Tuesday, February 19, 2013

A State can form its own Public Private Partnership to reap the benefits of leasing the spectrum and the rights to operate.

In researching the topic of how a State can create its own Public Private Partnership, plus reap the benefits of leasing the spectrum allocated to a partnership I came across the following. You should note that all the elements are there for a State to commission its own "real" Public Private Partnership and to bring in private equity to invest in a given State's PSBN solution.

In short, why can a State put together its own Public Private Partnership so that they can get Private Equity to pay for the State’s deployment of Public Safety Broadband; and why is it best to utilize the SGLIP funds to help pay for your State's RFP to bring in Private Equity to pay for your entire network?

FirstNet: Fee Income and Other Revenue
FirstNet has the authority to obtain grants and to receive payment for the use of network capacity licensed to FirstNet and of network infrastructure “constructed, owned, or operated” by FirstNet.23 Specifically, FirstNet is authorized to collect network user fees from public safety and secondary users24 and to receive payments under leasing agreements in public-private partnerships.25 These partnerships may be formed between FirstNet and a secondary user for the purpose of constructing, managing, and operating the network. The agreements may allow access to the network on a secondary basis for services other than public safety. FirstNet and its partners may also receive payments for leasing access to infrastructure, such as towers.26 The act requires that these fees be sufficient each year to cover annual expenses of FirstNet to carry out required activities,27 with any remaining revenue going to network construction, operation, maintenance, and improvement.28 There is a prohibition on providing service directly to consumers; this does not impact the right to collect fees from a secondary user or enter into leasing agreements.29
Public-Private Partnerships
Partnerships are expected to play a critical role in building and operating the network. Electric utility companies, for example, are upgrading their networks to meet Smart Grid requirements,70 and some companies have expressed an interest in partnering with FirstNet or state authorities. Some commercial wireless service providers have also expressed an interest in working in partnership with public safety entities to develop and operate new broadband networks.
The Middle Class Tax Relief and Job Creation Act of 2012 requires FirstNet to issue “open, transparent, and competitive” requests for proposals to private sector entities for building, operating, and maintaining the network71 that leverage to the extent “economically desirable” existing commercial wireless infrastructure, in order to expedite network deployment.72 It is charged with managing and overseeing the resulting contracts or agreements. As part of a separate requirement to assure substantial rural coverage during all phases of deployment, the act requires that industry proposals and contracts include, if possible, partnerships with existing commercial mobile providers.73
Decisions by FirstNet about the network’s design, construction, and operation are likely to have a significant impact on commercial participation in a public safety broadband network or networks. These decisions may also influence decision-making by states as to whether or not to pursue radio area network construction independently or through their own partnerships.
Congress may be interested in the composition of private sector partnerships formed by FirstNet and individual states, not only for their business plans but also for the inclusion of a wide variety of stakeholders. For example, are rural and tribal wireless carriers included as business partners? Do secondary access agreements support services that meet social goals, such as for telemedicine, or are they exclusively for commercial purposes? Is competition in providing wireless services being enhanced or hindered?
21 P.L. 112-96, Section 6206 (e).

22 P.L. 112-96, Section 6207 (b).
23 P.L. 112-96, Section 6206 (b) (4).
24 P.L. 112-96, Section 6208 (a) (1).
25 P.L. 112-96, Section 6208 (a) (2).
26 P.L. 112-96, Section 6208 (a) (3).
27 P.L. 112-96, Section 6208 (b).
28 P.L. 112-96, Section 6208 (d).
29 P.L. 112-96, Section 6212.

30 P.L. 112-96, Section 6301.
65 P.L. 112-96, Section 6201 (b).
66 P.L. 112-96, Section 6206 (g).
67 P.L. 112-96, Section 6208 (c).
68 P.L. 112-96, Section 6209.
69 P.L. 112-96, Section 6210.
70 “Smart Grid” is the name given to the evolving electric power network as new information technology systems and capabilities are incorporated. See also CRS Report R41886, The Smart Grid and Cybersecurity—Regulatory Policy and Issues, by Richard J. Campbell.
71 P.L. 112-96, Section 6206 (b) (1) (B).
72 P.L. 112-96, Section 6206 (b) (1) (C).

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