Tuesday, June 7, 2016

FirstNet - States are starting to Opt-Out!! Uh-Oh!

The fact remains the same “why would a State want a Federal Organization to construct a local State network?” More than 75% of all the traffic routed and generated on any given network is locally driven – and that is a conservative 75%. That would mean that less than 25% of the traffic is routed and generated non-locally. What percentage of that 25% actually has anything to do with a federally driven program of operating in a “Public Safety” capacity?

If any given network is layered in security and is addressed to meet the demands of three pools of priority clients, i.e. Priority 1 being First Responders; Priority 2 being Secondary Responders; and Priority 3 being all commercial traffic (non-public safety specific), then you can quantitatively measure the historical packet driven logs to isolate network traffic loads between your usage base. In short, I can look at the logs and isolate what the traffic patterns are for each priority group.

The three priority group scheme is actually not something I just made up. The scheme is a basic network design of layered user access prioritization for any given network. It just so happens that a three priority group function fits perfectly for what Public Safety needs. By functionally isolating these three groups of users we can then adopt specific virtual network topologies in segmenting traffic loads and assigning them class codes to meet billable traffic patterns – down to the individual packet level. In layman’s terms, we can use our three user groups and isolate every individuals network usage and then charge them for their use. Why didn’t I just say so? Because, I’m a PhD and that’s how we roll.

Why am I even talking about this? Because this is a way overly simplistic view of a very complex network that needs to be created, operated, controlled and self-sustainable across a very diverse group of users all focused on their own needs. If 75% of all traffic on a network is locally generated, why would we think a 25% of the remaining non-local traffic should dictate the overall design and control of a State’s network? I can assure you that the 25% is actually much smaller and will realistically be around 3% of usage based on Federal public safety support solutions. In short, any State that Opts-In to a nationwide FirstNet solution will in fact be controlled by less than 3% of user traffic.  

Now let’s look at the actual 75% of the network. Of the 75% of the network the 3% figure translates into local Public Safety traffic patterns as well. Why? Because test have already shown that local public safety traffic generated on any given network has less than a 3% usage factor. Meaning, local Public Safety guys/gals only use 3% of the networks they have today and is presumed to be the same on the new network. With a 3% usage factor means we have more than 97% availability on the network for Priority 2 and Priority 3 customers.

Priority 2 customers are unique in that they will be administered as both a Secondary Responder as well as normal business operations. As an example; a Utility can be classified as Secondary user of the network (or even temporarily commissioned Priority 1 status) during a disaster to help with first response needs. During non-disaster times a Priority 2 Utility could utilize the network for its SCADA or micro-phase networks in maintaining its electrical distribution grid.
Priority 3 customers are the non-first, or secondary, responders. But, you should realize that any user of the network could be re-organized on the fly as a secondary or first response need demands – it’s all up to the “local commander” on the disaster scene. Meanwhile, while no disaster exists, the priority 3 traffic users can utilize all the underutilized or unused bandwidth for commercial operations – generating revenue.

Generating revenue will be crucial to a State’s need to be self-staining and self-funded. As predicted, in my model, the revenue generated from Priority 2 and 3 users will be sufficient in meeting that demand – and then some. BUT, if a State Opts-In to FirstNet then it will not be the ones controlling that aspect of the network and will in-fact relinquish that control over to FirstNet –or worse yet a commercial contract that FirstNet administers.

The terms of FirstNet’s RFP is asking for a $5 Billion dollar annual payment for 20+ years, so let’s use that as a basis for discussion. Now I’m no math mathematician, but $5 Billion divided by 56 (States and Territories) would equal roughly $90 Million a year for each State…if the State were to see any of that money…and that is GROSS not NET. Realistically how much of that $90 Million do you think a State would be able to benefit from? How about none. Why can’t a State benefit from the annual payment to FirstNet? Because the law states that “FirstNet” must reinvest all its revenue back into the network, it says nothing about the State. In fact, in the model suggested by FirstNet only allows for a “service offering” to the States, so in short the State will see nothing from that revenue. The big winners will be the commercial carrier, or contract entity that FirstNet awards the RFP too.

The commercial contract established by FirstNet will generate Billions of dollars for any given commercial carrier. Even more pleasing is that the commercial carrier doesn’t have to invest any more money than they would have already invested in infrastructure. Remember, the commercial carriers are only interested in the geographic localities that generate money, thus the major metropolitan areas (where they already are). So why would a commercial carrier, or contract entity want to be awarded the contract? Because they don’t have to pay for the spectrum!

