The problem is rising wireless prices due to an increasingly concentrated telecommunications sector, Reed Hundt told FCC Commissioner Jonathan Adelstein during a meeting on Friday, June 22nd.

The solution, at least for public safety broadband, is an "E-block" licensee that stewards about 12 MHz of the 700 band.

Hundt's company, Frontline Wireless, wants the FCC in its upcoming 700 MHz auction to sell off this chunk of spectrum with one proviso: that the winner, which Frontline hopes will be itself, will be required to use the space to build an open access, national public safety broadband communications network.

Public safety spectrum distributors around the country—for fire, medical, police, and emergency—will be able to tap into the E-block at wholesale rates, according to the Frontline plan.

Hundt came to his meeting with Adelstein armed with a Powerpoint presentation that presents a disturbing snapshot of the wireless universe:

• Four national firms have captured most of the wireless market: Cingular (owned by AT&T), Sprint-Nextel, T-Mobile USA, and Verizon.
• But only two firms dominate the wireless landscape; A&T and Verizon, which together control over 50 percent of all wireless subscriptions, about 120 million customers.
• As a consequence, the market has become "highly concentrated," according to measurement standards used by the U.S. Department of Justice.
• Wireless monthly rates have steadily risen since 1998, from an average bill of $40 a month then to $50 now. Verizon and AT&T charge the highest prices: 7 cents and 6.5 cents a minute, respectively.

Frontline charges that when it comes to making rules for the upcoming 700 MHz auction, AT&T and Verizon "aim to warehouse spectrum [buy spectrum just to keep it away from others], especially 700 MHz low frequency licenses, to block competitors."

The upstart firm also predicts that AT&T and Verizon will "support any public policy (e.g., large license sizes, open bidding that allows them to use their scale to advantage." Blind bidding systems prevent big competitors from colluding with each other on prices.

Hundt's presentation argues that the E-block plan will end run this bottleneck by creating an open section of the spectrum, available at wholesale rates to local spectrum distributors, and that will allow first responders to use their own equipment and create their own networks.

The proposal, he argues, "creates an alternative to existing carriers that sell to public safety."

On the other hand, Frontline doesn't appear very enthusiastic about auction rules that offer special credits to small business, or "designated entity" bidders.

A summary of Hundt's meeting with Adelstein discloses that the two talked about "whether the Commission’s small business credit policies should be withheld from the E Block auction."

It appears that the Frontline answer to that question is "yes."

"More bidding credit bidders leads to more competition and higher prices competition and higher prices," one of Hundt's Powerpoint slides argues.

And so the Frontline strategy appears to center not on making the 700 MHz auction more competitive, but on securing a regulated monopoly over a big chunk of that spectrum.