Due Diligence: Risk Factors in the Frontline Proposal

Abstract

This paper presents an analysis of the proposal put forward by Frontline Communications in 2007 under which the Federal Communications Commission would award the company 20 Mhz of spectrum in the 700 Mhz band to construct a nationwide wireless broadband network, a portion of which would be dedicated to public safety uses. The analysis is based in part on a rudimentary business model which incorporates the elements of the Frontline business model which its backers have publicly disclosed. The paper concludes that the Frontline plan is unlikely to succeed financially, and that its first-round investors - i.e., public safety agencies and the U.S. government - are likely to end up bearing the costs of that failure. At a minimum, the FCC should conduct a full due diligence analysis of Frontline's plans before awarding the company billions of dollars worth of valuable spectrum.