700 MHz auction closed but still creating controversy

All of the bids may be in, and the auction may have generated more than double its projected earnings, but after the 700 MHz auction’s close some people are asking why there weren’t a few more bids and a few more billion dollars in the pot. Specifically consumer advocates are pointing to the controversial D-block shared public safety/commercial license, which received only a single bid and failed to meet its reserve price after 261 rounds.

The Washington Post reported today that the nine groups including the Consumer Federation of America and the Consumers Union have asked FCC Chairman Kevin Martin to investigate whether the Public Safety Spectrum Trust’s advisor Cyren Call squashed interest in the auction by demanding payments from the winner. Apparently Cyren Call told Frontline Wireless and other potential bidders that they would be expected to pay Cyren Call $500 million over 10 years to cover the consultants operational expenses for the public safety side of the system.

The trust maintains this is standard procedure for such an arrangement. It even reported the possibility of those future payments in filings with the FCC, so certainly nothing was going on under the table. But those costs may have directly led to Frontline–widely regarded as the leading candidate to win the spectrum–to drop out of the auction. It never came up with the required down payment to bid and it dissolved soon afterwards.

So what’s in store for the D block now? It’s anybody’s guess. First off, the FCC must figure out if it wants to decouple the D block from the rest of the auction results so it can go ahead and announce the winning bidders for the rest of the spectrum. If the Commission doesn’t we could be waiting until well after CTIA to learn the identities of the licensees. Then the FCC will have to decide how to re-auction it, if at all. Martin said he would investigate the allegations made against the trust and Cyren Call, but even now Congress is preparing to hold hearings on whether to change the shared commercial and public model of the license. The 55,000 public safety agencies counting on a new nationwide emergency network can’t be happy about that.

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