![](media/image1.png){width="1.6979166666666667in"
height="1.6159722222222221in"}***OFFICE OF INSPECTOR GENERAL***

***REPORT***

**DATE: April 25, 2008**

**TO: Chairman Kevin J. Martin**

**FROM: Kent R. Nilsson**

**Inspector General**

**SUBJECT: D Block Investigation**

**[SUMMARY]{.underline}**

*Initiating Events.* On March 18, 2008, the Federal Communications
Commission's ("FCC" or "Commission") 700 MHz Auction (73) closed with a
record \$19.6 billion in bids. The D Block (the commercial spectrum made
available for a public/private partnership to create a nationwide public
safety network) received only one bid, from Qualcomm, which was
significantly lower than the \$1.33 billion reserve price. On March 20,
2008, Chairman Martin asked the Inspector General to open an
investigation regarding allegations in several online wireless
newspapers and "blogs" and included in a March 19, 2008 letter to the
Chairman from Harold Feld, Senior Vice President of the Media Access
Project ("MAP") and a representative of the Public Interest Spectrum
Coalition ("PISC"). PISC, through Mr. Feld's letter, specifically asked
that the Commission investigate the allegations regarding "a purported
meeting between Frontline, its financial backers, and Morgan O'Brien of
Cyren Call that may have had the effect of preventing Frontline from
attracting needed capital and discouraging other bidders."

*Investigation.* The Office of Inspector General ("OIG") investigation
officially began on March 24, 2008. The investigative team interviewed
officials from the FCC, AT&T, Cyren Call Communications Corporation
("Cyren Call"), Frontline Wireless ("Frontline"), Public Safety Spectrum
Trust ("PSST"), Qualcomm Incorporated ("Qualcomm"), Verizon Wireless
("Verizon"), and Mr. Feld. During the course of the investigation, the
OIG received requests for confidentiality for business proprietary
information from Cyren Call, PSST, AT&T, and Qualcomm. The team also
reviewed FCC orders and documents relating to the auction of the D
Block, including notices of *ex parte* meetings involving the above
mentioned entities. The scope of the investigation focused on Cyren
Call's meetings with potential bidders and whether the information
provided at these meetings affected potential bidders' involvement in
the auction. The investigation did not look into the broad-ranging
policy criticisms and suggestions made in the PISC letter of March 19,
2008 concerning the public-private partnership envisioned by the
Commission in the *700 MHz Second Report and Order*. Those matters are
under consideration by the Commission and thus conclusions by the OIG on
broader regulatory policies would not be appropriate at this time.

*Findings.* Cyren Call officials met with Frontline and Verizon to
discuss an estimated spectrum lease payment amount of \$50 to \$55
million (amount varied depending on the interviewee) per year for a
period of ten years. All of these meetings took place prior to the
"Quiet Period,"[^1] when the anti-collusion rule was in effect. The
lease payment was discussed as an estimated amount that was included in
the PSST business plan, but it was clear that the actual number would
result from negotiations after the auction. Frontline, as well as other
entities interviewed, stated that the lease payment amount was only one
of many factors it considered in deciding whether to participate in the
D Block. Witnesses from all of the entities interviewed also described a
host of problems and concerns with the D Block that, as a whole,
deterred their participation in the D Block.

*Conclusion.* After a thorough investigation, the OIG concluded that the
evidence established that the lease payment discussed at Cyren Call's
meetings with Verizon and Frontline was not the only factor in the
companies' decision not to bid on the D Block. Rather, potential bidders
stated that the uncertainties and risks associated with the D Block,
including, but not limited to, the negotiation framework with PSST, the
potential for default payment if negotiations failed, and the costs of
the build-out and the operations of the network, taken together,
deterred each of the companies from bidding on the D Block.

[I. CHRONOLOGY OF EVENTS 4](#i.-chronology-of-events)

[A. Regulatory Proceedings 4](#regulatory-proceedings)

[B. PSST and Cyren Call 6](#psst-and-cyren-call)

[C. Auction Timeline 9](#__RefHeading___Toc196218625)

[D. Ex Parte Meetings at the Commission.
10](#ex-parte-meetings-at-the-commission.)

[II. SCOPE OF THE INVESTIGATION 11](#section)

[III. SUMMARIES OF WITNESS INTERVIEWS
12](#iii.-summaries-of-witness-interviews)

[A. Harold Feld, Senior Vice President, Media Access Project (MAP):
12](#harold-feld-senior-vice-president-media-access-project)

[B. FEDERAL COMMUNICATIONS COMMISSION
12](#federal-communications-commission)

[1. Jeff Cohen, Senior Legal Counsel, PSHSB:
12](#jeff-cohen-senior-legal-counsel-pshsb)

[2. Erika Olsen, Deputy Chief, PSHSB:
13](#erika-olsen-deputy-chief-pshsb)

[C. FRONTLINE WIRELESS 13](#frontline-wireless)

[1. Reed Hundt, Vice Chairman, Frontline:
13](#reed-hundt-vice-chairman-frontline)

[2. Scott Wiener, Senior Vice President, Partner Development, Frontline:
15](#scott-wiener-senior-vice-president-partner-development-frontline)

[3. Tom Peters, Senior Director, Public Safety & Regulatory Engineering,
Frontline:
15](#tom-peters-senior-director-public-safety-regulatory-engineering-frontline)

[D. PUBLIC SAFETY SPECTRUM TRUST (PSST)
16](#public-safety-spectrum-trust)

[1. Harlin McEwen, Chairman, PSST: 16](#harlin-mcewen-chairman-psst)

[2. Alan Caldwell, Secretary-Treasurer, PSST:
17](#alan-caldwell-secretary-treasurer-psst)

[E. CYREN CALL 18](#cyren-call)

[1. Morgan O'Brien, Chairman, Cyren Call:
18](#morgan-obrien-chairman-cyren-call)

[2. Thomas Sidman, Executive Vice President, Business Processes, Cyren
Call:
19](#thomas-sidman-executive-vice-president-business-processes-cyren-call)

[3. David Knutson, Executive Vice President, Development, Cyren Call:
19](#david-knutson-executive-vice-president-development-cyren-call)

[F. VERIZON WIRELESS 20](#verizon-wireless)

[1. Don Brittingham, Director of Wireless Policy, Verizon:
20](#don-brittingham-director-of-wireless-policy-verizon)

[G. QUALCOMM INCORPORATED 21](#qualcomm-incorporated)

[1. Dean Brenner, Vice President, Government Affairs, Qualcomm:
21](#dean-brenner-vice-president-government-affairs-qualcomm)

[H. AT&T 21](#att)

[1. Brian Fontes, External Affairs, AT&T:
21](#brian-fontes-external-affairs-att)

[IV. DISCUSSION 21](#iv.-discussion)

[A. Question 1: Alleged Meeting With Morgan O'Brien and Alleged
Statements to Frontline.
22](#question-1-alleged-meeting-with-morgan-obrien-and-alleged-statements-to-frontline.)

[B. Question 2: Whether Cyren Call's Statements Deterred Bidding in the
D Block.
23](#question-2-whether-cyren-calls-statements-deterred-bidding-in-the-d-block.)

[C. Question 3: Rules Potentially Implicated.
25](#question-3-rules-potentially-violated.)

[V. CONCLUSION 26](#section-1)

#  [I. CHRONOLOGY OF EVENTS]{.underline} {#i.-chronology-of-events .unnumbered}

Provided below is a chronology of events that has been organized by
relevant category. As explained below, some of the key individuals and
entities interested in the 700 MHz proceeding, as well as a
public/private partnership established by the Commission, have been
pursuing their respective visions for the spectrum at issue for several
years. The positions of the entities and individuals involved have also
been, for the most part, a matter of public record. Thus, a great deal
of contemporaneous evidence is available through a review of public
filings at the Commission and/or press releases available on the
Internet. Meetings between and among PSST, Cyren Call, and potential
bidders (including Frontline), however, are not documented in the public
record in the same level of detail. Thus, the critical meetings that are
the focus of this investigation are noted in the chronology below and
are covered in detail in the witness interview section of this report.

## Regulatory Proceedings 

*700 MHz Proceedings*. The Commission issued a *Further Notice of
Proposed Rulemaking* in April of 2007 that proposed the creation of a
nationwide public safety broadband license ("PSBL") and the creation of
a nationwide public safety network built through a public
safety-commercial partnership with the commercial operator securing its
license through a spectrum auction.[^2] The network would be used to
provide both a commercial service and a broadband network service to
public safety entities.[^3]  The commercial operator would have access
to the public safety broadband spectrum on a preemptible secondary basis
and broadband public safety users would have priority access to the
network in times of emergency. Subsequently, on July 13, 2007, the
Commission adopted the *700 MHz* *Second Report and Order*.[^4] The
order established a regulatory framework for the Commission-approved
public safety-commercial partnership between the soon to be
Commission-selected PSBL licensee and the winning bidder of the D Block
license.[^5] The Commission determined that the D Block commercial
license would be awarded to a winning bidder only after it entered into
a Commission approved Network Sharing Agreement ("NSA") with the PSBL
licensee. At the same time, the Commission imposed, among other
requirements, stringent build-out requirements for the D Block licensee
requiring it to eventually serve 99.3 percent of the population of its
nationwide license area.[^6] The *700 MHz Second Report and Order* was
released by the Commission on August 10, 2007 and was published in
Federal Register on August 24, 2007.

