Thursday, December 6, 2012

BTOP Grant to FirstNet? What About the FCC's Connect America Fund as well?

Wednesday, 05 Dec 2012 11:26 PM By Todd Beamon and Kathleen Walter

When it comes to the $135 Million promised alluded to by the Feds to help fund the State’s “planning and audits” of the Public Safety Broadband many people really think it will come to fruition anyway? After all the Federal Government allocated $7 Billion of which $2 Billion would be in the form of direct grants. The remaining $5 Billion has to come from auctioning off spectrum already in use. How long has it taken to get narrow-banding completed? Oh sorry it hasn’t been completed yet. Didn’t that start in the 1990’s? How would one anticipate that $5 Billion in anticipated funds from auctioning off spectrum, that is still in use, would be available anytime soon? Regardless can anyone please tell me what the term “Fiscal Cliff” actually means anyway?

But, if it is imperative that a State must have the grant money then we still have a solution right in front of us. Last year the Broadband Technologies Opportunities Program – better known as BTOP – was in full cycle. Then came FirstNet, which put a halt to all the BTOP grants. As it stands the only “realistic” proportion of federal grants available under FirstNet would be $36 Million ($2 Billion / 56 States and Territories). The original promise (hearsay) was $135 Million per State and Territory ($7 Billion / 56 State and Territories). But if we add the already allocated BTOP grants we could actually see roughly $185 Million for PSBN planning and audits ($150 Million + $35 Million). That’s not all, if we are so captivated in the belief that we can’t build a nationwide broadband network for Public Safety without Government funding then why not allocate the $4.5 Billion from the FCC’s Connect America Fund as well? Realistically though renaming the BTOP as the PSBN grant makes more sense. At least we can rest assured we are looking at reinstalling the $135 million that was already being utilized. It still won’t be enough to even come close to funding a full national build out of LTE in support of Public Safety.

Having been in the industry for over 20 years I can safely ascertain that this is going to cost somewhere between $50-$100 Billion, easily, to build this nationwide solution. To put it in realistic terms just look at the assets in the 10K filings of Verizon, or AT&T, of whom only covers 40% of the United States (96% of the “population mass”). With a FirstNet target of 99% of “geographic landmass” of the United States it doesn’t take a rocket scientist to understand the proportional differences between the terms “geography” and “population”.

If we were to be conservative and depict a $50 Billion price tag, that would mean that each State would be looking at $892 Million as there share to help build it (State taxpayer money), with of course we could see a reduction of the $135 Million from the BTOP (or just $35 Million allocated from the $2 Billion NTIA grant for PSBN). So in essence the States could see a bill of roughly $757 Million trying to be passed through their State Legislature. Don’t know about you, but I saw some pretty vicious fights in the State Legislative sessions just to get approval for a few more dollars to cover SMART Metering alone, which by the way had $4.5 Billion in funding from the Title XIII of the Energy Independence and Security Act of 2007 (EISA), and was a matching funds act that was topped at $200 Million per application. Too bad they used it to also fund WiMax and 3G services to connect their SMART Meters. Now we have all used the term "BetaMax" in the past, but this topic is a whole other article. 

But there is a solution! I’m the type that doesn’t like to complain unless I also come bearing solutions. As I have promoted in the past the secret lies in the Public Private Partnership. How do you turn this entire funding debacle into a positive? By using Public Private Partnerships. Now I just have to figure out how to promote this so that people start to listen.

Just some guy and a blog…


Randy Whitehead said...

Excellent article. Could you expand on your Public Private Partnership solution which I certainly have a proclivity toward.
I suspect a few new Al Gore taxes (referred to as user fees by some) will appear on phone bills in the near future in addition to the current 911 tax.
Randy Whitehead
OSP Infrastructure
Development Consultant

Mike said...

Actually the grant process is he same nothing changes. That grant money would be for planning and audits of State entities and assets to support the build. Part of those planning and audits will also be a cost analysis for the State entity to create a standing SLA with the State P3. The State would then accumulate all the State entity audits, cost analysis' and physical requirements into an P3 RFP that would be advertised to private equity who in turn would purchase the rights to 49% ownership of the standing recurring revenue from the fixed State entities. So in short, outside of the grants for planning and audits, the solution will require no taxpayer money. But it has to be adopted by FirstNet and formulated into a standings model for all States to follow.


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