Anyone that has been in the telecom industry for the last 40 years will tell you that the most expensive part of building out a network has to do with acquiring the spectrum and putting in your backup solutions on cell-towers. The cost of buying the spectrum dwarfs any capital or operational program. In this case a commercial entity can avoid those costs -- thus is way more receptive to building the network for “Public Safety” reasons. As I wrote about in the past, this whole deal is about acquisiton of 20Mhz of spectrum – that’s it. That 20Mhz of spectrum is very valuable and if you can get access to it for free, then why wouldn’t you? What’s the carrier plan?

If I were the CEO of one of these carriers, I’m thinking long-term. I would just partner with a good team that brings a message of fulfilling the demands of what’s in the RFP. Then, overtime, I will start to provision services onto the network (after its built) that enforces reliability to meet government demands. Eventually the State, or FirstNet, will come back and ask for build out to the rural areas, but at this point I have the State, and FirstNet, over a barrel, because of all the commercial and local prioritized traffic being used on the network. In short, FirstNet and the State will have no control at that point and then the spectrum will be fully under the control of my private commercial operations. Pretty sweet if you ask me. I’m able to build a network, enhance my own network, add more capacity, have the taxpayers flip most of the bill, generate lots of revenue, and not have to spend a dime on any of the spectrum. Outside of being an ethical issue, why wouldn’t any commercial entity want to reap those benefits – on the backs of Public Safety, the taxpayers and a na├»ve Federal entity? If you get a chance read a book called “Snakes in Suits”, it will explain a lot.

So let’s look at the makeup of a Rivada-Mercury that is being boasted about. To tell you the truth I like the framework of execution on this strategy, the only real issue is the terms and conditions of who owns the network, who’s in control of the network, and how would a local State Public Safety Organization be able to influence the architecture when he needs it? The bigger problem here -- and why this won’t work -- is the “Top Down” approach, which by the way I just see Rivada-Mercury as being reactionary to the RFP thus would explain their pursuit to get States to Opt-Out. The teaming established by Rivada-Mercury is good, although I would shy away from the vendors having any say on position in a holistic national goal, especially if those vendors don’t have any scope in the deal. Who wants competitive vendors fighting over a market they aren’t even playing in yet? The structure is based on my model of a P3 partnership to bring in the financial investment to build it; an EPC to manage the build and construct it; both major vendors of LTE (and Fujitsu) willing to sell you equipment – I mean who wouldn’t; and a carrier relationship to keep others warm and fuzzy. The big issue is really the “top-down” approach. I think Mr. Ganley knows this, but he’s playing both sides of the fence in getting some kind of an award, which is understandable, but raises another issue…. trust. How do you “trust” a double agent? Short answer is you don’t.

The one good thing about a double-agent is you know where they stand. They are in it for themselves no matter what. So when the time comes to make the decision to go with the double-agents plan, you know you are taking a huge risk….in this case you are risking a whole lot of political infighting, taxpayer commitments and etc... I’m not saying Mr. Ganley is a bad guy, in fact in such complex situations it’s good to have someone with that kind of drive and enthusiasm on your team, but the board will need to keep a short leash on him so that they can control the trust issue – I’m sure that’s why they have a new Co-CEO (very smart move).  

Regardless, the framework they propose can work, but needs to be applied from the “bottom-up” – a State “Opt-Out”.  The complexity associated with adopting such a framework is too cumbersome to manage, in fact, it’s impossible. The real question is who owns the network and how can a local guy get the support they need to do their job? The solution that Rivada-Mercury is putting forth will not meet the demands…in fact…no federal top-down solution will. My suggestion for Rivada-Mercury would be to elevate themselves above the direct role when it comes to their teaming effort and focus on more of an executable framework to which they could plug and play new players in each role. Don’t commit yourself to a solid team until everyone completely understands their role and that role may take some time to understand. The only plausible way of doing this will be by focusing on the deployment in geographic areas, but don’t forget about State controls, legislators, and governance structures. But, if you take on this role you are in fact a Program Manager and thus will relinquish control to the more local or regional executable players. The more you give away in your capital program the less control you have over the ownership, which makes this position impossible from a national federal level. Piecing together individual State Opt-Out solutions, using the same framework of execution, is actually where Rivada-Mercury needs to focus. Leave the national FirstNet solution to another Program Manager. Just because you are a Program Manager at the federal level doesn’t mean you have any control over what happens in the State, i.e. the Tenth Amendment of the Constitution. What I’m trying to say is that executing on such a framework is nice, but if you haven’t realized the full context of all the variables, and how they will impact the solution, you are in fact introducing time delays, legal consensus, political correctness and money. Stay local, stay small, and focus on “cookie-cutter”. Which begs to question…is this really what a State wants to buy into?