*Lowering Default Payment and Further Clarification of NSA Process*. On
November 2, 2007, the Wireless Telecommunications Bureau ("WTB") lowered
the default payment for the D Block from 15 to 10 percent of the
defaulted bid or of the subsequent winning bid, whichever was less. At
the same time, WTB and the Public Safety Homeland Security Bureau
("PSHSB") announced that the two Bureaus would not exercise their
authority to immediately deny the long-form application filed by the
winning bidder for the D Block license as a result of any dispute over
the negotiation of the terms of the NSA absent issuance of a decision on
the disputed issues and other procedures.[^7]

*PSST granted PSBL.* Implementing the *700 MHz Second Report and Order*,
in early September 2007, the PSHSB issued a Public Notice soliciting
applications for the PSBL.[^8] PSST filed an application for the PSBL in
October and on November 19, 2007, PSST was granted the license.[^9]

*Relevant Filings in 700 MHz Proceeding After Adoption of the Second
Report and Order*[^10]*.* On September 20, 2007, Frontline filed a
request that the Commission adopt a no-profit, no-loss principle for the
service to be provided by the shared network to the public safety
community.[^11] On September 24, 2007, Frontline filed a petition for
reconsideration requesting that the Commission, among other things,
change the designated entity rule, address the potential for excessive
concentrations of spectrum, lower the reserve price for the D
Block,[^12] limit the default penalty only to cases of bad faith,
confirm certain points regarding the build-out requirement for the
shared network, and clarify the signal coverage requirement for the
shared network.[^13]

*Waiver of Designated Entity Rule*. On November 15, 2007, the Commission
waived one of its designated entity eligibility rules -- the
impermissible material relationship rule - for the D block license.[^14]

## PSST and Cyren Call 

In the summer of 2007, in anticipation of being granted the proposed
PSBL, PSST was organized as a non-profit corporation under the laws of
the District of Columbia.[^15] The initial officers were President
Harlin McEwen, International Association of Chiefs of Police; Vice
President Bob Gurss,[^16] Association of Public-Safety Communications
Officials-International; and Secretary --Treasurer Alan Caldwell,
International Association of Fire Chiefs. In further anticipation of
being selected as the PSBL licensee, PSST issued a request for proposal
("RFP") seeking an advisor during July of 2007. Ten entities responded
to the RFP in August 2007. On October 5, 2007, Cyren Call [^17] was
formally selected as advisor to PSST.[^18] Prior to being formally
selected as PSST's advisor, Cyren Call was actively involved in the 700
MHz proceeding with key executives of Cyren Call working closely with
Messrs. McEwen, Gurss, and Caldwell.[^19]

*NPSTC's Statement of Requirements.* At some point during the late
summer/early fall of 2007, the National Public Safety Telecommunications
Council ("NPSTC")[^20] commenced work on a Statement of Requirements
("SoR") for the nationwide public safety network.[^21] The
telecommunications industry had the opportunity to be involved in the
drafting the SoR.[^22] The work on the SoR continued through the fall
with multiple versions being created.[^23] Further, Commission staff was
apprised of the SoR process and provided comments on the NPSTC SoR.[^24]

*PSST Bidder Information Document.* Sometime after being named the
advisor to PSST, Cyren Call started work on a Bidder Information
Document ("BID"). This document was drawn from the technical
requirements found in the NPSTC SoR, but also included information
regarding the nature of the relationship between PSST and the D Block
licensee.[^25] Prior to release of the BID publicly, the document was
shown to Commission staff by Cyren Call representatives. Specifically,
on or about November 12-13, 2007, while attending a NPTSC conference in
Atlanta, Georgia, Cyren Call staff shared a draft of the BID with Jeff
Cohen, Senior Legal Counsel, PSHSB. Mr. Cohen, in turn, shared the
contents of the BID with Erika Olsen, Deputy Chief, PSHSB. Mr. Cohen
conveyed the staff comments on the draft BID to Cyren Call (David
Knutson and Jay Paull), requesting that an estimate for the annual lease
payment to PSST of approximately \$55 million be taken out of the draft
BID document.[^26]

On November 15, 2007, PSST issued the BID v. 1.0.[^27] The estimate for
the lease payment was not contained in the November 15, 2007 version
released to the public. The BID v. 1.0, however, stated that PSST
intended to request an "annual fixed payment amount."[^28] PSST released
the final version of the BID -- v. 2.0 -- on November 30, 2007.[^29] BID
v. 2.0 also noted that PSST intended to request an annual fixed payment
amount.[^30] On the same date, one of the potential bidders, Frontline,
issued a press release stating that the final version of the BID
dovetailed "with Frontline's own business and construction plan."[^31]

*Cyren Call and PSST Meetings with Potential Bidders.* In late 2006 and
early 2007, the executives of Cyren Call and what would become the
executive committee of PSST had several initial meetings with interested
entities regarding the public-private partnership that they were
pursuing at that time.[^32] The meetings included executives of what
would become Frontline as well as representatives from Verizon. The
majority of the meetings held with interested entities and potential
bidders, were, however, held in the fall of 2007 (*i.e.*, after the
issuance of the 700 MHz Second Report and Order).

Upon its appointment as advisor to PSST in October 2007, Cyren Call
formally announced that it was engaged in meetings, telephone calls, and
discussions with potential bidders and other interested entities.[^33] A
non-exhaustive list of parties that Cyren Call met or had contact with
included: (1) AT&T, (2) Clearwire, (3) Council Tree, (4) Frontline, (5)
Google, (6) David Grain, (7) ICO, (8) MSV, (9) Northrop-Grumman, (10)
Qualcomm, (11) TerreStar, and (12) Verizon. These meetings appeared to
serve multiple purposes - educating all interested parties about the D
Block, obtaining feedback from potential bidders and vendors, and
generally creating as much interest as possible in the D Block
auction.[^34]

*Final Meetings Prior to the Quiet Period.* As noted above, the BID v.
1.0 was released on November 15, 2007 and the final version 2.0 was
released on November 30, 2007. During the period between the release of
versions 1.0 and 2.0, Cyren Call had additional meetings with potential
bidders. Of note for the purposes of this investigation was that on
November 28, 2007, Keith Kaczmarek, David Knutson, and Tom Sidman of
Cyren Call met with Verizon representatives to review the BID v. 1.0
document. The meeting lasted approximately half a day and involved
various Verizon personnel (Don Brittingham, Mike Centore, Molly Feldman,
and Bob Lashkari).[^35] The meeting covered the relationship between the
PSBL licensee and the D Block winning bidder. The estimated lease
payment was also discussed at this meeting. Finally, on November 29,
2007, the same team with the addition of Bob Burkhardt of Cyren Call met
with Tom Peters and Scott Wiener of Frontline. The meeting lasted about
one hour. Cyren Call reviewed the BID and also discussed the estimated
lease payment.

After November 30, 2007, neither Cyren Call nor PSST appears to have had
any meetings with potential bidders. On December 4, 2007, Alan Caldwell
of PSST sent an email to the Board of Directors of PSST and to the staff
of Cyren Call stating that the Chief of PSHSB contacted "Chairman Harlin
McEwen and advised that as of close of business yesterday, December 3,
2007, the Public Safety Spectrum Trust Corporation and its agent, Cyren
Call Communications, should have no further conversations/contacts with
potential D Block bidders."[^36] []{#__RefHeading___Toc196218625
.anchor}

## Auction Timeline

*Auction Filing Window Opens.* On November 19, 2007, the filing window
opened for the submission of Form 175 (Short Form) Applications to
participate in Auction 73.

*Auction 73 Quiet Period Starts.* On December 3, 2007, at 6:00 PM ET the
Short Form application filing window closed. The Commission received 266
short-form applications.[^37] Pursuant to Section 1.2105(c) of the
Commission's rules, the anti-collusion prohibitions commenced on that
date and would remain in effect until after the down payment deadline
for the Quiet Period.

*Upfront Payment Deadline.* On January 4, 2008, at 6:00 PM E.T., all
Auction 73 upfront payments were due from bidders with accepted
applications. Frontline did not make an upfront payment. On January 14,
2008, the Commission released the *Qualified Bidder Public Notice*[^38]
listing the name of each of the 214 qualified bidders.

*Auction 73*. Auction 73 commenced on January 24, 2008, and closed on
March 18, 2008. The provisionally winning bids for the A, B, C, and E
Block licenses exceeded the aggregate reserve prices for those blocks.
The provisionally winning bid for the D Block license, however, did not
meet the applicable reserve price and thus did not become a winning
bid.[^39] On March 20, 2008, the Commission decided not to re-offer the
D Block license immediately in Auction 76 (the contingent auction,
subsequent to Auction 73). The Commission stated that this decision
would provide additional time to consider other options with respect to
the D Block spectrum.[^40]

*Down Payment Deadline/Quiet Period Ends*. The Auction 73 down payment
deadline was on April 3, 2008. After that date, the anti-collusion rules
prohibitions lifted.

