Government and public safety officials said Wednesday they remain committed to plans for a national wireless network that could solve critical communication problems during emergencies, even though the most likely builder of the network has shut down.
Industry analysts said Frontline Wireless' demise throws into doubt the viability of the ambitious plan, which would impose unusual constraints on a private operator by forcing it to share airwaves with public safety agencies.
Frontline was expected to be a leading bidder in the Federal Communications Commission auction of wireless airwaves, which starts Jan. 24.
"We are still hopeful there will be someone who will emerge as being willing to take on this challenge," the FCC said in a statement.
The FCC is offering to sell relatively cheaply a chunk of spectrum to a carrier that will agree to share the airwaves with police and fire agencies during crises. Public safety agencies often have been unable to communicate with each other during disasters such as Hurricane Katrina because they use different frequencies.
Frontline, backed by Silicon Valley heavyweights and co-founded by former FCC chairman Reed Hundt, was the only prospective bidder that voiced interest in buying the spectrum and sharing it with public safety. But Hundt said this week the company has ceased operations. He did not elaborate, but research firm Stifel Nicolaus said the start-up was unable to raise financing.
Stifel analyst Blair Levin said Frontline was the most viable bidder that could have provided fresh competition to the established wireless giants. The company, for example, pushed through FCC rule changes so it could qualify for 25% bidding discounts while still being able to lease the spectrum to other carriers.
Levin, however, said other start-ups likely would be turned off by auction rules that give public safety officials final say on matters such as the type of gear used to build the network. Meanwhile, the network builder would be saddled with billions of dollars in costs.
Harlin McEwen, chairman of the Public Safety Spectrum Trust, the entity assigned to negotiate with the auction winner, disagreed that the spectrum-sharing rules are onerous. "We are committed to this process," he said.
Jessica Zufolo of Medley Global Advisors said in a report Wednesday that it's possible no one will step forward to bid on the spectrum. That would force the FCC to reauction it without the mandate to share it with public safety, enticing the big wireless carriers, she said.
Levin said Frontline's demise could prompt AT&T att or Alltel to bid now and win the airwaves cheaply. He said a large company could afford to abandon the project if it disliked the terms.