PUBLIC SAFETY SPECTRUM TRUST CORP. Chairman Harlin McEwen has distanced himself from a key element in a Federal Communications Commission inspector general report on the unsettled 700 MHz D Block.
The report, which cleared Cyren Call Communications Corp. of any wrongdoing prior to the failed auction of the D Block, described now-defunct Frontline Wireless L.L.C.’s concerns about Cyren Call’s plan to become a mobile virtual network operator that would resell service to first responders across the country.
McEwen said he wasn’t present at a meeting last fall in which Cyren Call Chairman Morgan O’Brien, according to information given to the FCC IG, told then-Frontline Wireless vice chairman Reed Hundt that Cyren Call wanted to create an MVNO that would buy
spectrum wholesale from the D-Block winner and resell it at a higher price to public-safety agencies.
When asked about Hundt’s recounting of the meeting with O’Brien in the FCC report, McEwen said, “That does not jibe with anything I’ve discussed with Cyren Call.[Cyren Call] never discussed anything like that with us, and we would never have approved anything like this.”
A PSST bidder information document for prospective D Block applicants includes a section envisioning a ‘virtual public-safety user network,’ but indicates it would be operated by the PSST. The PSST is the FCC-approved 700 MHz public-safety broadband licensee. Cyren Call was selected by the PSST in a competitive process to be an advisor to the PSST. In that role, Cyren Call would help the PSST negotiate a network-sharing agreement with the winning bidder of the national license.
Tim O’Regan, a Cyren Call spokesman, questioned the accuracy of Hundt’s account of last fall’s meeting with O’Brien in the FCC report, particularly references to Cyren Call’s MVNO ambitions. “This is not ‘Cyren Call’s MVNO’ – it would be a public-safety service provided by the PSST,” O’Regan said.
O’Regan added: “Since the main purpose of Cyren Call’s meetings with potential D-Block bidders was to discuss matters pertaining to a shared network and receive feedback regarding the information contained in the publicly available BID [bidder information document], Cyren Call’s discussions with and responses to those potential bidders of course were consistent with the concepts and substance contained in the BID. Cyren Call, therefore, believes that anyone who now places a different characterization on their discussions with Cyren Call is simply mistaken in their recollection of what actually occurred.”
Others made connection, too
Hundt wasn’t the only one who made the Cyren Call-MVNO association in interviews with the FCC’s inspector general. So did Tom Peters, senior director for public safety and regulatory engineering at Frontline. “Mr. Peters thought investors were also concerned with Cyren Call’s role in the network (especially with Cyren Call’s plan to be a MVNO), whether Frontline would be able to negotiate with Cyren Call, and the network’s high level of uncertainty and unknown costs,” the FCC IG’s report stated.
Brian Fontes, an AT&T Mobility external affairs official who last week was named executive director of the National Emergency Number Association, told the FCC IG that “Cyren Call explained it intended to be an MVNO and act as a reseller for the network, and that it would negotiate the rates of the network with the D-Block winner following the auction.”
In a footnote, the FCC IG report stated that a key Frontline concern was that “Cyren Call intended to serve as a mobile virtual network operator, which would allow it to purchase spectrum from the D-Block licensee at wholesale prices and sell it to the public-safety community.”
PSST control
The inspector general’s probe was prompted by allegations that Cyren Call demanded of prospective D Block bidders a $50 million-a-year lease payment for access to the public-safety spectrum. The report concludes the annual $50 million payment that may, or may not, have continued throughout the 10-year license term was only one factor contributing to the reluctance of any D Block bidder to pay the $1.3 billion reserve price for the license. Frontline Wireless, at one time considered a leading contender for the D-Block license, folded less than two weeks before the Jan. 24 start of the 700 MHz auction.
The FCC is set to launch a new rulemaking May 14 to consider changes to the D-Block license, with an eye toward re-auctioning the spectrum later this year.
Meantime, Congress, which also is looking into the D-Block fiasco, has signaled it will continue investigating the matter regardless of the FCC’s concluded probe. Rep. Henry Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, is investigating the relationship between Cyren Call and the PSST. At an April 15 hearing on the 700 MHz auction results, House Commerce Committee Chairman John Dingell (D-Mich.) requested documents relating to relationships among the PSST, Cyren Call and venture capital firms that have invested in Cyren Call.
The issue of PSST control could emerge as a key issue as congressional investigators move forward. The FCC IG report said the PSST’s McEwen said he did not attend any meetings where the lease payment figure was mentioned. “Mr. O’Brien told Mr. McEwen that PSST’s business plan included a $50 million lease payment (to cover PSST’s operating costs) from the D-Block licensee in the first year,” the report stated.
Get on with it
Reaction to the FCC IG’s report was mixed, with Cyren Call and PSST saying it was time to move on to solve public-safety’s communications needs, which include interoperability and broadband connectivity.
Others focused on the FCC’s role in the past and going forward.
“We are pleased that the commission responded swiftly and thoroughly to our request for an investigation whether any rules were broken during the bidding for the D Block in the recent spectrum auction. It appears there were none,” said Gigi Sohn, president of Public Knowledge.
Public Knowledge and other groups had asked the FCC to investigate D-Block allegations.
“However, even this narrow investigation showed that the D-Block auction was fatally flawed by terms and conditions set both by the commission and by the public-safety community,” Sohn added. “The controversial $50 million lease payments suggested by the public-safety community to potential bidders were only one factor. While the inspector general found that none of this was against the rules, the conclusion needs to be drawn that the auction was doomed to failure. The commission should take a more active role in future auctions to make certain public safety receives the spectrum it deserves. We look forward to the commission’s notice on the next version of the auction.”
Harold Feld, senior vice president of the Media Access Project, said the FCC investigation is a good first step in re-examining D-Block rules in advance of the re-auction.
“The inspector general report resolves critical questions as to whether Cyren Call, PSST, or potential bidders violated the commission’s rules or acted with improper motives in the period before the auction,” said Feld. “Happily, it appears no rules were broken. These facts could not have been established with certainty without the IG investigation.” Feld added that the FCC needs to be more engaged in the upcoming rulemaking on the D-Block re-auction.