## *Ex Parte* Meetings at the Commission.[^41] 

*PSST/Cyren Call Meetings.* On November 5, 2007, Mr. Gurss of PSST and
Messrs. Knutson, O'Brien, and Sidman of Cyren Call met with Derek Poarch
(Chief of the PSHSB), Ms. Olsen (PSHSB Deputy Bureau Chief), Tim
Peterson (PSHSB Chief of Staff), and Mr. Cohen (PSHSB Senior Legal
Counsel) to discuss the NPSTC SoR^.^[^42]

On November 13, 2007, Messrs. Knutson and Paull of Cyren Call met with
Mr. Cohen regarding technical and non-technical aspects of the BID being
prepared by PSST.[^43]

On December 6, 2007, Messrs. Caldwell and McEwen of PSST and Messrs. Cox
and O'Brien of Cyren Call, met with Messrs. Cohen, Peterson, and Poarch
and Ms. Olsen of PSHSB, Ajit Pai, (Office of General Counsel ("OGC"),
Associate General Counsel), David Horowitz (OGC Assistant General
Counsel), Fred Campbell (WTB Bureau Chief), James Schlichting (WTB
Deputy Bureau Chief), Roger Noel, (WTB Division Chief), Margaret Wiener
(WTB Division Chief), and John Branscome (WTB Division Chief).[^44] On
December 13, 2007, Messrs. Caldwell and McEwen of PSST and Mr. Cox of
Cyren Call, met with Mr. Cohen of PSHSB, Gary Michaels (WTB Deputy
Division Chief), Paul Murray (WTB Legal Advisor), Ms. Wiener, and Mr.
Schlichting of WTB.[^45] Both meetings involved a discussion of the
Commission's anti-collusion rules.

*Frontline Meetings.* On December 13, 2007, Mr. Hundt and Mr. Jonathan
Blake of Frontline met with Chairman Kevin Martin, Aaron Goldberger
(Legal Advisor to Chairman Martin), and Mr. Campbell (WTB Bureau Chief).
The meeting was characterized as discussing "FCC's default provisions as
they apply in the context of the upcoming NSA negotiations between the D
Block high bidder and the PSBL."[^46] A meeting on the same topic was
held on December 14, 2007, when Mr. Blake met again with Mr. Campbell.
Additionally on the same date, a meeting was held on the same topic when
Gerard Waldron and Mr. Blake from Frontline met with Bruce Gottlieb
(Legal Advisor to Commissioner Michael Copps).[^47]

#   {#section .unnumbered}

# [II. SCOPE OF THE INVESTIGATION]{.underline}  {#ii.-scope-of-the-investigation .unnumbered}

As noted above, at the end of March 2008, Mr. Feld of MAP and PISC[^48]
sent a letter to Chairman Martin seeking, among other things, an
investigation focused on "the allegations surrounding a purported
meeting between Frontline, its financial backers, and Morgan O'Brien of
Cyren Call that may have had the effect of preventing Frontline from
attracting needed capital and discouraging other bidders."[^49] Similar
allegations regarding meetings between Frontline and Cyren Call were
also mentioned in press reports and "blogs" on the Internet.[^50] In its
letter, and in a subsequent interview with the author of the letter,
PISC did not suggest any wrongdoing or violation of Commission rules on
the part of Cyren Call and/or PSST. Nevertheless, in its letter PISC
requested that the Commission "determine whether concerns over the
possible financial exposure of the D Block winner and/or the role of
Cyren Call as an intermediary played a role in the failure of D Block to
attract bidders."[^51]

The investigation focused on the role of Cyren Call as advisor to PSST,
the meetings held between and among Cyren Call, PSST and potential
bidders in Auction 73, and how, if at all, statements at these meetings
(or Cyren Call's role) affected the decisions of potential bidders in
regard to Auction 73. In particular, the investigation inquired into
whether Cyren Call had discussed with potential bidders a specific
monetary amount for the lease payment mentioned in the BID and, if so,
whether Cyren Call's stated position affected subsequent decisions by
potential bidders. The investigation did not look into the broad-ranging
policy criticisms and suggestions made in the PISC letter of March 19,
2008 concerning the public-private partnership envisioned by the
Commission in the *700 MHz Second Report and Order*. Those matters are
under consideration by the Commission and thus conclusions by the OIG on
broader regulatory policies would not be appropriate at this time.

Consistent with the focus of this investigation, investigators
interviewed key players in Cyren Call, PSST, and Frontline.
Investigators also interviewed knowledgeable individuals with other
potential bidders, and knowledgeable individuals within the Commission.
As noted in the chronology, the investigators determined that Cyren Call
had, as alleged, provided potential bidders with an estimate of the
annual lease payment PSST would seek in future negotiations. Therefore,
the investigation addressed the question as to the extent to which this
estimate or other actions by Cyren Call deterred bidding. To provide
context for that analysis, the investigators sought information from
potential bidders and other knowledgeable parties as to why certain
entities decided not to participate in the auction and/or did not bid on
the D Block license. The investigation limited this aspect to reporting
the reasons given by Frontline and other potential bidders for declining
to bid and avoided any forward-looking policy analysis.

# [III. SUMMARIES OF WITNESS INTERVIEWS]{.underline} {#iii.-summaries-of-witness-interviews .unnumbered}

The OIG investigatory team interviewed a number of individuals with
regard to whether the failure of the D Block to attract bidders was
related to any behavior of Cyren Call, and whether other reasons existed
that caused or contributed to causing the lack of bidders for the D
Block. Those individuals included Harold Feld of MAP; Morgan O'Brien,
Thomas Sidman, and David Knutson of Cyren Call; Alan Caldwell and Harlin
McEwen of PSST; Reed Hundt, Scott Wiener, and Tom Peters of Frontline;
Don Brittingham of Verizon; Brian Fontes of AT&T; and Dean Brenner of
Qualcomm. Additionally, the investigatory team interviewed Jeff Cohen
and Erika Olsen of the FCC's PSHSB. Please note that the interview
summaries below are largely expressed in the words of the interviewees.

## Harold Feld, Senior Vice President, Media Access Project:

Mr. Feld was interviewed on March 27, 2008. Mr. Feld said that he wrote
about Frontline dropping out of the auction on his blog
([www.wetmachine.com](http://www.wetmachine.com/)). He received calls
and emails from three sources who told him the same story about a
meeting between Mr. O'Brien and unknown Frontline people (including
investors) regarding the potential network sharing agreement and related
costs involving the future D Block winner. Mr. O'Brien made a lot of
demands regarding the shared public/private network during the meeting.
In particular, Mr. O'Brien discussed a fee of \$50 million per year for
ten years that the D Block winner would have to pay to have access to
the public safety spectrum. Mr. Feld frequently acknowledged that he had
no direct knowledge of Frontline's reasons for dropping out of the
auction and was only speculating. Other reasons he posited were: the
market, the high reserve price, the vague business model, the project
size, and the potentially difficult network negotiations with Cyren
Call. Mr. Feld said his sources all believed that it was the meeting
between Mr. O'Brien and the Frontline backers that caused Frontline to
back out.

Mr. Feld does not know who was present during this alleged meeting or
when it took place. Mr. Feld stated his anonymous sources were not
associated with the bidders, were not present at the alleged meeting,
and obtained their information second hand. Mr. Feld did not hear any
information regarding any other potential bidders meeting with Cyren
Call. Mr. Feld said he does not believe that Mr. O'Brien talked to
Frontline with the intention of scaring it off from bidding. Confirming
his statement in the March 19, 2008 letter, Mr. Feld was not able to
state whether this alleged meeting between Mr. O'Brien and Frontline was
improper or violated any FCC rules.

## FEDERAL COMMUNICATIONS COMMISSION

**[Public Safety and Homeland Security Bureau]{.underline}**

### Jeff Cohen, Senior Legal Counsel, PSHSB:

Mr. Cohen was interviewed on March 28 and again on April 3, 2008. Mr.
Cohen stated in these interviews that he did not know anything about a
meeting between Mr. O'Brien and Frontline; although Mr. O'Brien
commented on the allegation at the recent March 24, 2008 meeting with
the FCC. At this meeting, Mr. O'Brien seemed anxious to give his side of
the story once the anti-collusion rule had lifted. Mr. O'Brien briefly
stated that the allegations that he demanded \$50 million per year for
ten years were not accurate and that he thought the press had
misrepresented the situation. Mr. O'Brien did not deny that he talked
about costs and even suggested that he might have even thrown some
numbers out. Mr. O'Brien stressed that every aspect of Cyren Call's
business plan was open to negotiations with the D Block winner.

Mr. Cohen attended a NPSTC convention in Atlanta from November 12-14,
2007. At that meeting, he thinks he recalled being shown a document by
Cyren Call officials. He does not recall the names of the Cyren Call
officials. He was not sure what the document was, but remembered it
contained a particular number that was discussed. He did not recall it
as a lease payment, but thought perhaps it was an upfront payment. Mr.
Cohen stated that he may have advised that this number should not be
contained in the document. He did not recall checking the matter with
others at the FCC. Mr. Cohen did not recall advising Cyren Call that it
could tell potential bidders about the number. He said he thought it
unlikely that he would have given "permission" of this sort. However, he
does not think this would have been problematic, as long as the
conversations were outside the Quiet Period as defined by the
Commission's anti-collusion rules.

### Erika Olsen, Deputy Chief, PSHSB:

Ms. Olsen was interviewed on April 4, 2008. Ms. Olsen recalled that Mr.
Cohen called her from a NPSTC convention and reported that he had been
given a draft of the BID document that contained a \$50 million lease
payment number. She thought it was \$50 million, but also said she was
not entirely sure whether she was remembering this number correctly or
instead recalling it from numerous recent press accounts. Mr. Cohen
reminded Cyren Call that there would be negotiations for the NSA
following the auction with the winning bidder; that the FCC will be the
final arbiter of what is reasonable in these negotiations; that it might
not be a good idea to prejudice those negotiations or influence bidders
by placing an actual number in the BID; and that it might appear that
the FCC had endorsed this number when it had not. Cyren Call was advised
(although not actually instructed) to take the number out. Her belief is
that she and Mr. Cohen agreed on this message and that he then conveyed
it to Cyren Call. She did not recall who Mr. Cohen spoke to at Cyren
Call. She did not recall any discussion concerning whether Cyren Call
could convey this number verbally although she did not perceive a
problem with Cyren Call's doing so.

