Thursday, January 3, 2013

Public Safety Broadband, FirstNet and the need to Commoditize Internet Access.....a perfect fit?

It is time for a change!

In with the New Year comes the possibility of transition that we have seen in the last 3 years, that is the commoditization of the Internet. I am not the only one that sees the connection between the utilities, the Internet and the Public Safety Broadband Network. As was written in a recent Bloomberg articles titled, “U.S.Internet Users Pay More for Slower Service. By Susan Crawford Dec 27, 2012 5:30PM CT” it is clear to see that there exist a connection.

Monetization is a crucial part of the deployment of the Public Safety Broadband Network and by doing so comes the necessity to build customer base. As has been laid out in the preliminary discussions of FirstNet there is a necessity to prioritize users on the network. There also exist in the legislation the need to provide rural broadband service to those that need it. Undoubtedly those users would be priority three type users. Priority one-users being First Responders and priority two-users being the likes of the Utilities, Transportation, etc..

By the legislation laying out the necessity to provide rural broadband service, and the alignment of the three base priority users, promotes a perfect incentive to commoditize the Internet Access scenario. To a commercial carrier commoditization is a bad word. It cuts their ability to manipulate the margins on the service thus eliminating further advantages of more service offerings. But, in this case the actual commoditized infrastructure will come from the Public Safety Broadband Network. In the context of commoditizing the access piece  this could actually be the turning point. 

Eventually the cost of support starts to outweigh the profit margins, thus commoditization starts to happen. This may be the point we face today when it comes to Internet Access. The balance of market competition, affordable price margins and the demand for service may be at a transition point where as the commoditization of the Internet Access is the best solution. For the carriers they will need to shed infrastructure due to the shift towards content and services as being their prime driver of revenue. For the Public Safety Broadband Network (PSBN) this would be the opportunity for partnering with Utilities to institute the commoditization process of the Internet service model.  What better partner than a Utility who has been playing in commoditized services through its power distribution business?

Being that the business model of the Public Safety Broadband Network will be of a social context rather than strict revenue bearing operation; it only plays too well for a commoditized Internet Access service model to grow roots. Through a State sponsored Public Private Partnership the creation of revenue will come from the stalwart clients that require broadband service and that maintain a Public Safety Service responsibility in times of disaster or emergency response. These clients will not bother with the traditional subscription based model but would rather see a long-term (20-30 year) contract for services that includes their requirements for hardening and coverage. Such contracts would be based on long-term SLAs (Service Level Agreements) fixed on operational cost models. Through those fixed contracts we could see the opportunity of providing commoditized Internet Access service models via the Utility itself, or bid to the commercial Telco markets. It is through the PSBN architecture that the commoditized Internet Access will be garnered yet virtually managed through a commercial service model. Yet one has to remember that these rural broadband users will be priority 3 users thus always under the gun for interruption during an emergency…. which is really no difference than what happens today anyway.

Just some guy and a blog….

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