This discussion of governance for a public-private partnership is based on preparations undertaken by the Federal Communications Commission (FCC) to auction 62 MHz of radio frequencies in the 700 MHz band of radio spectrum in conformance with requirements in the Deficit Reduction Act. The FCC issued rules, in a Second Report and Order , concerning the allocation of this spectrum, the auction, the final disposition of spectrum assigned for public safety use, and the creation of a public-private partnership to build and operate a network for public safety users, with agreements for sharing spectrum. Responding to a requirement in the Balanced Budget Act of 1997, the FCC had previously set aside 24 MHz in the same bandwidth for public safety users. In the Second Report and Order , it proposed to set aside 10 MHz from the public safety frequency bands to be paired with 10 MHz of auctionable spectrum to create a shared network of 20 MHz for a nationwide broadband network. The decision to create a shared network was centered on two conclusions, endorsed by the FCC and the majority of stakeholders: (1) that a network with national coverage would meet public safety needs for robust communications capabilities, information, and interoperability; and (2) that sharing spectrum and network facilities with commercial users would benefit public safety by providing new sources of funding, economies of scale in building the needed network, and access to additional spectrum in times of large-scale emergencies, among other benefits. As structured by the FCC, two adjacent spectrum license-holders would collaborate so that their combined spectrum capacity would be adequate to support a broadband network. In anticipation of obtaining a commercial partner, the FCC assigned a national license for 10 MHz to a not-for-profit corporation formed to represent public safety interests. This public safety license was created from the 24 MHz originally assigned to public safety through regional, state, and local negotiations for spectrum assignments. It is administered by a Public Safety Broadband Licensee (PSBL), chosen by the FCC. From the frequencies intended for commercial use, the FCC designated 10 MHz to be paired with public safety's 10 MHz to create a shared network. This license was to be sold to a commercial enterprise as part of the auction of licenses at 700 MHz, Auction 73. The commercial license, known as the D Block, attracted only one bidder at the auction, which concluded March 18, 2008. Qualcomm, Inc. placed an opening bid of $472 million but there were no other bidders; consequently, the reserve price of $1.3 billion set by the FCC was not met. In an Order adopted and released on March 20, 2008, the FCC directed the Wireless Telecommunications Bureau not to proceed with the re-auction of the D Block because it is "in the public interest to provide additional time to consider all options ..." The FCC therefore initiated a review of its rules regarding licensing, structuring a partnership, setting service requirements, and other rules and obligations established prior to the commencement of Auction 73. It prepared a further notice of proposed rule-making that sought comments on identified options that might be pursued in disposing of the D Block. From these comments, the FCC prepared a Third Further Notice of Proposed Rulemaking that lays out new auction rules for the D Block. For the most part, the new rules represent modifications of the rules prepared for Auction 73. A single, nationwide license has been maintained for the Public Safety Broadband Licensee but the commercial license will be offered as either a national license or in smaller licenses covering 58 regions. A number of public safety associations and officials have asked that the PSBL allow local public safety networks to operate on and manage access to the public safety spectrum. The national licensee would assure common standards and interoperability across all systems while allowing local networks to negotiate sharing arrangements and services that met their specific needs. From the perspective of Congressional policy, one of the key issues that has emerged from the discussions of the auction is how best to combine public and private spectrum license ownership with the important goal of a national capability for public safety communications support. The FCC and the Office of Emergency Communications at the Department of Homeland Security (DHS) are pursuing separate paths for developing this communications response. According to testimony, neither agency has undertaken to incorporate each other's goals in their specific planning. Another major policy consideration for Congress is the identification of funding solutions for various parts of the program. As discussed below, the FCC has proposed to resolve these needs through levies on the commercial partner or requirements for performance. Public sector funding is another possibility that may receive renewed interest in the current economic situation. An economic stimulus program that includes funding for improvements to critical infrastructure could include a component for public safety networks. By temporarily assuming the role of the commercial partner, the federal government could preserve the principle of the shared network, assure the construction of the network, and sell the ongoing business to the private sector. It was noted above that there is general agreement that sharing spectrum and network facilities with commercial users would benefit public safety by providing new sources of funding, economies of scale in building the needed network, and access to additional