easiest way to do that would be to move towards a uniform rate."

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The FCC won’t allow the 700 MHz D-block licensee to use satellite phones to count against buildout requirements, Chairman Kevin Martin told reporters Friday. The rules will deal only with terrestrial buildout, Martin said. Rural areas would have to be built out 90 percent and urban areas 98 percent, he said. The Satellite Industry Association urged the agency to make the 700 MHz buildout rules more flexible if satellite technology is used. The SIA believes other commissioners support its position, President Patricia Cooper told us. “We've been gratified to see the support for the role that satellites can play in this arena.” The D- block is 10 MHz of commercial spectrum to be paired with 12 MHz of public-safety spectrum. A public-private partnership would build and run a nationwide interoperable broadband wireless network. One complaint about the original D-block rules was that their buildout requirements were too strict. In its original rules, the FCC required the D-block licensee to offer at least one handset using both mobile satellite service (or MSS) and terrestrial technologies.