## FRONTLINE WIRELESS

### Reed Hundt, Vice Chairman, Frontline:

Mr. Hundt was interviewed on April 1, 2008. Mr. Hundt stated that
Frontline had many problems with the D Block auction that came from the
FCC's *700 MHz Second Report and Order*, oral and written
representations from PSST and Cyren Call, and the auction process in
general. Some of Frontline's problems with the order were the build-out
requirement, control given to the PSBL licensee on system requirements,
and the bankruptcy rules. The order also did not apply the open rules
(proposed by Frontline) to the D Block, but to the C Block instead. Mr.
Hundt thought this would create more competition for Frontline on the D
Block while also making it harder to attract investors. Frontline also
had issues with the technical and business requirements that PSST
compiled in the NPSTC SoR and the two versions of the BID documents. The
requirements were very specific and sometimes unreasonable. The strict
requirements made the D Block appear more expensive and riskier than had
been previously understood by Frontline.

In meetings in the fall of 2007, Mr. O'Brien told Mr. Hundt he wanted to
create a Mobile Virtual Network Operator ("MVNO") for Cyren Call which
would allow Cyren Call to purchase spectrum from Frontline at wholesale
prices and sell it to the public safety community for a higher price to
gain a profit for Cyren Call. Mr. O'Brien also stated at the meeting
that it was possible that the total of the network costs would be
between \$10 and \$12 billion which was about \$5 to \$7 billion more
than the cost to build a commercial network, according to Mr. Hundt.
Cyren Call officials explained that the target set of customers would
not be limited to first time responders, but would also include all
critical infrastructure people which increased the customer group from
the 3 million people Frontline had estimated to 13 million people,
according to Cyren Call's estimates.

The next issue that arose was that Cyren Call released information which
stated that the D Block licensee would be responsible for making annual
lease payments to PSST for a period of ten years for access to the
public safety spectrum. Mr. Hundt learned from some unknown parties that
\$50 or \$55 million was the quoted, not demanded, lease payment amount.
He never heard the information first hand from PSST or Cyren Call. PSST
first mentioned a lease payment in the BID v. 2.0, but did not specify
an amount in any documents. The problem for Frontline investors was the
unknown factor of the lease payment and knowing that the figure would
not be resolved until negotiations concluded after the auction. The
lease payment, however, was not "the straw that broke the camel's back"
in Frontline's decision not to bid on the D Block.

The D Block winner was not guaranteed the D Block license just because
it placed the highest bid. The license was contingent on a successful
negotiation with PSST that would follow the auction and payment to the
FCC. If the two entities were not satisfied over the details and costs,
the FCC would settle any disputes. If negotiations could not be settled
and there had to be another auction, the D Block winner from the first
auction would have to pay a fine equal to the difference between the
first auction's winning bid and the second auction's winning bid. In
addition to the fine, the first D Block winner would have to forfeit 10
percent of its bid amount. The possibility of a very expensive fine in
addition to not being granted the D Block license was "very bad for
investors." Frontline met with the FCC often to discuss its problems
with the default penalty. Mr. Hundt did not identify the Commission
staff with whom Frontline met.

Frontline's decision not to bid on the D Block was made on January 1 or
2, 2008. Frontline was holding out for as long as possible to see if it
could raise enough money for the minimum bid. The issues most frequently
discussed among the Frontline investors were the build-out requirement,
the unknown nature of the lease payments, and the penalty process. Mr.
Hundt did not think that Mr. O'Brien was acting in bad faith or
purposefully misrepresenting PSST when he was meeting with potential
bidders prior to the auction. Rather, Mr. Hundt thought that Mr.
O'Brien's approach was "candid, audacious, and aggressive," but that in
the end his claims were all made to eventually benefit the public safety
community. He saw Mr. O'Brien's ideas for the shared network as
unreasonable from a commercial perspective and in terms of costs. Mr.
Hundt was clear that he was not accusing Cyren Call or PSST of an
unlawful act. The way the auction was set up did not work with
Frontline's ideas.

### Scott Wiener, Senior Vice President, Partner Development, Frontline:

Mr. Wiener was interviewed on April 4 and again on April10, 2008. Mr.
Wiener stated that he met with investors from September through December
2007. The potential partners wanted to know how much it would cost to
build the network, in addition to the size of the addressable market,
and how many customers would use the network. There were a lot of
unclear issues relating to the costs for the D Block licensee. Frontline
discussed the technical requirements of the network (provided by NPSTC
in the SoR) and then later the business requirements of the network
(provided by PSST in the BID documents) at meetings with Cyren Call and
PSST. These meetings were supposed to help Frontline get a better
understanding of the network, but they did not really talk through the
issues since a negotiation could not happen until after the auction had
concluded.

On November 29, 2007, Mr. Wiener and Mr. Peters met with Mr. Sidman, Mr.
Kaczmarek, Mr. Knutson, and Mr. Bob Buckles[^52] from Cyren Call. Mr.
O'Brien might have stopped by the meeting, but he was not considered an
attendee. Mr. Sidman led the meeting and discussed the lease payment
costs. This was the first time Mr. Wiener had attended a Cyren Call
meeting where this was discussed. According to Mr. Wiener, Mr. Sidman
explained that the lease payment was estimated to be \$55 million per
year for the length of the license. They were just providing information
and made it clear that the amount was up for negotiation. Frontline
tried to explore how focused Cyren Call was on the \$55 million amount.
Mr. Sidman said that PSST business plan called for that amount, but that
they were open to different arrangements for getting that amount. Mr.
Sidman also stated that they had intended to put this amount in the BID
v. 2.0, but that the FCC asked them not to specify an amount in the
document. Mr. Wiener thought the lease payment was just one of the
problems that was "keeping investors up at night." Mr. Wiener thought
that the biggest concerns for Frontline's investors were the level of
uncertainty about the negotiation results with its unknown costs
(including the lease payment), the default penalty, and the very
specific and costly requirements.

### Tom Peters, **Senior Director, Public Safety & Regulatory Engineering, Frontline**:

Mr. Peters was interviewed on April 8, 2008. Mr. Peters stated that he
is a member of the Frontline Technology Team. He met with Cyren Call on
a few occasions to discuss the NPSTC requirements and the BID documents.
As the process progressed, some of the technical requirements for the
network got less specific and less firm while others became
recommendations rather than requirements. The level of uncertainty
increased about the outcome of the negotiations and how much the shared
network would cost the D Block licensee.

According to Mr. Peters, on November 29, 2007, Mr. Peters and Mr. Wiener
met with Cyren Call's Mr. Sidman, Mr. Kaczmarek, Mr. Knutson, and Mr.
Buckles[^53] to discuss the BID v. 2.0 and the differences from the
first BID document. Mr. Wiener asked about the ballpark figure for the
lease payment that was mentioned in the second BID document. Mr. Sidman
responded that the annual lease payment amount was \$55 million for a
period of ten years and that they had calculated that number from PSST's
operating costs. The \$55 million was a starting point which was subject
to change and negotiation. The first payment would be due at the signing
of the NSA.

At the meeting, Mr. Sidman also discussed the addressable market stating
that the customer base could be as high as 13 million people including
3 - 4 million first time responders with heavy network usage and another
9 million other emergency personnel with a lower level of usage. Cyren
Call would have priority over the public safety group and leave the
commercial users for the D Block licensee.

After the meeting, Frontline discussed how it thought that the
additional 9 million public safety users would greatly increase the
network's traffic which would negatively affect the value of the
commercial side. Mr. Peters believed that Frontline thought that the FCC
would back them up on limiting the number of public safety users.
Investors, however, was still concerned about the unknown factors that
would greatly affect the network. Mr. Peters thought investors were also
concerned with Cyren Call's role in the network (especially with Cyren
Call's plan to be a MNVO), whether Frontline would be able to
successfully negotiate with Cyren Call, and the network's high level of
uncertainty and unknown costs.

## PUBLIC SAFETY SPECTRUM TRUST

### Harlin McEwen, Chairman, PSST:

Mr. McEwen was interviewed on April 8, 2008. Mr. McEwen stated that
before the start of the auction, PSST and Cyren Call frequently met with
potential D Block bidders. They were "not restricted in any way" in what
they could say in these meetings. Mr. McEwen said PSST's whole purpose
was to encourage bidders to bid. PSST met with AT&T, Frontline, Google,
and Verizon; although Frontline was the only company that made a public
statement that it intended to bid on the D Block. Mr. McEwen met with
Frontline on many occasions. Qualcomm, which was the only company that
bid on the D Block, never met with Mr. McEwen. The FCC told Mr. McEwen
on or about December 3rd that PSST and Cyren Call could not have
conversations with potential bidders after the Quiet Period commenced.
PSST obeyed the rules and refrained from discussions with potential
bidders during the Quiet Period.

Mr. McEwen did not attend any meetings in which 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. This amount would have been
partially based on the winning bid amount and the type of company that
won the D Block. Mr. McEwen stated that the lease payment number was
"fuzzy" because at that point there were unknown costs involving an
unknown partner. In the first year when the network was not built there
would not be any revenue. In later years as revenue grew, the lease
payment amount might not be as high as \$50 million. Any excess money
from the lease payments would go back to public safety users or to the D
Block licensee. Cyren Call was not going to be paid by PSST based on
revenue, but just for its services. The \$50 million amount was not set
in stone as an absolute requirement. Mr. O'Brien was in no position to
demand this amount since the amount was up for negotiation at the end of
the auction. Mr. McEwen disagreed with Mr. O'Brien's decision to even
share this number with potential bidders.