spectrum in times of large-scale emergencies. These benefits are generally accepted as concrete and desirable and, although there is much discussion about how to achieve the goal of sharing resources between the public and private sectors, the consensus remains that this is the goal. For the purpose of analysis, this report further assumes three needs that must be met for an effective solution. These are Sufficient spectrum for a broadband network. The amount of spectrum needed to operate a nationwide broadband network, with the coverage required by public safety, is at least 20 MHz, according to most experts. Source of funds. A source of funds needs to be identified to meet unavoidable costs to public safety associated with the creation of a single, national public safety license. These costs include the costs of rebanding as part of the new allocation plan for 700 MHz set forth by the FCC, and the costs of spectrum license administration and frequency coordination—tasks usually managed through state or local agencies. Management structure. The key elements for a public-private partnership as set forth by the FCC are: 1) a Public Safety Broadband Licensee; 2) a public-private partnership; and 3) a Network Sharing Agreement, required in order to build and manage a network shared by commercial users and emergency personnel. There is also a frequently mentioned assumption that is not associated with a particular solution. Commercial partner(s) will use the shared network for consumer services and therefore incentives are required to build out a network that meets the higher standards required for public safety. This assumption ignores the projections for significant demand from the business sector for mobile access to data and the requirements of many businesses for security and reliability equal to or greater than those of public safety. Since the conclusion of the auction, there has been a vigorous public debate about why the D Block license was not successfully auctioned and what steps might be taken going forward to assign the license. Some of the reasons why the D Block failed to attract a winning bid have been circulated through the media and presented at congressional hearings. Discussion of possible flaws in the structure of the auction, and how some rules may have discouraged potential bidders, is only part of the debate. The debate also encompasses other solutions to meet the goal of proving an interoperable public safety broadband network. Principle points under consideration can be categorized as Modify the auction rules to eliminate FCC requirements that might have discouraged potential bidders and keep the structure of the public-private partnership intact. This course assumes that the business case for the public-private partnership is sound and changing auction rules, without changing the structure of the partnership, will be sufficient to attract a bidder. Eliminate the network sharing requirement, while empowering public safety to negotiate independently for public-private partnerships or other sharing agreements, and auction the D Block license without the public safety requirements. This course assumes that there is both a structure and adequate spectrum capacity to enable different entities to collaborate successfully in constructing a nationwide capability for public safety interoperability. Use federal funds to build a public safety network. This course is usually predicated on using proceeds from the auction of 700 MHz frequencies and assumes that there are sufficient funds and a management structure to achieve the goal. This course notably requires congressional action to authorize expenditures. Choose a different organizational structure for managing a public safety network that shares resources and infrastructure with commercial and other spectrum-license holders. This course requires congressional action to authorize expenditures and may further require legislation to provide the organizational structure. These solutions are not mutually exclusive and several proposals combine different elements. In its Second Further Notice of Proposed Rulemaking , the FCC seeks comments on a wide range of options and solutions that it has identified. Most of these would fall within one of the categories summarized below. At a hearing on April 15, 2008, all five FCC commissioners affirmed their support for re-auctioning the D Block under rules that would produce a winning bidder and provide a commercial partner for public safety. Their remarks also indicated the intention of the FCC to maintain and increase its oversight role in supervising the public-private partnership. The rule changes for the auction could be modifications of requirements for the D-Block winning bidder—such as lowering the reserve price or eliminating the financial penalty for failure to negotiate a completed Network Sharing Agreement—or they could include, for example, changes in the network sharing agreement or the terms applicable to the Public Safety Broadband Licensee (PSBL). Another course of action that has been proposed is to re-auction the D Block without encumbrances. These encumbrances include provisions that require paying up to $10 million to cover rebanding costs in the 700 MHz band; expensive build-out requirements; and the network sharing agreement. Some proposals would eliminate the network sharing agreement entirely, offering the D Block as a commercial license under terms similar to the other blocks of licenses assigned through Auction 73. It has been suggested by some that the network sharing agreement will be reworked to accommodate the strongest potential bidders.