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Questions Raised on Frontline Wireless LLC’s Demise

Telecom analyst Jessica Zufolo of the Medley Advisors LLC stated that concerns have risen regarding the future of the FCC and the D Block plus the success of the auction itself. Re-auctioning of the D Block would be considered if its reserve price is not met, as mentioned by Zufolo.

Frontline has been focused on getting the D Block license, one of the more than a thousand licenses being auctioned starting January 24. Frontline is a startup spearheaded by Haynes Griffin, cofounder of Vanguard Cellular, and officials from the Bush and Clinton administration. The company boasted of a top-notch team organization of Silicon Valley backers, high-profile lawyers, and well-known political insiders until a $128 million payment to the FCC upfront on January 4 was demanded that it claimed to be closed for business and shut down.

It has been earlier reported that Frontline was okay with the upfront payment terms but was not decided on the $1.3 billion necessary for the D Block license. But this claim does not go with the company’s FCC filing early in December—where Frontline withdrew its dare to the reserve price, claiming that the waiver will most likely increase the chances of the reserve price being met.

The mortgage-credit crisis plus some other factors unfortunately may have been the cause of the company being able to make the first payment to the government.

Public safety groups are therefore worried about whether other D-Block bidders will come forward and what the federal officials will have to do if that happens. After all, these groups have spent a lot of time and effort in fostering the creation of a public safety network after the aftermath of the horrible September 11 tragedy.

Chairman Harlin McEwen said that “The Public Safety Spectrum Trust thinks it is important for the FCC to continue to do all that it can to advance the public-private partnership concept intended to build a nationwide broadband network for public safety.” McEwen confirmed their enthusiasm however for what the FCC has accomplished. McEwen is chairman of the nonprofit organization authorized to collaborate with the D Block winner.

Director Robert Gurss of the legal and government affairs (Association of Public Safety Communications Officials International) further stated that APCO supports the rules and procedures established by the FCC, which are all geared to promote the implementation of a national public safety network. Gurss and his group are confident that the partnership between the private and public sector will come out of the FCC auction and after the negotiation and agreement between and among the Public Safety Spectrum Trust.

With Frontline leaving, Verizon Wireless , AT&T Mobility , and Google Inc. are the most likely bidders that will be left for the D Block auction. Others are wondering on the possibility that a dark horse may come out or that other tech companies will simply forgo bidding on it with the hope that it will be re-auctioned at a cheaper price and less strict regulatory strings.

Kevin Martin, FCC chairman, mentioned that he’d be glad to see a company win the license in the auction. This after he received kudos from the public safety sector after the approval of the 700 MHz band plan a half a year back. National mobile phone carriers were generally in disagreement with the imposition of new conditions for much of the previous year’s D Block rulemaking. But Frontline shrugged off the criticisms with the thought that they were part of the industry’s fearful reaction to competition.

Analyst Ric Prentiss of Raymond James and Associates speculates Frontline’s demise as a big sales opportunity for its competitor Sprint and a bad news for other tower companies. He adds that the government will probably opt for a prioritized public safety wireless server.