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June 07, 2007

Frontline Wireless’ Bad Idea

Newly formed Frontline Wireless, LLC has a star-studded team behind it including former FCC Chairman Reed Hundt, Jim Barksdale of Netscape fame, and super-VC John Doerr of Kleiner Perkins.  Frontline has proposed a plan to the FCC for the use of 10MHz of the 700MHz frequency band coming up for auction which sounds superficially like it might be a good idea.  It isn’t.  The economics behind the plan are deceptive. If implemented, it will be a threat to public safety.

The FCC has asked for comment on the Frontline plan, and rumor has it that FCC Chairman Kevin Martin thinks it has merit.  Unfortunately the very short formal comment period has ended.  That’s no reason , however, not to look very carefully at what’s wrong with this idea.  Hopefully the FCC – with some helpful pressure from the public and Congress – will not adopt the Frontline proposal.

Frontline proposes that 10MHz be carved out of the 60MHz allocated for commercial auction and reserved for national award to a bidder who will build a public safety network at the bidder’s expense.  This bidder will get the right to sell use of the 10MHz to commercial interests – ISPs, mobile companies, and the like – subject to preemption by public safety in an emergency (“emergency” to be defined).  Frontline is upfront about the fact that they intend to be a bidder for that spectrum and they appear to be well enough connected to raise the capital to build the required network.

The benefits to public safety, according to Frontline, are that the build-out of the network is paid for by the bidder and that public safety gets emergency use of 10MHz if they should need it. The politics of their plan are based on the fact that everyone – including me – is all for public safety.

Here’s some of what’s wrong with the plan (according to me):

  • In an emergency, ordinary citizens need to be able to communicate with each other and with public safety.  If your mobile phone operator or ISP happens to be a customer of Frontline, then you’re out of luck and out of touch when trouble happens.  How do you call for help if your frequency’s been preempted?
  • A mechanism for preempting frequencies in an emergency is inherently unsafe.  Suppose you’re a bad guy; you target the control center for preemption or YOU pretend TO BE the control center and do the preempting yourself.  That may be your attack.
  • Public safety is already slated to get an additional 12MHz of capacity when the UHF frequencies are reallocated in February of 2009.  There is no evidence that it needs any more although there’s plenty of evidence that public safety needs better communication than it has today.
  • Frontline proposes that the bidder be required to accomplish a “build-out of 75% of the population of the United States by the end of the fourth year, 95% by the end of the seventh year and 98% by the end of the tenth year.” It’s not only because I’m in Vermont that I wonder what happens to the uncovered parts of the population during this period.  Only Frontline can build to use the special 10MHz so it goes unused in rural areas for a long time to come.  Do public safety agencies in those areas wait patiently for “free” infrastructure to be built or do they meet the needs of their constituencies by building infrastructure needed only until Frontline shows up?
  • The “build-out at no cost to taxpayers” IS at the cost of taxpayers; it’s just disguised.  Consider other potential bidders for the 10MHz under the proposed rules.  Each of them considers the revenue they’ll get from being able to wholesale the frequency when it’s not in use and the capital cost of the build-out.  They subtract the cost of the build-out from what they’re willing to pay for the spectrum.  The likely result is that the auction – which results in revenue to the federal government – nets less than it would have had there not been a build-out requirement.  There’s no one to make up the difference except us taxpayers; ipso facto, we pay for the build-out either way.

There’s no such thing as a free lunch.  This lunch would not only be costly but dangerous.

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