Friday, August 10, 2012

An RFP Model for Building, Operating and Maintaining the Nations First Responder Broadband Network or Public Safety Broadband Network Using Public Private Partnerships

Not that it matters, but here’s just one way of viewing a plan for deploying the Public Safety Broadband Network with a Public Private Partnership.

FirstNet is the organization created to build the Nations First Responder Broadband Network, or also know as the Public Safety Broadband Network. Legislation passed by the President allocated the D-Block 700 MHz spectrum for Public Safety use. In short, we are going to build a nationwide network of broadband LTE for Public Safety. Such a network, that when completed, is estimated to cost roughly $70 - $100 Billion.

In this example FirstNet would issue an RFP (Request For Proposal) for an overall Program Manager to focus on the oversight of the nationwide build out. This Program Manager will then formulate a template for the RFP process that would be executed at the State level. Along with that, FirstNet would provide the governance model for execution and would include the technical interoperability mandates that the States must follow.

In working with FirstNet, the States and the Feds, should come up with individual Statewide PSBN Business Plan that would execute a Statewide Public Private Partnership (fulfilling requirements for spectrum usage). As part of the formatted template of an RFP process each State will execute a P3 RFP that will seek an awardee to Build, Operate and Maintain the States Public Safety Broadband Network for at least 20 years (for each State). This will open the door for competition, across the board, yet maintains a rigorous plan of standardization that FirstNet can maintain for the long term. Such awardees would be best suited via large investment brokers executing a standard teaming agreement with a large contractor for project management, engineering and controls; engineering contractors to design, construct, deploy and integrate the Statewide solution; vendors for equipment (microwave, LTE, etc..) and any other team members the P3 Team requires.

The formulated Statewide PSBN Business Plan should utilize all State entities (Police, fire, Transportation, DHS, Utilities, Agriculture, Forestry, etc..) as potential paying clients to access the broadband network (if they have Public Safety characteristics). Those potential clients should utilize a standing long-term SLA contract with the State Public Private Partnership awardee. This SLA will also mandate design requirements for hardening that would incorporate across all State entity needs. The SLA would dictate its Terms and Conditions (T&Cs) and would utilize an annual cost model of 10% of the capital program costs that the entity would have incurred if it had to build, operate and run the same type of solution on its own. This would eliminate the entities need for a capital budget and stabilize their annual budgets to a fixed OpEx model for broadband communications (big cost savings). This would also consolidate any existing commercial broadband services already in existence, and being paid for, and could be incorporated in the P3 (extra savings for the State).

As an example: if a Utility has a requirement for broadband access to support its SMART Meters, and/or sub-stations, it would traditionally move forward with developing its own capital budget to design, build, operate and maintain its own broadband solution (I will use a budget of $500 Million). In this case it should expect to convert to an annual payments model (OpEx) of at least 10% of that capital budget (10% of $500 Million), which comes to roughly $50 Million a year. It’s not outlandish to estimate that it would cost $50 Million annually for the Utility to operate such a solution on its own covering its entire footprint.  But in this case it could off-set costs through its leasing of infrastructure assets back to the P3 for use in its deployment essentially reducing that $50 Million payment. Offsetting of assets would be a “first come first served model” and then boolean into a “best fit model” or vice versa. 

With an OpEx target of 10% from all State entities we can easily see a great source of long-term recurring revenue that would attract private investment, as well as bidders, on the Statewide Public Private Partnership RFP. Such a model far outpaces a “subscriber model” and eliminates a lot of complexities, such as interoperability of back-office solutions, OEM device manufacturer device tracking, plus roaming capabilities. With a minimum of 20 years terms on the RFP this would also attract State entities to use the Private Public Safety Broadband Network as an alternative to costly commercial infrastructure leases at the same time instituting the hardening requirements of its own network needs. In short, it allows for the technical upgrades and feature enhancements without renegotiating the commercial terms of their commercial broadband service.

There are a host of other opportunities as well; Managed Service contracts with the P3 awardee, bids for rural access broadband costumers, OEM contracts for M2M device manufacturing specialized in Public safety and others.

This of course is an oversimplification of the entire process, but its important to keep it simple in its planning stage as to keep it on course.

Just some guy and a blog…

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