Mr. McEwen stated that he was surprised that Frontline did not bid since
it had praised the November 30^th^ BID in a press release. There were,
however, problems evident early on. Prior to the auction, Frontline
frequently met with PSST and was continuously trying to push PSST into
negotiation-like conversations as if they were already the D Block
licensee. Mr. McEwen thought Frontline's demands were unreasonable. Mr.
McEwen thinks the biggest issue with Frontline not bidding was that they
were just not able to raise enough money. Mr. McEwen thought that once
Frontline withdrew from the auction, the major carriers were no longer
threatened by a possible competitor and perhaps lost its interest in the
D Block. All of the potential bidders wanted less requirements and less
cost which is why Mr. McEwen thought the C Block was more successful
than the D Block in the end.

### Alan Caldwell, Secretary-Treasurer, PSST: 

Mr. Caldwell was interviewed on April 8, 2008. Mr. Caldwell stated that
PSST had numerous discussions with Cyren Call. These discussions
involved determining the best possible approach to potential bidders and
those that PSST and Cyren Call thought should become potential bidders,
but had not shown an interest in the D Block auction.

Mr. Caldwell also met with members of the wireless industry regarding
the D Block including AT&T, Clearwire, Frontline, and Verizon. With
regard to Mr. Caldwell's meeting with Verizon, Mr. Caldwell stated that
Verizon clearly wanted to get a feel for what a public safety broadband
network would look like. PSST did most of the talking at the meetings
with Verizon and discussed preemption, 4G technology, hardening of sites
(a public safety requirement), business models - how the public safety
network would operate, who would manage the database, who would manage
the operation centers, what technology would be used, what were the
build-out requirements, when would it be expected, and how satellite
would be incorporated into the network. With regard to PSST's meetings
with AT&T, Clearwire, and Frontline, the meetings were informational -
PSST was trying to find out what those companies had in mind, and they
were trying to find out what was in PSST's mind.

On the issue of the BID document, spectrum lease payments, and the
inclusion of a specific lease payment amount in discussions between
Cyren Call and potential bidders, Mr. Caldwell stated that he was aware
that a number was being "bandied around" as the BID was being put
together. Additionally, PSST made sure that they got feedback from the
FCC regarding the BID document, although they did not get it through
official channels. Mr. Caldwell stated that this was done because PSST
had to know that the FCC would be proud of what PSST did, so PSST could
not afford to have the document come out and have someone at the FCC say
"what were you thinking?" According to Mr. Caldwell, the first feedback
from the FCC was with respect to the SoR. Mr. Derek Poarch and Mr. Cohen
of the FCC's PSHSB communicated to PSST that the language in the SoR was
too much "thou shalt" and should be toned down.

As to the impact of the amount of the estimated spectrum lease payment
or any other items in the BID v. 1.0 on potential bidding activity, Mr.
Caldwell stated that between the release of the first and second BIDs,
PSST and Cyren Call were of a like mind that they needed to get as much
information as possible to potential bidders as to whether there were
any drop-dead items and it appeared to Mr. Caldwell that there were
none. Mr. Caldwell stated that everyone wanted to know whom the public
safety people would be, how big the group would be, and did the
definition of public safety users include critical infrastructure. Some
of them may have disagreed with PSST's approach, but the BID set forth
that the public safety customers were the ones that PSST wanted to
manage---customer service, provision of devices, achieving what the
public safety customers need, and being generally responsible for the
public safety users. Mr. Caldwell was not aware that any potential
bidders found anything in the BID that would have caused them to avoid
the auction. Mr. Caldwell stated that he was nearly certain that
Frontline would participate in the D Block auction because they set up
its business to do just that. He was reasonably certain that AT&T or
Verizon would bid.

## CYREN CALL

### Morgan O'Brien, Chairman, Cyren Call:

Mr. O'Brien was interviewed on April 2, 2008. Mr. O'Brien stated that
Cyren Call, under the direction of PSST, participated in the NPSTC
conference, created the BID to help inform potential bidders, and sought
to stir up as much interest among potential bidders for the D Block
spectrum as possible. To this end, Mr. O'Brien stated that he and others
from Cyren Call contacted potential bidders and entities that Cyren Call
felt "ought to" be interested in bidding and met with Verizon and
Frontline after the release of BID v. 1.0.

Mr. O'Brien also stated that he believed that Mr. Knutson had received
guidance from Mr. Cohen of the PSHSB before the release of BID v. 1.0 on
the issue of including the estimated spectrum lease payment amount in
the BID. Mr. O'Brien understood that Mr. Cohen discussed this with other
members of the PSHSB, and subsequently told Mr. Knutson and Mr. Paull
that the number should be removed from the document and that Cyren Call
was allowed to discuss the estimated amount in meetings with potential
bidders.

As to why the D Block auction failed to attract bidders, Mr. O'Brien
stated that he was dismayed that Frontline did not bid, but not too
surprised that others did not. From Mr. O'Brien's perspective it
appeared that Frontline was enthusiastic about the auction, and he cited
Frontline's release of a November 30, 2007 press release commending
PSST. With regard to other potential bidders, Mr. O'Brien was less
surprised that there was not a lot of activity. He said that during the
lead-up to the Quiet Period, he did not feel like many of the potential
bidders were asking the questions that would demonstrate a heightened
level of interest in the auction. He stated that initially he thought
perhaps AT&T and Verizon would compete in another area of the auction
for spectrum and, then, whoever lost in that area would find the D Block
spectrum more attractive. However, when AT&T announced on October 9,
2007 that it had purchased another telecommunications entity, Mr.
O'Brien's hope receded because he believed that AT&T's purchase made an
AT&T-Verizon spectrum bidding contest less likely.

As to the impact of the disclosure to potential bidders of the estimated
spectrum lease payment amount, Mr. O'Brien did not believe that this
significantly impacted the D Block bidding activity. According to Mr.
O'Brien, neither Frontline nor any other potential bidder questioned
Cyren Call as to the \$50 million dollar estimate. In the BID documents
and in private discussions, Cyren Call made clear that this figure was
subject to negotiation. Mr. O'Brien opined that the default bidder
penalty provision was likely a problem for the potential bidders and
stated that Cyren Call, itself, opposed the default bidder penalty
provision.

### Thomas Sidman, Executive Vice President, Business Processes, Cyren Call:

Mr. Sidman was interviewed on April 2, 2008. Mr. Sidman recounted that
while attempting to drum up interest in the D Block, he became aware
that some of the people whom he contacted were simply not interested.
Mr. Sidman also stated that the \$50 million estimated payment amount
was mentioned in the November 29, 2007 meeting between Mr. Knutson of
Cyren Call and Mr. Wiener and Mr. Peters of Frontline. It was presented
to Frontline as a yearly payment for each of the ten years of the
license term. He also said that this number was presented to Frontline
as being subject to negotiation.

### David Knutson, Executive Vice President, Development, Cyren Call: 

Mr. Knutson was interviewed on April 7, 2008. Mr. Knutson stated that
while attending the NPSTC conference on November 13, 2007 in Atlanta,
Georgia, he gave Mr. Cohen the draft BID for any feedback PSHSB might
have. According to Mr. Knutson, Mr. Cohen took the draft and on November
14, 2007 discussed with Mr. Knutson removing the \$55 million figure
from the document before communicating it to potential bidders. Mr.
Knutson said that Cyren Call removed the dollar amount from the draft
BID, but he asked whether Cyren Call could mention an actual dollar
figure during its discussions with potential bidders. During his
interview on this matter, Mr. Knutson stated that Mr. Cohen agreed to
Cyren Call's request.

Mr. Knutson stated that Cyren Call met with Verizon on November 28, 2007
and with Frontline on November 29, 2007. During his interview with the
OIG, Mr. Knutson stated that in both meetings Cyren Call communicated
that it was PSST's position, subject to negotiation, that the spectrum
lease payment would be \$50 million per year over the ten-year term of
the license. Mr. Knutson stated that neither Verizon nor Frontline
provided much feedback during the meetings. Verizon had some questions
about whether there would be two lease payments due during the first
year but no specific questions on the amount. He did not recall any
specific comments about the lease payments from Frontline.

## VERIZON WIRELESS

### Don Brittingham, Director of Wireless Policy, Verizon: 

Mr. Brittingham was interviewed on April 10, 2008. Mr. Brittingham
stated during this interview that Verizon was interested in supporting
the public safety community and to that end, met several times during
the summer and fall of 2007 with members of the public safety community
as well as with Cyren Call.[^54] Additionally, Mr. Brittingham
participated in the October 2007 NPSTC conference in Boulder, Colorado
at which the SoR was vetted.

Mr. Brittingham explained during his interview that Verizon had a number
of issues with regard to the D Block auction. First among those issues
was the uncertain nature of the post-auction negotiation process between
the auction winner and PSST as to the NSA. It appeared to Mr.
Brittingham that should these negotiations fall through, the D Block
auction winner would be liable for a default payment under FCC auction
rules. Moreover, the potential failure of negotiations might also mean
that the D Block auction winner missed a chance to win other spectrum
licenses in Auction 73 because of the allocation of limited financial
resources to the D Block that would have been more appropriately
allocated elsewhere.

