Tuesday, May 10, 2016

FirstNet -- State Governors you have been given an entire broadband solution covering your entire State on a Silver Platter -- Carpe Diem!

So it has come down to decision time for the State Governors; do you start the process of analyzing the “Opt-Out” solution; or do you just sit and wait for FirstNet? Being that the alternative is to do the Ostrich thing and just stick your head in the sand and then hope everything goes your way. I would say now is the time to take charge and do the required work.

For a State to truly analyze its Opt-Out solution it needs to evaluate a certain amount of things first; one is the business model it will use; what is the revenue forecast; what products will you sell; how many users can you expect; what is the cost to design and build. If you look at this from the top down you will see that all we are defining at this stage is a new broadband company. After all you wouldn’t just invest your money into a new company without doing some due diligence first – this is no different.

To accommodate a thorough analysis of the opportunity we need time and money. The time is essentially today until FirstNet presents its model (supposedly November per FirstNet) plus 90 days to decide. That doesn’t give you much time to define out a new broadband company that meets your needs. Starting today that’s seven months until FirstNet’s presentation and three more months for you to make a decision. The good thing is you still have time to get it done. A good example, or case study, of what is needed is the New HampshireRFP to Opt-Out. Essentially all the RFP has asked for, is a business model it can use to help the Governor make his/her call on Opt-Out or Opt-in – that’s really all you need.

To award such an RFP will take a month or two to solicit bids; 2 weeks to award; and NTP immediately; leaving you 7 months (including 90-day decision) to get the analysis completed. This analysis should be competed with a non-biased partner that is already courting financial investors. You have to remember, it’s not about the technology – it’s all about setting up the deal. Which leads us to the next step, that being money.

How do you pay for such an endeavor?  One way to look at this is based on value. What are you bringing to the table to incentivize private investment to fund your design, build solution? What stake of ownership will you get out of the opportunity? In order to find the answers to these questions, the State needs to make its own upfront investment to pay for the analysis. But, where does the funding come from?

The fact is the State doesn’t need to pay for the analysis out of State taxpaying dollars, rather it already has grants available for the purpose; BTOP, USF, Broadband America and the NTIA grant to help the State DB their solution. What will the analysis phase cost?

With a 10-14 person crew, and covering the entire analysis phase, plus the additional approval stage with the NTIA, and the application for use of the D-Block spectrum, we are talking in the ballpark of $10-$12 Million. BTOP grant allocations alone are $154 Million per State; USF is roughly $10-$100 Million (per State) and the FirstNet-NTIA Grant (following approval of your plan) will be in the ballpark of $33-$130 Million (per State) – don’t forget FHA, DOE and other federal Grants out there to help, i.e. ARRA, etc. Did you know that the Federal Highway Administration allocates more than 10% of its grant programs, to fund highways, is dedicated to IT and communications? Remember, the State, if using the P3 model I have presented, doesn’t have to pay for the DBOM of the solution, nor does it have to pay for its long-term operations – private investment will take care of that. That’s not bad for a Billion-dollar broadband solution covering your entire State; hardened to your specifications; puts First Responders as Priority 1; interoperable with FirstNet; and does not need any taxpayer money to help fund it. Where do I signup? The biggest cost item for such a solution would normally be the price for the spectrum, but even that comes for free (almost free).

The issue is not whether or not you need to Opt-Out, or Opt-In, it’s a matter of why haven’t you acted already. If the use of this spectrum, the availability of long-term revenue, and the diversified nature of risk falling on someone else, is not a great recipe for your success, then I don't know what is. What's the definition of Silver Platter? Who else will ever sit in such an opportune position as you? Just take it and move on, your entire State is counting on you to do whats right! But, you can’t get there from here unless you get your analysis done upfront…. what are you waiting for? Get your RFP out to the market asking for a business model for the State’s potential Opt-Out decision. But who am I other than….

Just some guy and a blog….

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