Wednesday, October 30, 2013

FirstNet Public Safety Broadband - State OptOut directions!

On the FirstNet website you can find out about their consideration for the "Opt Out" process through the following document entitled, "The Process for Working with FirstNet". I cut and pasted the bottom portion of that material so that I can address it straight on.

Funding the Build-out

If the state’s plan is approved by the FCC, the state may apply for grant funding from NTIA. To obtain federal funding to construct a RAN, a state must demonstrate it can:

For this first part you must understand that even if you come up with a plan, and file for grant assistance, it is already well known that their is not enough cash in grants offered by the Federal Government to accomplish the national build-out -- let alone long term "self-sustainment". The only way to fulfill these requirements will be with the State's taxpayer base to fund the rest, essentially hitting the taxpayers with State and Federal robbing Paul to pay Peter. At $7 Billion dollars -- if we get the full $7 Billion from the spectrum auctions -- it only equates to $125 Million per State and Territory (if distributed equally). The reality of even getting the full amount we should expect will fall short, thus that $125 Million will probably be even less, thus, the State will have to pay more.

Through a State based Public Private Partnership, the State can generate enough cash by sharing the revenue collected with Private Equity. Private Equity steps in a funds the entire build, and its long term operations, thus avoiding any taxpayer requirements, or grant dependency.

Provide the technical capability to operate and fund the RAN

When it comes to the technical capability, the State will use the specifications laid out by FirstNet, from there it will also follow operating procedures of the Core solutions and interoperability standards. Given that there is only a few viable LTE, and Core solutions, it will be uncomplicated in the technical adoption. This only accounts for the LTE and the backhaul solutions, the mobility and access piece will be a different beast.

Mobility and access will, most likely, follow the demands and requirements of the State. Every state, and territory, has an installed base of LMR solutions, thus, a reliance on certain vendors, i.e. Motorola, Cassidian, Harris, etc.. This is where it starts to get interesting, at least for the Public Safety piece. For the "other Public Safety Service Organizations", such as Utilities, Transportation, and any other vertical industry, can take it a step further by aligning with their committed vendors as well, i.e. Cisco, Juniper, and others, but these users are only paying for bandwidth and coverage of broadband service, and are limited to Priority 2 scenarios. This provides the Priority 1 interruption solutions that are required for Public Safety, plus, it is controlled by Public Safety as well.

In the end the users of the network will bring in the recurring revenue to attract Private Equity, who in turn will pay for the capital to build and maintain the network statewide, at the same time sharing in the revenue. There is no better plan that meets these characteristics.

Maintain ongoing interoperability with the FirstNet network

Through the Public Private Partnership, the State is in control of the Special Purpose Vehicle (new company or SPV) that will design, build, operate and maintain the State's Public Safety Broadband Network...for the long-term. As part of that long term plan is the utilization of FirstNet's interoperability standards as laid out. By doing so will allow the State to operate its SPV just like a typical carrier, of which it can envelope commercial carrier roaming agreements as well as cross State agreements for network roaming. It really is no different than a carrier, except this network will be private, hardened and managed under the guidelines of Public Safety first.

Complete the project within specified comparable timelines

This part is quite easy, in fact, it will be a lot easier to deploy than any other model, reason being  is that the contractors and vendors will be working for a Private Equity team rather than a government run capital construction outfit. In short, the contractors, and vendors, will feel more comfortable in that they know the project is solidly funded; they will get paid; and will be able to make more expedient decisions in the deployment and operation -- less red tape. With such characteristics the network will, most undoubtedly, have faster timelines towards a successful build out.

Execute its plan cost effectively

As you may already surmise, what better way to be cost effective when the State, Federal, taxpayers don't have to pay for the network and its long operation. How much more efficient can you get? Plus, it will be in the best interest for the Private Equity teams to utilize as much as the existing assets as they can, it will cut down on capital needed for the build, as long as the State approves those assets for use. Just remember, as I have said in the past, sometimes its more expensive to remediate an existing tower than it is to just build greenfield, especially when you have such robust hardening needs. The beauty of the State's P3 model, is that it takes all this into consideration, and will use the most efficient manner possible in insuring it's cost effectiveness.

Deliver security, coverage and quality of service comparable to the FirstNet network

As compared to the FirstNet proposed carrier relationship model, the P3 model is way more capable of delivering the exact needs of Public Safety and the users. It is Public Safety and "those users" that dictate the design, and structural hardening requirements, right from the beginning. The entire network design will be based on the collected needs of its users and will utilize the most stringent design requirement needs as the basis for the entire design, thus, capturing all the lesser user requirements holistically. The alternative is to use the carrier infrastructure, funded by the taxpayers, to augment their infrastructure, which it turn benefits the commercial side more than Public Safety, while at the same time putting the bill on the taxpayers, as was discussed above, which ultimately impacts the State more than the Feds.

Plus, we haven't even addressed long-term operations and maintenance of the national control center and data center requirements, who will pay for that? Actually this is where the $7 Billion can be utilized, but even the $7 Billion won't be able to cover the long-term O&M. The P3 model at the State level can! It's all part of the terms and conditions that will be laid out by the State to the Private Equity respondents.

There are additional funding implications if a state receives approval to build its own RAN:

States pay any fees associated with using FirstNet core elements

Why is it we put so much attention on the Cores? It's not because they cost too much, in fact they will be less than 1% of the total capital program. The real reason is all about who controls the network. The fact of the matter is the attention really needs to focus on the Accounting and Billing platforms, this is what the State's need to control. FirstNet can control the Core's all they want. The real important stuff will be in collecting the revenue of the user base within a State's boundaries. Technically you can deploy the Core solutions, based off the FEMA Regions, as planned by FirstNet, but, financially the State needs to be in control of its billing and revenue collecting operations. Actually, the State must control its own financial governance. Outside of the obvious point that revenue must be collected from a State's own user base, it also needs to fulfill it's P3 obligations with Private Equity. The State's business model will be a disaster if they let the Federal Government come in and control the State's revenue collecting operations. Why would anyone want to give all their revenue controls to someone else? That would be like Verizon allowing the Federal Government to come in a control all their revenue. Don't think there would be too many happy investors wanting to play in that business.

As for fees for using the Core, they will be minimal compared to the revenue operations. In fact, how does one State pay the Feds for a Core that was paid for by an adjoining State? Why would the State that houses the Core, to which they also paid for the Core, why would they need to pay a fee for their own asset they purchased? If anything, FirstNet just needs to be a part of the State's P3 model, they will make more money that way than any other model, probably enough to run their long-term O&M nationally.

Grant program specifics are not developed yet

What's new?

NTIA will determine: eligible costs of the grant program; whether a match will be required; and funding levels

Won't be necessary if the State deploys the P3 model. What would be the matching fund requirement if grants aren't used and private investment pays for the entire build -- and O&M? Short answer....none!

Licensing FirstNet Spectrum

If the state plan is not approved, the construction, operation and maintenance of the state RAN will proceed in accordance with the FirstNet plan. If a state receives approval to build its own RAN, the state then needs to negotiate a lease for the use of FirstNet spectrum.

Sounds fair to me.

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