Mr. Brittingham identified additional issues with the D Block. He stated
his belief that the 700 MHz rules required the auction winner to build a
costly nationwide network. He also stated that the spectrum would be
subject to "ruthless preemption" under the proposed priority access
regime proposed by PSST. Thus, Mr. Brittingham presented the
unattractive scenario of a very costly network with diminished
commercial value.

Another issue of uncertainty mentioned by Mr. Brittingham was the
definition of "public safety provider." Mr. Brittingham considered the
definition of public safety provider to be unsettled. Without knowing
with certainty how "public safety provider" was to be defined, measuring
the impact of the creation of the public-private nationwide network was
not possible and, thus, difficult to account for in a business model.

Regarding the issue of the impact of announcing the estimated spectrum
lease payment amount, Mr. Brittingham stated that Cyren Call informed
him of the \$50 million payment at a meeting on November 28, 2007. As he
understood this, Cyren Call stated that it was its position, subject to
negotiation, that the winning bidder for D Block would make spectrum
lease payments of \$50 million a year for each of the ten years included
in the license. He further stated that, although this figure was
significant, he did not believe that Verizon Wireless ever got to the
point of evaluating the appropriateness of this amount because of the
other issues and uncertainties surrounding the D Block.

## QUALCOMM INCORPORATED

### Dean Brenner, Vice President, Government Affairs, Qualcomm:

Mr. Brenner was interviewed on April 10, 2008. Mr. Brenner said that he
was aware of several discussions that Qualcomm had with Cyren Call
regarding the D Block (none of which took place during the Quiet
Period). During these discussions, Qualcomm never discussed an intention
to bid on the D Block or even participate in the auction. Cyren Call
never encouraged Qualcomm to bid on the D Block. Qualcomm's main purpose
in these discussions was to market its technology to Cyren Call, as the
agent for public safety. Mr. Brenner said Qualcomm placed a bid on the D
Block partly to preserve eligibility to bid on the D Block or another
block, and partly because it was interested in ensuring that the D Block
spectrum was used. Qualcomm was interested in providing wireless
solutions to public safety and wanted its technology used with the
shared network. At the time, Qualcomm had not decided whether it would
continue to bid on the D Block or use its bidding units elsewhere if
they were outbid.

Qualcomm decided not to withdraw its bid in order to keep its options
open until the last moment. In the end, Qualcomm decided not to bid
against itself (as it was the only bidder) on the D Block for several
reasons. These include, but are not limited to, its conclusion that the
build-out requirement was too onerous, and the fact that it was far more
expensive than any of the current networks.

## AT&T

### Brian Fontes, External Affairs, AT&T:

Mr. Fontes was interviewed on April 11, 2008. Mr. Fontes said that AT&T
met with Cyren Call twice and PSST twice in the period from September
through early October 2007. AT&T wanted to find out more about PSST and
its ideas for the network. There were no discussions about the NPSTC or
BID documents. Mr. Fontes' role at these meetings was to gain
information about the D Block. He was not involved in the auction
decision-making for AT&T. At the time AT&T met with Cyren Call, Cyren
Call had not been chosen as the advisor of PSST. Cyren Call explained
that 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. Lease payments were not discussed at any
of these meetings. AT&T, in the OIG's opinion, did not express any views
that were inconsistent with the views of other interviewees in this
investigation.

# [IV. DISCUSSION]{.underline} {#iv.-discussion .unnumbered}

This section addresses the questions identified earlier in the Scope of
Investigation, in light of the uncontroverted facts collected and the
witness interviews that were conducted during the course of this
investigation.

## Question 1: Alleged Meeting With Morgan O'Brien and Alleged Statements to Frontline.

Concerning the alleged meeting between Mr. O'Brien of Cyren Call and
Frontline and the statements alleged in press reports regarding the \$50
million lease payment estimate, the investigation revealed the
following:

On November 29, 2007, a meeting was held between Cyren Call and
Frontline at which statements closely matching the allegation were in
fact made. Mr. O'Brien was not the speaker. Mr. O'Brien was present only
at the start of the meeting to "shake a few hands." The speaker who
uttered the statements appears to have been Mr. Sidman. Also present at
the meeting for Cyren Call were Mr. Kaczmarek and Mr. Burkhardt. Present
for Frontline were Mr. Wiener and Mr. Peters. PSST was not represented.

At the meeting, Cyren Call discussed various aspects of what would be
released the next day as the second public version of the BID. In
discussing Section 3.5, Spectrum Lease Payment, Cyren Call said that
PSST's business plan contemplated an initial \$50 million lease payment.
Cyren Call also stated that PSST's plan contemplated payments of \$50
million per year over a ten-year period. All witnesses agreed that these
statements were not couched as a demand, but rather as a reflection of
what was contained in the PSST business plan. Both Frontline
representatives said they sensed a high degree of flexibility and a
willingness to negotiate this number when the time came.[^55]

With respect to the ten-year duration of the payment, Mr. McEwen of PSST
stated that PSST's business plan did not entail a set payment from the D
Block winner over 10 years, but that future years' payments could change
for a host of reasons. Mr. McEwen was not at the November 29th meeting.
However, Mr. Wiener, Frontline's business consultant who attended the
meeting, clearly recalled that Cyren Call suggested that the D Block
winner might not be responsible for the entire payment over the ten-year
period, but that Cyren Call was open to "alternative ways that the
payment could be delivered," including the possibility of receiving a
portion of it from public safety customers.

Mr. Hundt, one of the Frontline founders and a key Frontline
decision-maker, stated that, following the November 29 meeting,
Frontline and its investors did not interpret the Cyren Call statements
concerning the lease payment as a hard and fast demand. Instead, as will
be discussed further below, the possibility of an uncertain future lease
payment was only one of many uncertainties that troubled Frontline's
investors. The \$50 million number was never shown in writing to
Frontline or other potential bidders.

It appears that Cyren Call's statements to Frontline on the lease
payment issue were intended to be primarily informational, and also to
mark the starting point for future negotiations on the issue. This was
the last meeting before the release of BID v. 2.0 and in fact the last
meeting Cyren Call had with Frontline before the start of the Quiet
Period. Many prior meetings were held between the entities in which
various sorts of information were provided; for example, information
concerning specifications for the type of network PSST and Cyren Call
believed would have to be built by the D Block winner to serve public
safety customers. It appears that the Commission's staff was aware that
Cyren Call might share its lease payment estimate with potential bidders
and did not express a concern.

The OIG, therefore, concludes that statements reflecting a \$50 million
payment per year over a ten-year period, were in fact made to Frontline.

## Question 2: Whether Cyren Call's Statements Deterred Bidding in the D Block.

The reasons for Frontline's and others' decisions not to bid for the D
Block were somewhat complex. Nonetheless, we were able to reach several
definite conclusions.

1.  **Frontline**

Frontline appears to have been the party most interested in bidding on
the D Block, if it could resolve its many concerns. Frontline met with
Cyren Call and PSST frequently in an effort to resolve those concerns.
Frontline's greatest overall concern was with the uncertainty it would
face if it won the D Block auction. This uncertainty manifested itself
in many ways and, from the standpoint of investors, translated into a
wide range of risks that Frontline would face. The major areas of
uncertainty and risk can be summarized as follows:

*Bid Default Rule/Negotiating Leverage.* One major concern was that
Frontline would win the auction, but then not be able to negotiate a
satisfactory NSA with Cyren Call. If Frontline were unwilling to proceed
along the lines demanded by Cyren Call, if the FCC took Cyren Call's
side of the dispute, and if Frontline then opted to pull out, it was not
clear whether, or to what extent, the FCC would apply its bid default
rule. The FCC had reserved any decision concerning potential application
of this rule. One possibility, though, was imposition of a penalty and
holding Frontline liable for the difference between its bid and a
subsequent lower winning bid. This could translate to a penalty of many
millions of dollars.[^56]

Because of this potential indeterminate regulatory penalty, Frontline
believed that Cyren Call would have much greater leverage in the NSA
negotiations. Added to this disparity in perceived leverage was
Frontline's fear that the FCC would have a tendency to support the
perceived needs of the PSBL licensee in the interests of public safety.
The assurance that the FCC would monitor the negotiations, require good
faith, and be the final arbiter of disputes was small comfort to
Frontline, as it faced no set parameters as to what Cyren Call could
demand in good faith. This left its investors facing a significant and
uncertain financial exposure with respect to the amount bid and a
potential penalty.

*System Specifications, Cost, and Viability.* Frontline faced
considerable uncertainty as to what would be required to finance the
build-out of the nationwide public safety network contemplated in the
FCC's orders. It did financial modeling and met often with PSST and
Cyren Call in an effort to ascertain what would be required. However,
Mr. Hundt explained that as public documents were released showing the
system expectations of PSST and Cyren Call, and as meetings between the
entities to discuss these system specifications progressed, Frontline
became more and more concerned with the system requirements that it
thought PSST and Cyren Call would demand, with the costs that these
would entail, and with the business viability of the venture.

*Quality of Service.* It became apparent to Frontline that PSST regarded
the quality of service necessary for public safety to be much higher
than that considered acceptable for commercial use. This was borne out
by Mr. McEwen, who freely acknowledged that emergency responders could
not be subject to the kind of interruption and loss of service
experienced by the typical cell phone user. A system impervious to such
interruptions would be much more expensive to build.

