Public Safety Spectrum Trust Says Its Costs May Exceed $5 Million
The Public Safety Spectrum Trust plans to ask the FCC not to cap at $5 million what businesses would pay public safety yearly for use of its block of 700 MHz spectrum, trust Chairman Harlin McEwen said Monday. That amount is one-tenth of earlier estimates of a lease payment for the spectrum. McEwen met with FCC officials Monday to discuss the revised 700 MHz D-block proposal that Chairman Kevin Martin discussed Friday during a call with reporters (CD Sept 8 p1).
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“That would be very difficult for us,” McEwen said of the proposed cap: “It’s pretty hard to know what our costs and expenses would be, not knowing totally what our obligations will be. That seems to not be enough for any reasonable efforts on our part.” McEwen said a more realistic figure would be closer to $15 million, though his group doesn’t know for sure what its expenses will be. For example, he said, managing many regional licensees would be more expensive than handling a single, national licensee. If commissioners “put a cap on that’s unrealistic and it’s in the rules, then we're locked into having to go back and change the rules,” he said.
One of the most contentious issues after the failed 700 MHz D-block auction was the size of the commercial licensee’s lease payment to the trust to use the public safety spectrum block. Especially controversial was the $50 million annual estimate put forward by trust adviser Cyren Call in meetings with potential bidders. House Commerce Committee Chairman John Dingell, D-Mich., was among those who questioned the payment proposed.
Cyren Call founder Morgan O'Brien had said the amount was an estimate and a negotiating position subject to FCC approval. Cyren Call officials had no comment Monday on the revised order, which started circulating at the FCC Thursday evening.
McEwen said the $50 million reflected in part a proposal to offer an MVNO using the spectrum, which the proposed order would prohibit. Martin “has said we would be restricted from doing an MVNO and we knew that before,” he said. “That wasn’t even being considered by us.” McEwen also said the trust was already planning to open meetings to the public, as the order would require.
McEwen expressed concern about the probable schedule for the D-block auction discussed by Martin. It would start between April and June to give would-be bidders time to put together financing. “We would hope that it would be earlier than that,” he said. “But we want it to be a successful auction.”
The costs the PSST will face are difficult to gauge, industry and public safety sources said Monday. By way of comparison, the 800 MHz Transition Administrator reported $9.5 million in fees and $200,000 in expenses in the most recent quarter for which it released a report. Comparing the two entities makes little sense since they have very different missions, a public safety official said. “I don’t know what the costs are or could even give an educated guess whether a cap of $5 million is reasonable or unreasonable.”
An industry official sees $5 million as a fair amount to handle the group’s expected duties. “If the PSST is to be the organization that sets the technical requirements and may handle some of the billing and administration, the contracting and all that, that’s probably a reasonable number,” the official said. “That probably supports a team of 20 to 30 people, which is certainly adequate for the job.”
The FCC is to seek public comment on the order, which would give the PSST a chance to make its case against imposing the cap proposed by Martin.