The fact is we’re only touching the tip of the ice-berg of complexity here. Will a State Governor, as they are exposed to more and more of the complexity of the FirstNet national solution, see any benefit in Opting-In? In essence, the case is being made for Opt-Out by FirstNet itself. The more we learn about the complexities of deploying such a solution from the “top-down”; the more political in-fighting we see; the more greed is exposed; the more we understand that we need to KISS it – keep it simple stupid. Hopefully FirstNet is starting to understand this scenario themselves, thus will change course and focus on the “bottom-up” solution, whereas each individual State (who is capable) can build their own solution within their own boundaries. Using the framework that Rivada-Mercury is presenting (although I can see the very similar approach to my own) is in fact the way for the build-out to happen…BUT…from the ground up. For what the Rivada-Mercury team is proposing they really need to focus on the State. What FirstNet needs is a Program Manager – that’s all. Someone who can manage FirstNet requirements for national control centers, centralized datacenters, and most importantly the connectivity with State control centers, datacenters, etc...

So here I interject, if the framework that Rivada-Mercury is selling is the solution, then multiple teams should be developed to compete in the same space. I can tell you that I’ve been working closely with many of the States and proposing a similar solution, but in the model we propose we run the EPC/vendor/P3 framework that demonstrates complete Public Safety control to the State and its interoperability with the nationwide FirstNet top-down solution -- while at the same time not costing the taxpayer a dime and allowing the State, and FirstNet, a solid stream of revenue. How do I know this? Literally I wrote the book on it. All of what the Rivada Mercury team is proposing is based on the context of my model that I’ve been exalting since day one – only in this case I did not expose everything to the open forum. After all, I need to protect the secret sauce. The fact remains that Rivada Mercury has done a good thing in opening up a new can of warms of competitive landscape. I congratulate Rivada Mercury for doing this.

Why am I praising another team’s proposal that competes with my own? Well the fact is simple, in a heroic fashion this is way bigger than me, or any one team, but more specifically it’s because I see a competitive fabric of competing bids to the Rivada-Mercury solution as the answer. In order to build out his entire solution we will need competition. If the competition understands the framework, such as Rivada-Mercury now does, then many more teams can be setup to compete in this huge market place. Plus, what better way to moot the competition than to introduce more competition? It’s like I planned it all along…imagine that. The fact is the Myers Model™ approach, that Rivada-Mercury is using, is just a model. If you don’t know all the parts and pieces to how it works then you will fail, or your client will fail, it may take a while, but it will happen, thus the risk. Do you ask a baker to build your car?

The context of building out this network will be based on availability of local resources to construct and manage the eventual market. We are talking about a whole new market that will dwarf the current TURF market by 3-4 times…that’s a lot of people going to work.  If I can make a buck in helping that goal be achieved then that’s gravy on top, but in the end I am, as I have been since the beginning, focused on the tax relief, jobs creation portion of the new law – the context of putting Public Safety first so that it can achieve its mission a mission that will touch every one of us when time calls. If I were focused on the money, then I would have ad’s on my website.

If you want to setup your own team to compete in this market, then let me know. Working for my current employer allows for me to consult on all levels of the opportunity and provides the depth of the solution. Plus, it helps when the company you work for has a long history of putting together these large-scale P3s and has been fully engaged with State Opt-Out solutions. It’s too big to win it all for ourselves, plus it takes a lot of good partners to execute. Just so you know, the most important piece to understand has not been divulged, that needs to be applied to each P3 team that is setup to go after each State Opt-Out solution. Think of it this way, each State will in-fact create its own private broadband company.

So you want to be involved, but don’t know how? Let me know. We can help. It’s really not that difficult. The most difficult thing to consider right now is how to put your team together, of which we have formulated a few already – specifically for this opportunity. It’s not about the overall national FirstNet program, it’s all about the State. The model we have presented, to many States now, is solid and can be made up of many different partners. We have partners now, but we can use many more.  

Just some guy and a blog…


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