One can never get enough of bits of information that put a clear perspective on where things are going and what it is we’re holistically trying to accomplish. Case in point, a recent article in Fierce Wireless entitled “Report: Verizon, T-Mobile spending consistently on capex, while AT&T, Sprint hit bumps” (October 13, 2014 | By Phil Goldstein)
In the article it explores the capital expenditure of the two largest carriers in the US; Verizon and AT&T. I want to bring to everyone’s attention the very last paragraph:
[AT&T spokesman Mark Siegel said the company invested $11.8 billion into its wireless and wireline network in the first six months of 2014. He said the carrier confirmed in July that it expects to spend a total of around $21 billion this year on its network. "We can't provide any detail around our third-quarter investment ahead of earnings next week, but this expectation is driven in part by the fact that we've completed our VIP 4G LTE build target to cover more than 300 million people” (42% of the geographic landmass on the United States), he told FierceWireless. "And keep in mind that we do business with hundreds of vendors, and in a capital program as large as ours, our spend with individual vendors varies in the normal course of business. We can't speak to what any individual vendor expects we'll spend with them."]
If that doesn’t give us an eye-full of what we should expect for FirstNet, then I don’t know what will. The article only addresses the capital expenditures (CapEx) here (money needed to spend to do one-time projects or programs such as an upgrade) have nothing to do with the long-term operational expenses (OpEx). The fact is a government-funded approach, with bonds and grants, will not work in this instance. The money is just not there and the taxpayers are consistently becoming a bit perturbed about our spending habits. Let alone we can’t risk the impact on the timeline associated with the upcoming election cycle.
The elections will have an impact on what funding we were already allocated. It will be arduous for anyone to convince everyone else that we need another Federal Organization to build something that should be delivered by private industry. If building a website for Healthcare is any gauge, then we must observe all the red signs. It’s not that the people within the Government are all bad, it just means I wouldn’t expect a Federal Organization to market and deliver a website – that’s not what they do. I also wouldn’t expect a website company to perform as the Federal Government. The National Broadband Network is much larger and definitely more complex and costly than a website. Whatever course we set today could be disastrous for many if not done correctly.
I just completed my response to the RFI advertised by FirstNet and I have to say that the idea to do one holistic national build-out approach is a disaster in waiting. If you use the website for healthcare as a case study you will see that their approach to the market place took a “top-down” approach, just like FirstNet has proposed for its RFP in the future. Had the website been designed bottom up, then things would have turned out drastically different. It would have been manageable with a grounding of lessons learned. In the case of FirstNet I think there may be too many people drinking the cool-aid that just because the Public Safety Broadband Network, once completed will be twice the size of the two largest commercial carriers combined, that we should mirror how we build using their perspective. There are no shortcuts here. We have to start small and build big. Going full-bore at the top level is definitely not how you want to try and build National Public Safety Broadband Network. We have to start locally and build-up. Trying to rope our arms around the whole national solution will be extremely inefficient and succumb to problems, delays and over expenditures, thus wasted tax dollars.
One good thing I did see in the RFI was the thought process associated with “thinking outside of the box” and the “creative approach to financing”. If FirstNet is serious about their intentions then this will be the savior. The fact is we can’t build this network without substantial private investment. How do we attract private investment? Well the only way to accomplish this is through Public Private Partnerships (P3) – a P3 that generates a return on their investment.
In order to insure the success of a solid P3 we need an ability to stay focused and establish a solid understanding of what it is the investors, us, are investing in. By stating a holistic national strategy only complicates that message and distracts the investor’s focus. Once the investor completes a thorough review of the opportunity, they will pass judgment as to whether or not it is a sound opportunity.
The focus of FirstNet is too broad, complex and outlandish in its strategy and will only result in a confused investor; or it could setup a monopolistic solution from a given few. The investors want to see a realistic and logical flow of what it is they are investing in, which ultimately creates the projected ROI or payback. The investors also want to see equality in the investment opportunities. We can’t get there from this holistic national programmatic approach. Without meeting those basic characteristics, plus, add the perception of a Federal organization in bed with a commercial carrier, only forms a bottomless pit of wasted time and money -- money that is obviously going to be needed for “our own” upgrade. If the referenced article above is any indication, then we are only looking at the tip of the iceberg on this one.
The network rollout solution, and its self-funding needs, must start with one or two States. We must start at the granular level in order to keep a perspective to control the outflow of lessons learned, as well as to track the progress needed to schedule its build-out nationally. As I have stated early in my blogging days, its only a matter of time for the States to take hold of their own destiny – FirstNet needs to envelop itself into a partial ownership role for each of the State’s executed P3 frameworks else it will miss out completely. FirstNet also needs to start focusing on the national applications and control center roles, where as they need to start envisioning their control centers, datacenters and applications store – that is what this RFP should be about. Let the physical build happen at the State level. Working with multiple States to build their own infrastructure of broadband is much more of a manageable approach than shot gunning the entire barn. Nothing is perfect, but some things are just better aligned.
Remember, AT&T just spent $33 Billion in two-quarters for an upgrade of LTE -- we haven’t even installed our baseline infrastructure yet. But who am I other than…
Just some guy and a blog….