*Preemption.* It became clear that the groups that, in PSST's view, fell
into the public safety user category were much larger than Frontline had
originally anticipated. This would mean that commercial users on the D
Block might be subject to the very kinds of service interruptions --
during periods of peak preemption -- deemed unacceptable to public
safety. Again, Mr. McEwen confirmed Frontline's perception with respect
to the groups PSST sought to serve and provide with accompanying
preemption rights.

*Population coverage/build-out.* It became clear that PSST expected the
D Block winner to build out the system to reach a higher percentage of
the nation's public safety users than Frontline had anticipated. Mr.
Hundt explained that the costs necessary to reach only a few additional
users would entail a vastly disproportionate additional cost.

Without criticizing these views held by PSST/Cyren Call, Mr. Hundt
explained that the realization gradually dawned on Frontline that the
nationwide shared network the D Block winner would likely have to build
would be far more costly, and yet perhaps less reliable in terms of
commercial use, than Frontline had first thought. Of course, these
things were all subject to negotiation, but as explained above,
Frontline felt it would be at a disadvantage in such negotiations.

*Revenues.* Another major concern was over projected revenues. Although
the goal was to build a network capable of reaching all public safety
users, there was no requirement and no guarantee that any users would
actually sign up to use the system. Nor was there any guarantee that
commercial users would sign on. Frontline would be competing against the
other major providers.

*Cyren Call as MVNO.* Finally, Frontline was concerned with Cyren Call's
anticipated role as the MVNO,[^57] the sole contractor with public
safety users. Unlike PSST, Cyren Call was a for-profit company.
Frontline was generally concerned that it might be unable to reach all
interested public safety users.

In context of the major uncertainties and risks described above, the OIG
concluded that the lease payment was just one of many concerns for
Frontline. While the lease payment estimate provided on November 29,
2007 was not viewed favorably by potential investors, it was not seen as
an absolute demand, and certainly was not regarded as a deal-breaker,
according to Mr. Hundt. Cyren Call's statements regarding lease payments
did not deter Frontline from continuing to pursue its strong interest in
bidding on the D Block after November 29, 2007. Frontline attempted to
come to grips with the many concerns described above until just before
the start of the auction, but decided just before the deadline for
upfront payments, along with its investors, that the risks and
uncertainties were too serious to justify its participation in the
auction.

The OIG, therefore, concludes that Cyren Call's statements regarding a
\$50 million per year payment was not the deciding factor in Frontline's
decision not to bid on the D Block, but was merely one of many concerns
it had regarding the auction.

2.  **Other Potential Bidders in the D Block**

The statements regarding the expected lease payment were made to only
one other potential bidder in the D Block -- Verizon. Verizon was given
the \$50 million estimate on November 28, 2007. It is clear that the
statements did not deter Verizon from bidding in the D Block auction.
Verizon had all but decided not to bid by the end of November 2007, and
never evaluated the lease payment amount carefully. The statements
regarding the expected lease payment were not made to AT&T, and did not
deter AT&T from bidding on the D Block.

The OIG, therefore, concludes that the lease payment issue by itself did
not affect potential bidders' decisions with respect to the D Block, but
rather that these entities' decisions were made for many of the same
reasons given above for Frontline's decision not to participate in the D
Block.

## Question 3: Rules Potentially Violated.

The FCC advised all parties, both formally and informally, of the need
to observe the anti-collusion rule[^58] by refraining from all
communications after December 3, 2007, the start of the Quiet Period and
until that period ended.[^59] We found no evidence of any communications
among the entities during this period, even when certain parties were
anxious to set the record straight as to the allegations investigated
and reported on here. On the basis of the information before us, we
conclude that there is no evidence of any violation of the FCC's
anti-collusion rule.

The rule constraining parties to negotiate the NSA in good faith[^60]
also does not appear to be implicated. The rule was intended to take
effect after the auction had produced a winner. Moreover, the statements
that were made do not appear to have been made in bad faith, nor could
they have prejudiced later good faith negotiations. Cyren Call complied
with the FCC's one informal request in this regard by taking the
estimated lease payment amount out of the BID v. 2.0. As also explained
above, the statements did not have the alleged adverse effect of
deterring bidding in the auction.

In summary, the OIG concluded that no FCC rules appear to have been
violated and that no referral is warranted.

#  {#section-1 .unnumbered}

# [V. CONCLUSION]{.underline} {#v.-conclusion .unnumbered}

This investigation has concluded that the lease payment estimates
conveyed to Frontline on November 29, 2007 were informational in nature,
were not made in bad faith, and by themselves had no deleterious effect
on the auction. The lease payment was only a drop in one of the many
"buckets" that concerned Frontline and other potential bidders
interviewed. As a consequence, we conclude that the lease payment was
not, *per se*, the cause of the D Block's failure to attract a bid at
the reserve price. Rather, the many layers of uncertainty and risk, and
the growing prospect of high network costs, as described above, were
responsible for potential bidders' decisions not to bid.

[^1]: The Quiet Period commenced on December 3, 2007, at 6:00 PM ET,
    when the Short Form application filing window closed and ended on
    April 3, 2008, at 6:00 PM ET, when the down payment deadline
    expired. After that date, the anti-collusion rules prohibitions were
    lifted.

[^2]: Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT
    Docket No. 06-150, Revision of the Commission's Rules to Ensure
    Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket
    No. 94-102, Section 68.4(a) of the Commission's Rules Governing
    Hearing Aid-Compatible Telephones, WT Docket No. 01-309, Biennial
    Regulatory Review -- Amendment of Parts 1, 22, 24, 27, and 90 to
    Streamline and Harmonize Various Rules Affecting Wireless Radio
    Services, WT Docket 03-264, Former Nextel Communications, Inc. Upper
    700 MHz Guard Band Licenses and Revisions to Part 27 of the
    Commission's Rules, WT Docket No. 06-169, Implementing a Nationwide,
    Broadband, Interoperable Public Safety Network in the 700 MHz Band,
    PS Docket No. 06-229, Development of Operational, Technical and
    Spectrum Requirements for Meeting Federal, State and Local Public
    Safety Communications Requirements Through the Year 2010, WT Docket
    No. 96-86, *Report and Order and Further Notice of Proposed
    Rulemaking*, 22 FCC Rcd 8064 (2007) ("*700 MHz Further Notice*").

[^3]: Section 337(f) of the Communications Act of 1934, as amended,
    defines public safety services, 47 U.S.C. § 337(f); 47 C.F.R. §
    90.523.

[^4]: Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT
    Docket No. 06-150, Revision of the Commission's Rules to Ensure
    Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket
    No. 94-102, Section 68.4(a) of the Commission's Rules Governing
    Hearing Aid-Compatible Telephones, WT Docket No. 01-309, Biennial
    Regulatory Review -- Amendment of Parts 1, 22, 24, 27, and 90 to
    Streamline and Harmonize Various Rules Affecting Wireless Radio
    Services, WT Docket 03-264, Former Nextel Communications, Inc. Upper
    700 MHz Guard Band Licenses and Revisions to Part 27 of the
    Commission's Rules, WT Docket No. 06-169, Implementing a Nationwide,
    Broadband, Interoperable Public Safety Network in the 700 MHz Band,
    PS Docket No. 06-229, Development of Operational, Technical and
    Spectrum Requirements for Meeting Federal, State and Local Public
    Safety Communications Requirements Through the Year 2010, WT Docket
    No. 96-86, Declaratory Ruling on Reporting Requirement under
    Commission's Part 1 Anti-Collusion Rule, WT Docket No. 07-166,
    *Second Report and Order*, 22 FCC Rcd 15,289, 15,428-79 ¶¶ 386-553
    (2007) ("*700 MHz Second Report and Order*").

[^5]: The D Block is located in the upper portion (the 758-763 and
    788-793 MHz bands) of the 700 MHz Band. *See* "Auction of 700 MHz
    Band Licenses Scheduled for January 24, 2008; Notice and Filing
    Requirements, Minimum Opening Bids, Upfront Payments and Other
    Procedures for Auction 73 and 76," *Public Notice*, DA 07-4171, 22
    FCC Rcd 18,141, 18,143 n.1 (2007)(WTB).

[^6]: 47 C.F.R. § 27.14(m)(1); *700 MHz Second Report and Order*, ¶ 437.

[^7]: Auction of 700 MHz Band Licenses; Revised Procedure for Auctions
    73 and 76: Additional Default Payment for D Block Set at Ten Percent
    of Winning Bid Amount; Disputed Issues in the Negotiation of Network
    Sharing Agreement, *Public Notice*, DA 07-4514 (rel. Nov. 2, 2007)
    (WTB PSHSB).

[^8]: Public Safety and Homeland Security Bureau Solicits Applications
    for the 700 MHz Public Safety Broadband License, *Public Notice*, DA
    07-3885 (rel. Sept. 10, 2007) (PSHSB).

[^9]: Implementing a Nationwide, Broadband, Interoperable Public Safety
    Network in the 700 MHz Band, *Order*, FCC 07-199 (rel. Nov. 19,
    2007).

[^10]: This is not an exhaustive list of filings, merely a list of
    filings that are useful to understanding the position of Frontline
    prior to the meetings in November of 2007.

[^11]: Request to Further Safeguard Public Safety Service, filed by
    Frontline Wireless, LLC, dated September 20, 2008.
    <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519731514.>

[^12]: Frontline subsequently withdrew its request to lower the reserve
    price. Amendment to Petition for Reconsideration, filed by Frontline
    Wireless, dated December 4, 2007.
    <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519816736.>

[^13]: Petition for Reconsideration, filed by Frontline Wireless, LLC,
    dated September 24, 2007.
    <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519743269.>

[^14]: Waiver of Section 1.2110(b)(3)(iv)(A) of the Commission's Rules
    For the Upper 700 MHz Band D Block License, *Order*, FCC 07-197
    (rel. Nov. 15, 2007).

