Public safety airwave auction faces next test

By Kim Dixon

WASHINGTON (Reuters) - A renewed effort by U.S. regulators to auction part of the airwaves to a commercial entity that must share the spectrum with firefighters, police, and other emergency workers, faces its next test within weeks.

The Federal Communications Commission's latest proposal to lure bidders to the slice of airwaves being vacated when television broadcasters switch to digital signals is set to take center stage at an FCC meeting in mid-December.

But doubts persist about whether slashing the minimum bid requirement and easing coverage requirements can overcome a failed auction effort early this year.

At issue is whether a commercial partner can profitably share the airwaves with the public safety groups. A weak economy and scarcity of financing is another hurdle.

"One of the big problems is that we are trying to privatize something that might not have a good return on investment," said Sascha Meinrath, a research director at the New America Foundation, a think tank. "It's not as if you can profit from saving lives."

Communication problems between police and firefighters during the September 11, 2001 attacks, during Hurricane Katrina and other national emergencies, has driven the spectrum-sharing effort. It is one of the last recommendations by the 9/11 Commission to be implemented.

The bi-partisan leaders of that panel wrote the FCC earlier this month urging the agency to finalize the rules by the end of the year.

"We are deeply concerned that more than seven years have passed since 9-11 without the implementation of a public safety network," Lee Hamilton and Thomas Kean wrote to FCC Chairman Kevin Martin. "We must not let this opportunity pass."

If the FCC agrees on new rules, the running of the auction will fall to the administration of President-elect Barack Obama who takes office in January.

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Earlier this year, AT&T and Verizon Communications, the two biggest U.S. mobile phone providers, dominated the $19.2 billion auction of the bulk of the so-called 700 Megahertz airwaves being vacated by television broadcasters.

The spectrum is seen as highly valuable for its ability to penetrate thick walls and go long distances.

But the slice set aside for a commercial partner to share with public safety agencies, known as the D-block, failed to attract a company willing to meet the FCC's $1.3 billion minimum bid and other requirements.

Now, FCC Chairman Kevin Martin has devised a new proposal with a cheaper price tag of $750 million and fewer restrictions. A private-public partnership to manage the spectrum is far from ideal, he said recently, but called it the "best alternative" the FCC now has.

"Other better models would require the government to provide direct resources," said Martin, a Republican who is expected to be replaced by the Obama administration.