In February, President Obama laid out his vision for how to gain wider deployment of high-speed wireless networks. In Part 1 of this Industry Spotlight series, we looked at proposal highlights; Part 2 discussed the proposed plan to fund wireless initiatives through a voluntary spectrum auction; and Part 3 outlined the incentive auctions plan for a $5 billion Universal Service wireless mobility fund and $3 billion, also from the incentive auctions, to fund wireless research and development.
In conclusion of this series, Part 4 below outlines the efforts to build a nationwide mobile broadband public safety network.
Spectrum and bandwidth concerns
The idea of a nationwide mobile broadband public safety network has been talked about for a long time. Current public safety networks generally operate at relatively low throughput rates and do not interoperate from one geographic area to another, making it difficult to coordinate public safety efforts nationwide. But the idea hasn’t gotten off the ground, in part because of disputes about how much bandwidth it would need but also because funding has not been made available for network construction.
One of several important goals of President Obama’s proposed wireless broadband initiative, announced in February, is to create a concrete plan for a nationwide public safety network by ensuring that the public safety community has enough bandwidth to meet its needs and to create a mechanism to fund network construction.
The public safety community already holds a license for spectrum in the prized 700 MHz band. But public safety officials have argued that their current spectrum holdings are not sufficient to support their needs and have put pressure on the government to allocate additional 700 MHz-band spectrum known as the D-block to public safety.
Obama’s plan accepts this argument and would allocate the D-block to public safety. The plan also would make $10 billion available for a nationwide public safety network. As discussed in Part 2 of this four-part series, the money for this and other key wireless initiatives would be raised through spectrum auctions.
Show me the money
Not all of the $10 billion earmarked for public safety would be spent on network construction, however. The D-block auction was expected to generate proceeds of approximately $3.15 billion for the government. Accordingly, Obama’s plan calls for transferring $3.15 billion to the treasury to make up for the lost auction revenues. The remaining $7 billion would go toward public safety network construction costs.
That isn’t enough to cover network construction costs, comments Andrew Seybold, president of the consulting firm with the same name. Seybold has been a champion for the nationwide public safety network, producing a large part of the evidence that persuaded Obama and others that public safety needed the D-block.
“I believe it’s a $10 billion buy,” says Seybold. In addition, Seybold estimates that another $3 billion would be needed over a five-year period to cover ongoing operational expenses and additional builds.
But Seybold isn’t especially concerned about the funding shortfall, noting that the public safety network presents the opportunity for public/private partnerships that could generate additional revenues. “In rural areas, the spectrum would be used not only by public safety but also by power companies, who would resell connectivity to farmers who have no broadband access,” explains Seybold.
In addition, he says, cities and states would be required to provide some funding for the network.
One group that has opposed the idea of giving the D-block to public safety is the Rural Cellular Association. The RCA is concerned that if a network were devoted only to public safety, it would have a small number of users over which to spread handset development costs. As a result, the organization has argued that such handsets could cost as much as $6,000, making them too expensive–particularly in rural areas where public safety needs are often met through volunteers. The RCA argues that if the D-block were shared with a commercial operator, the costs of developing devices for use in that frequency band would be spread across a broader base, making handsets more affordable.
But Seybold disputes the RCA’s assumptions about handset costs. The biggest cost, he says, is in the development of the chip—and at least two manufacturers have said they would be willing to create chips for the public safety network for upfront costs of between $3 million and $7 million.
That’s not a high number in comparison with total anticipated network costs, and Seybold had hoped that proposed public safety network legislation would recommend allocating funding toward chip development costs. But although several different bills have been proposed to use auction proceeds to fund a nationwide public safety network, not one of them would allocate funding for chip development—and neither does President Obama’s plan.
The $3 billion research and development fund that the president proposes includes $500 million for efforts related to the public safety network. But those efforts are focused on a five-year testing plan for the network.
Seybold notes though, that Congress will have to agree on one final version of the various public safety bills that have been proposed, and he is still hopeful that funding for chipset development will be added as part of that process. He also notes that all of the bills that have been proposed have support from both Democrats and Republicans–making public safety network legislation a rare bi-partisan effort that he believes will be enacted.