Friday, July 20, 2012

Why is it so important that the Utilities and all State and Federal agencies get on-board with Public Safety? It’s all about surfing the wave!

There has been a lot of traffic in regards to the Public Safety Broadband Network and its impending rollout throughout the United States. But there seems to be a lot of confusion as to why the Utilities, Transportation, and all State Agencies, must get on-board with the solution. It’s a complex question to answer, but using the Utilities as an example, I will try to convey a high level theory.

The primary reason is of course cost, Money. Money is the end of the line for all our efforts. But even eliminating the money issue you can see that there are three additional primary reasons: market forces at play; the domination of wireless commercial telecommunication advances; and the definitive fight against time.  I say, “wireless telecommunication” because the predominate talk today is around the complexities to install the wireless communications fabric the will run the entire Public Safety solution – or LTE.

The market surrounding telecommunications, in whole, is one of divergence and consolidation. As the carriers’ move further away from their dependence on the “old” network infrastructures of 2G and 3G, and more towards an all IP based architecture of 4G, it puts a strain on the Original Equipment Manufacturers (OEMs). It forces the OEMs to rethink their product lines to accommodate the 100 Million users each carrier services, in short, they have to downsize and eliminate the old and develop the new. As the carriers move into the IP fabric of more wireless dominance, so does the need for expanded and costly infrastructure and the pressure of the OEMs to design and develop products that will operate on it -- in this case LTE.

With that said now picture a huge wave pool. The carrier creates the wave and those that rely on what the carrier sells, i.e. OEM, contractors and users, will be forced to ride that wave. As it stands we are currently in a wave of LTE and wireless. There is no turning back on the where this wireless wave is going -- and by the way this is no typical wave -- it's a tsunami. A tsunami that is having deep and lasting impacts on the entire world and we are years away from when the calming of the oceans start to happen. Those impacts will, and are, having a huge impact on the Utilities as case in point.

You see the Utilities are one of those entities that is riding this huge wave and, unfortunately, they committed to the wave way too soon and have put themselves in the bad position of sitting at the bottom of the wave as it builds to its highest point. Having been a surfer in my youth, I know the feeling of committing too soon only to have that bone-crushing, ten-footer, crash on top of you. Its not a lot of fun and can be downright scary at times. But you just let your body rock and roll under the waves like a rubber dummy and wait for the point in time to make a dash for the surface. Meanwhile, everyone else is sitting back, riding the wave, or laughing at you on shore.

This is not entirely the fault of the decision making capacity of the Utilities, after all the excitement of the SMART Grid market, and the influx of stimulus money, paid a political toll that only forced them to commit to their deployments and the technology of the time. In this case that technology selection was WiMax and 3G cellular.

WiMax is better known as the Betamax of wireless. Now there are those who steadfast with their claims about WiMax, and that it still has a role to play, but its just a matter of time when the wave takes over the OEM manufacturing process -- and the users commitment -- will force the technology out of the picture all together.

Along with that WiMax decision came with the commitment to cellular 3G mesh solutions to connect the fabric of the SMART Grid metering infrastructure. This too was not entirely the fault of the Utility alone. Their decision to go with a 3G wireless solution was the technology being sold by all the major carriers at that time. LTE wasn’t even a viable solution yet. But that wave built up fast to the point that the wireless carriers saw that they had no choice but to commit to the 4G LTE solutions that ultimately enveloped the commercial carrier world (actually ever commercial carrier in the world has committed to LTE). With that commitment to 4G LTE, so came the commercial carriers notice to the Utility players that the 3G solutions they just sold them will be end of life within the next 5-10 years. This is the break in the wave that allows the Utility to shoot for the surface.

Most of those SMART Metering deployments have, or are, just wrapping up, which means they are already considering the next upgrade to replace the SMART Meters with radio interface chip sets that will talk LTE. This is a hard cookie to swallow being that a typical Utility likes to put technology in that lasts for 20-30 years -- minimum. But, if they don’t upgrade then it will cost even more later to maintain (being that the OEMs won’t want to maintain tooling for the old devices) and ultimately be forced to upgrade when the options are less prevalent.

Could this have been avoided? Is it a bad thing? So where to go from here? The choice is clear to me…the Utility must commit full throttle to the technology. By buying into the complex architecture of the SMART Grid solution, they bought into the technology curve as a business. There is no going back. After all, you can’t just rip out all your SMART Meters … can you? Realistically though, they too are here to stay. But the decision to commit to LTE raises another complex issue. If the Utility commits to 4G LTE as its eventual wireless solution for SMART Metering -- they will need spectrum. Thus comes the Public Safety Broadband Network (PSBN). It’s the surfer on the surface grabbing you by the arm to pull you out of the water.

In order to build out the entire national infrastructure of LTE, LMR (integration), microwave, fiber, and control/datacenter elements for the PSBN, it will cost roughly 70-100 Billion dollars (installed assets). The Federal Government allocated 7 Billion total with 5 Billion from auctions yet to happen and the remaining 2 Billion available in grants. The grants will be allocated to each State for a max grant total of 135 Million per State (most likely matching funds as well). It may be just me, but there seems to be a problem Houston. If you tally that up you get, roughly, 6.7 Billion (almost 7 Billion) and if matching funds are instituted -- you get roughly 13 Billion. I’m no mathematician, but that’s not even close to 70 or 100 Billion needed. As an example, AT&T services 100 Million subscribers that accommodate 96% of the population mass of the United States. It has installed assets of 107 Billion. I think that may cover Internationally as well… not sure…. couldn’t see the split in the international versus US operations in their 10K filings.  

Ultimately the answer is in the States ability to generate enough cash to build their portion of the national solution. That need opens the door to a Public Private Partnership that would allow State entities, and departments, like a Utility, to play a crucial part. The Utility needs the technology and the PSBN needs cash.

This relationship opens the door for some great benefits for the Utility. One obvious opportunity is the Utilities currently installed telecommunication infrastructure, which could be utilized for the PSBN to offset infrastructure costs. A more pressing opportunity is the added cost savings to a Utility by not having to run a capital program to install the wireless infrastructure themselves, which is what they would typically do…as was the case of the SMART Metering installs. In essence, the Utility can put the risk on the State Public Private Partnership to deliver its broadband access for its SMART Metering infrastructure, thus saving the cost of having to build it themselves, ultimately eliminating their capital program requirements all together. Plus, it will shore-up a fixed annual operational cost model, at a fraction of a capital program, to pay for the broadband service it needs.

There is one other area that the Utility could benefit from -- that being the investment option associated with the Public Private Partnership itself. As with all the State entities that would require access to the broadband services, they could all become stakeholders of the private investment itself. In short, they could also invest, monetarily, into the State Public Private Partnership, further reducing its fiscal footprint associated with their broadband needs by recouping money through a shared revenue model. The long-term revenue generated from the annual costs associated with buying the service from the State PSBN Public Private Partnership.  

In the end, it’s quite important that all the viable State agencies, and entities, that require access to the broadband LTE service, be a player in the Public Safety Broadband Network rollout. Together they all bring something that is complimentary to the overall success of the program and that will ultimately allow the entire nation to ride some awesome waves of change. 

Just some guy and a blog….

No comments:


Words to Live By: “Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… The ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… They push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.” (Steve Jobs)