Tuesday, June 25, 2013

FirstNet Business Model: Come buy this car!

Have you ever gone into a car dealership and you get bombarded with sales men pitching all the electronic gadgets in a car, but fail to highlight the terms and conditions of your purchase? 

How would FirstNet, and its planned business model, compete with the Public Private Partnership model commissioned at the State level? It’s actually quite simple: the FirstNet model needs to be able to completely deploy and fund the entire Public Safety Broadband Network without using any taxpayer funding. On top of that it must be able to monetize the use of the spectrum so that each and every State can retain ownership of hundreds of millions in user fees and contracts while at the same time covering 100% of the geography to include the rural territories. If FirstNet can come up with a model that does this then I am on board!

The fact of the matter is FirstNet is trying to create just another national carrier that is in coordination with the commercial carriers so that each and every State can pay for service just like it does today – from the same commercial carriers – but this time from a so called “private” national provider. There is no plan to allow the State to reap the benefits of monetizing its own spectrum covering its own State. It also has no plan of constructing the network on its own dime. The fact of the matter is that each and every State will pay for another commercial carrier type service, but in this instance they will also have to pay for its own build in their own geographical coverage area. What a deal! So I can buy new service from a broadband company and pay for its build out as well? Sounds good to me! (a hint of sarcasm) After all it's just taxpayer money, right?

The big word (or words depending on how you write it) of the day is “Opt-Out”. What does “Opt-Out” actually mean when a State would be responsible for paying for its own backhaul on the “Opt In” scenario? Plus, how heavy is the load when you have to list all your own assets so that this provider can ride your investment for his own benefit? They want to include your hard-earned assets in their plan of building a national private broadband service provider to which you will have to pay for service from? It just doesn’t make any sense to me. The “opt out” solution is actually the best solution. You can create your own state owned “private broadband company” to which you have direct oversight and you get direct say in its support for your own State Public Safety Service Organizations. Am I missing something here?

Let me get this straight: through the Public Private Partnership model with private equity I can build a state RFP based on the assets and the specifications of my own State entities who in turn are willing to pay an annual usage charge (SLA) to create recurring revenue? I can then advertise that RFP to the private equity market who in-turn is willing to come in and pay for my entire statewide broadband network without any taxpayer money? I can maintain local control with a local hiring process to keep my own people employed? All I have to do is share with the private equity awardee 49% of the recurring revenue of which I get to keep 51%? I can reinvest my 51% into the public safety solutions for my State and pay for the First Responder communication gear? I can also control the contractual arrangement; divert risk away from my state agencies and entities onto the P3 broadband company; and have “self-sustainment” with a 30-year contract for managed services with a P3 broadband company I control?          Nah…. I’d rather pay for the service from an over-reaching federal agency who promises me that they will come into my own state to build it for me of which all I have to do is go to my legislature to ask for tax increases to help fund my own portion of that build as well as my long-term payment for their service offering. That’s the way I’m use to it! (Really big hint of sarcasm)

“Well, I screwed it up real good, didn’t I?” (Richard M. Nixon)

“Sometimes you do something, and you get screwed. Sometimes it's the things you don't do, and you get screwed.” (Chuck Palahniuk creator of Fight Club)

Just some guy and a blog…

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