Wednesday, August 29, 2012

A Business Case for the Nations First Responder Broadband Network or Public Safety Broadband Network: will it cost $500 Billion? Does it Matter?

It’s important to note that the best solution for a successful deployment of the PSBN (Public Safety Broadband Network) is a great business case model.

There is a big push to just build out the network, but one must understand that by going out on the limb, and just building it, doesn’t mean they will come. The technical delight to build lays at the heart of an engineer, but a typical engineer doesn’t get enthused about the cost structures and governance models that drive the financial partnerships that actually help feed the funding engine.

It cannot be stressed enough to illustrate that a sound business model must be generated before the PSBN is built. By business model I’m not just talking about a short-term fix to get funding -- it’s more than applying for grants and aligning financing with the OEMs. It’s about the long-term goals of the network itself. We must think outside of the box by fashioning the financial model as a revenue operation; even though at the heart of the design it is not. We must align business strategies with those that have access and must utilize the network. We have to organize financial constructs that will last the entire lifespan of the network itself and beyond. We must energize an ROI message that is attractive to current/future investment strategies and stakeholders. If we fail to capture the essence of a good return on investment scenario; we risk long-term failure instead of success.

We mustn’t leap to the idea that we have to build today without doing our homework. In the end that would not benefit anyone except a few engineers and their desire to see something get built. Every entity that is considered part of the First Responder picture has isolated business plans. A Utilities business plan is to generate and distribute power. The Police have a business plan to protect and serve. The EMS has a business plan to save lives. The Transportation Authority has a business plan to transport people. All of these entities have their own business models that they must adhere too. By mixing these models into a rapid build scenario only complicates and slows the execution and success of their primary goals. By rushing the build-out of the PSBN this is exactly what we are doing – we are mixing all these competing business models into a “one size fits all” scenario.

In order to successfully execute a sound business model -- the PSBN must have its own business strategy -- a strategy that links all these business models into an efficient standard of implementation. All the States’ entity business models needs must be met, or at least interfaced for the benefit of those models. As an example: the business model of the PSBN must include the business requirements of the Utilities. The Utilities will require a broadband footprint of service capabilities to cover all their sub-stations and SMART Metering devices. Plus, the Utility must have sufficient hardening requirements so that it can carry out its mission. Those requirements should be enveloped into the PSBN model and shared so that all can take advantage of such requirements while interfacing with players such as transportation, agriculture, forestry, Fire, and Police. In essence the business model of the PSBN Public Private Partnership will be all the combined requirements of the States entities that require access to the Public Safety Broadband Network. 

Combining those requirements, and then wrapping the PSBN business model with a sound revenue collection scenario, will not only generate the cash required to design, build and maintain, but it will also attract long-term investment. For example: enveloping all the best requirements of the combined business models opens the opportunity for the P3 SPV (Special Purpose Vehicle, or in short, the newly created private company to run the State’s PSBN), a method to extract an ROI (return on investment). My model calls for fixed annual, or monthly, payments from each State entity to access the established State PSBN through the P3 SPV; which in turn will pay for the network as a Build, Own and Operate model of execution. The P3 SPV will offset its costs through investment and the monthly, or annual, payments of the State’s entities.

Another aspect to look at is the advantages the State entities have when connecting to the PSBN. Having the broadband technology available, each entity could functionally utilize the technology to cover its own current business model at the same time expanding service features.  As an example: a Utility may originally utilize the PSBN to cover all its access points, such as SMART Metering or sub-station access. Later on the Utility could investigate packaging Internet Access to their client base to help accommodate Rural Broadband Penetration representative in the FCCs broadband plan to all Americans. As an added observation; some of these sub-stations are in pretty remote areas, but are within the vicinity of a few rural farming communities. It makes sense to extend that broadband capability from the sub-station to those communities. This opens the door for expanded service offerings with regional, or local, carriers as well as more ROI opportunities for the P3 SPV.

A lot of people get stuck on the vision that because the network “costs” a lot of money to build; loses sight of the fact that those “cost” figures actually represent VALUE. In the end it doesn’t matter if the network costs $5 Billion, or $500 Billion, as long as the money is being put back into the economy and employing Americans. The point to make here is that VALUE puts the money back into our “own” economy.

Just some guy and a blog…

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