updated 1/8/2008 7:37:33 PM ET 2008-01-09T00:37:33

A wireless startup company that planned to build a national public safety communications system has apparently bailed out of the upcoming airwaves auction, a move that creates doubt about the future prospects for the network.

The company, Frontline Wireless LLC, is a Greensboro, N.C.-based firm with extensive connections in both Washington and Silicon Valley. Company spokeswoman Mary Greczyn told The Associated Press Tuesday that "Frontline is closed for business at this time. We have no further comment."

When asked if that meant the firm would not be bidding in the spectrum — or airwaves — auction, set for Jan. 24, she said, "We aren't commenting on that."

The Federal Communications Commission is auctioning off public airwaves currently used by television broadcasters. A significant block has been set aside to build a national emergency communications network.

In a novel plan, crafted largley by Frontline, the winning bidder on that block would combine it with other spectrum now controlled by emergency communications organizations, to create the network.

The private company would build it — Frontline estimated it would cost as much as $10 billion — and the network would be shared by public safety officials and commercial users. Public safety would get first priority.

The bidder would eventually turn a profit.

The minimum bid on the block is $1.33 billion. On Friday, Frontline was required to come up with an upfront payment to certify its participation. If no company bids on the spectrum block, it is uncertain what will happen.

The agency's rules are vague about what happens if the reserve price isn't met. In other blocks, if a reserve price isn't met, the spectrum is re-auctioned.

Frontline had lobbied the FCC intensively on the auction rules and won several battles that were expected to increase the likelihood that the company would bid. Frontline has a number of deep-pocketed partners.

Among them are former Netscape CEO James Barksdale and Ram Shriram, a founding board member of Google Inc. Its management includes former FCC Chairman Reed Hundt, who is the company's vice chairman, and Janice Obuchowski, a former assistant secretary of commerce in charge of telecommunications policy, who is chairwoman.

According to paperwork Frontline submitted to the FCC, its bidding partners included Backline LLC. Backline, which has also submitted an application to bid in the auction, is controlled by Fortress Investment Group, private equity and hedge fund company with $40 billion in assets.

Frontline's apparent withdrawal raises serious questions about whether the spectrum block will receive a bid.

In addition to the cost of the spectrum and the billions of dollars it would require to build the network, the winner is also required to cover 75 percent of the population within four years and 99.3 percent within 10 years.

Blair Levin, former chief of staff for Hundt when he was at the FCC, said in a note to investors Tuesday that Frontline's difficulties are "unlikely to be specific to Frontline, which, because of the track record of some of Frontline's backers probably had as good a chance as any new entrant could in terms of raising money."

An FCC spokesman declined to comment.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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