CORRECTED - (OFFICIAL)-US FCC warns of higher public safety costs

(FCC corrects cost figures)

* FCC could propose D Block auction terms in July

* Public safety workers lobbying Congress

By John Poirier

WASHINGTON, June 2 (Reuters) - Delays in building out a wireless broadband network for public safety workers could increase the program's cost to nearly $16 billion, a top U.S. Federal Communications Commission official warned on Wednesday.

The warning involves the so-called D Block, a segment of the 700 megahertz band of airwaves that the FCC wants to auction to commercial carriers next year. Delaying the auction, the FCC said, could greatly raise the cost of the build-out, which is expected to run about $6.5 billion if the project gets off the ground next year

The Association of Public-Safety Communications Officials and other public safety groups want the D Block and are lobbying members of Congress. In April, Representative Peter King, a New York Republican, introduced legislation that would allocate the D Block to public safety agencies.

The FCC has said that public safety agencies already have a sufficient amount of spectrum for their communications.

The D Block failed to garner enough bids during auctions to commercial carriers in 2008 that otherwise raised about $19 billion for the U.S. government.

"It is absolutely crucial that we get this started," Jamie Barnett, chief of the FCC Public Safety & Homeland Security Bureau, said in an interview with Reuters.

To minimize costs, Barnett told Reuters, the program has to be timed with the build-out of fourth-generation wireless technology by the major wireless carriers.

He said missing that window could could more than double costs to nearly $16 billion and that could happen if regulatory proceedings by the FCC to start the auction process are not in place by the fall.

"We need to catch the wave," Barnett said.

To get the ball rolling, the FCC could issue as early as July the terms and conditions of the D Block auction in a notice of proposed rule-making, which typically carries a 60-day public comment period.

In February Barnett and other FCC officials said that during national emergencies the public safety sector will have access to the entire 700 megahertz band, and carriers that hold licenses in that band will be compensated accordingly for allowing public safety workers to roam on their networks.

By deciding what to do with the D Block, the FCC said it can move forward with building a nationwide wireless communications system for police, ambulances and firefighters, as well as U.S. and state agencies including the FCC and the Department of Homeland Security, to deal with disasters and emergencies.

Plans to auction the airwaves and establish an emergency network in the aftermath of the September 11 attacks were among many recommendations made in the FCC's National Broadband Plan.

FCC officials estimate that after the build-out the cost to operate and upgrade the system over the next 10 years could be as much as $10 billion. Broadband customers could be charged 50 cents a month to help defray those costs.

The opening of the D Block also is expected to be welcome news for smaller carriers such as T-Mobile, the U.S. unit of Deutsche Telekom AG (DTEGn.DE), seeking to acquire more spectrum to better compete with powerhouses AT&T Inc (T.N) and Verizon Wireless, a venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L).

Companies like AT&T and Verizon favor giving the D Block to public safety groups.

In March the 9/11 Commission endorsed the FCC's emergency broadband program. "The FCC's plan offers a realistic framework to move forward, and we hope that all stakeholders will work with the (FCC) commission to refine the plan as needed and make it a reality," the panel said in a statement. (Reporting by John Poirier; editing by Steve Orlofsky)