FCC's Audit on Why Frontline, Others Didn't Bid on D Block

A little over a month ago, Federal Communications Commission (FCC) chairman Kevin Martin asked the Commission's Office of Inspector General to investigate allegations raised by The Media Access Project's Harold Feld that a meeting between representatives from Cyren Call and Frontline Wireless led to Frontline's decision to not participate in the FCC's recent 700 MHz spectrum auction.

Frontline was expected to bid for the D Block license that was set aside for creation of a nationwide public safety network. Instead, it announced in early January that it was closing for business and, ultimately, only one company (Qualcomm) placed a bid that fell short of the $1.33 billion reserve price for the D Block.

Inspector General Kent Nilsson issued his report last Friday, concluding that Cyren Call did not break any FCC rules and that its discussion with Frontline and others about lease payment estimates was only one of the factors that influenced Frontline's decision not to participate in the spectrum auction. Which begs the question, why did Frontline -- and others -- not bid on the D Block license as planned?

The answer, as the report explains, is somewhat complex. But in Frontline's case, it seems that primarily investors were uneasy about "facing a significant and uncertain finanical exposure with respect to the amount bid and a potential penalty" that the FCC might impose.

The Media Access Project credited the FCC with taking swift action to investigate but said the audit only proves that "the auction was doomed to failure." The FCC will take up the issue of what to do with the D Block again at its next open meeting on May 14th.

The full Inspector General's report, which summarizes interviews with key officials from Frontline, Qualcomm, Cyren Call and Verizon, is available for download. You can also learn more by reading Ars Technica's postmortem.