[^15]: PSST's Articles of Incorporation and Bylaws can be found at
    [http://www.psst.org/orgdocuments.jsp](http://www.psst.org/orgdocuments.jsp )
    (last visited on April 10, 2008).

[^16]: Mr. Gurss was subsequently replaced by Kevin McGinnis in November
    of 2007.

[^17]: The following is a list of Cyren Call's main staff: (1) Morgan
    O'Brien is a co-founder and Chairman; (2) Keith Kaczmarek is a
    co-founder and President; (3) Tom Sidman is a co-founder and
    Executive Vice President, Business Processes; (4) John Melcher is
    Executive Vice President, External Affairs of Cyren Call
    Communications; (5) David Knutson is the Vice President of
    Development; (6) Brian McAuley serves on the Board of Directors and
    chairs its Finance Committee; (7) John Lane is the Senior Policy
    Advisor to the Chairman; (8) Bruce Cox is the Vice President of
    Government Affairs; (8) Thomas D. Hickey is Vice President and
    General Counsel; (9) Greg Meacham is Vice President Industry
    Relations for Cyren Call Communications; (10) Tim O'Regan is Vice
    President of Communications, overseeing all matters pertaining to
    the company's external communications; and (11) Jay Paull is Vice
    President and Managing Director, Strategic Initiatives;
    [http://www.cyrencall.com//index.php?option=com_content&task=view&id=16&Itemid=57](http://www.cyrencall.com/index.php?option=com_content&task=view&id=16&Itemid=57  )
    (last visited on April 8, 2008).

[^18]: [http://www.psst.org/documents/PSSTPress100507.pdf](http://www.psst.org/documents/PSSTPress100507.pdf )
    (last visited on April 10, 2008).

[^19]: Cyren Call was founded by Morgan O'Brien along with other former
    associates from Nextel. O'Brien Interview; Caldwell Interview;
    McEwen Interview.

[^20]: NPSTC is a federation of organizations representing public safety
    telecommunications. The NPSTC Charter can be found at
    <http://www.npstc.org/charter.jsp>.

[^21]: A working meeting was held on the SoR in Boulder, Colorado on
    October 23-24, 2007. Brittingham Interview; Knutson Interview.

[^22]: NPSTC listed the following industry members as participating in
    the SoR: (1) 4DK, (2) Airvana, (3) Alcatel-Lucent, (4) AT&T, (5)
    Bearing Point, (6) Cyren Call, (7) Data Radio, Directions, (8) EADS,
    (9) Ericsson, (10) Frontline Wireless, (11) Inmarsat, (12)
    KT Signals, (13) LCC International, (14) Motorola, (15) Nortel, (16)
    Northrop Grumman, (17) Qualcomm, (18) RCC Consultants, Inc., (19)
    Tyco Electronics, and (20) Verizon. The NPSTC SoR list of
    participants can be found at
    [http://www.npstc.org/documents/700%20SoR%20Participants%20v2.pdf](http://www.npstc.org/documents/700 SoR Participants v2.pdf )
    (last visited on April 10, 2008). David Knutson Interview (noting
    open process and presence of website).

[^23]: SoR version 0.6 dated November 8, 2007.

[^24]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519810022>
    (describing the scope of the meeting); Alan Caldwell Interview.

[^25]: Knutson Interview.

[^26]: Knutson Interview; Jeff Cohen Interview; Erika Olsen Interview.
    *See also*
    <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519811781>
    (describing the meeting between Jeff Cohen and Cyren Call stating
    that "the parties discussed both technical and non-technical aspects
    of the Bidder Information Document ("BID") being prepared by PSST in
    anticipation of the shared Public Safety-commercial broadband
    network to be deployed pursuant to the rules adopted in the
    above-identified proceedings").

[^27]: <http://www.psst.org/bidsummary.jsp> (last visited on April 4,
    2008).

[^28]: BID v. 1.0, Section 3.5 entitled "Spectrum Lease Payment."

[^29]: Found at <http://www.psst.org/documents/BID2_0.pdf> (last visited
    on April 4, 2008).

[^30]: BID v. 2.0, Section 3.5 entitled "Spectrum Lease Payment." This
    section was edited slightly between versions 1.0 and version 2.0 but
    in ways that were not material to the report.

[^31]: Found at
    [http://www.frontlinewireless.com/uploads/File/PSST%20release%2011.30.07.doc](http://www.frontlinewireless.com/uploads/File/PSST release 11.30.07.doc)
    (last visited on April 10, 2008).

[^32]: Hundt Interview (early meetings with O'Brien held approximately
    in the end of 2006); O'Brien Interview (Hundt meeting in 2006);
    Brittingham Interview (June 22 & 28, 2007); McEwen Interview.

[^33]: Witness interviews of O'Brien and Knutson. Additionally, in a
    press release dated October 11, 2007, Cyren Call states that
    "representing the interests of PSST, has now begun conversations
    with parties potentially interested in bidding for the upper 700 MHz
    D Block license to partner with Public Safety in the creation of a
    nationwide, wireless broadband network."
    [http://www.cyrencall.com//images/cc%20press%20release%2010%2011%2007%20final.pdf](http://www.cyrencall.com//images/cc press release 10 11 07 final.pdf)
    (last visited on April 8, 2008).

[^34]: Knutson Interview (*e.g*., many Mobile Satellite Services (MSS)
    operators had meetings with Cyren Call but he thought it was more to
    get information than to actually participate in the auction).

[^35]: Brittingham Interview; Knutson Interview; and O'Brien Interview.

[^36]: Email from Mr. Caldwell, dated December 4, 2007, to the PSST
    Board of Directors (subsequently forwarded to PSHSB). As provided by
    the Commission's rules, the Quiet Period began at 6:00 PM Eastern
    Time on December 3, 2007. 47 CFR §1.2105(c).

[^37]: Auction of 700 MHz Band Licenses: Upfront Payment Deadline
    Rescheduled for January 4, 2008; Mock Auction Rescheduled; Status of
    Short-Form Applications to Participate in Auction 73, *Public
    Notice*, DA 07-5030 (rel. December 18, 2007)(WTB).

[^38]: Auction of 700 MHz Band Licenses; 214 Bidders Qualified to
    Participate in Auction 73; AU Docket No. 07-157, *Public Notice*, DA
    08-993 (rel. January 14, 2008)(WTB).

[^39]: Auction of 700 MHz Band Licenses closes; Winning Bidders
    Announced for Auction 73, *Public Notice*, DA 08-595 (rel. March 20,
    2008)(WTB).

[^40]: Auction of the D Block License in the 758-763 and 788-793 MHz
    Bands, *Order*, FCC 08-91 (rel. March 20, 2008) (WTB).

[^41]: The record in the proceedings is replete with *ex parte* filings.
    The ones identified here were determined to be relevant to the
    investigation. Interested parties can search the commission's ECFS
    for a complete record of *ex partes* filed by PSST, Cyren Call,
    and/or Frontline.

[^42]: [http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519810022.](http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519810022.  )

[^43]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519811781.>

[^44]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519817290.>

[^45]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519818914.>

[^46]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519819091.>

[^47]: <http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519819091.>

[^48]: PISC consists of, in alphabetical order: The Consumer Federation
    of America (CFA), Consumers Union (CU), CUWiN Foundation (CUWIN),
    EDUCAUSE, Free Press (FP), Media Access Project (MAP), the National
    Hispanic Media Coalition (NHMC), the New America Foundation (NAF),
    Public Knowledge (PK), and U.S. PIRG.

[^49]: Letter from Harold Feld, Senior Vice President, Media Access
    Project, for PISC, to Chairman Martin, Federal Communications
    Commission, dated March 19, 2008 ("PISC Letter").

[^50]: For example, <http://www.wetmachine.com/totsf/item/1022>,
    "Frontline Wireless Bid Failed Amid Investor Concern, Bid Rules,"
    Corey Boles (alleging that Mr. O'Brien informed Frontline in one
    meeting the winner of the D Block auction would be required to pay
    \$500 million over ten years to lease access to spectrum controlled
    by public safety in order to build the wireless broadband network).

[^51]: PISC Letter.

[^52]: Although Mr. Wiener remembered Mr. Buckles attending the meeting
    for Cyren Call, Cyren Call clarified that Mr. Bob Burkhardt attended
    the meeting, and that Cyren Call does not have an employee by the
    name of "Buckles."

[^53]: See the preceding footnote.

[^54]: Verizon met with Harlin McEwen both before and after Mr. McEwen
    and others incorporated PSST.

[^55]: ^53^ As discussed elsewhere, the FCC's rules contemplated
    negotiations over the NSA between the PSBL licensee and the D Block
    winner. These negotiations would not commence until the auction
    concluded.

[^56]: The FCC has applied the rule in the past. *See, e.g.,* *BDPCS v.
    FCC*, 351 F.3d 1177 (D.C. Cir. 2003) (upholding application of
    two-part bid default rule, resulting in \$67 million penalty).

[^57]: Cyren Call intended to serve as a Mobile Virtual Network Operator
    ("MVNO"), which would allow it to purchase spectrum from the D Block
    licensee at wholesale prices and sell it to the public safety
    community.

[^58]: 47 CFR §1.2105(c).

[^59]: *See, e.g.*, n. 36 *supra.*

[^60]: 47 CFR § 27.1315(d).