Wednesday, March 22, 2017

FirstNet to award to AT&T…what now? FirstNet fights for its survival?

I’ve been seeing a lot of self-administered praise as to the court case going in FirstNet’s favor. “We expect an award to be announced in a few days to AT&T”. “AT&T gets its landfall”. "AT&T closes out the competition for good”. What does all that mean? Well nothing really. All this indicates is that the centralized federal solution still holds some wait in the holdovers of the Obama Administration. If anyone was of the belief that there was going to be any other outcome, then they are just fooling themselves. This was the course set a long time ago.

The fact remains that there are those that are still in the leadership roles within DHS, DOC, DOI and others that believe the centralized government role is the best course of action for FirstNet. Even though there may be those within the FirstNet organization and the board that believe otherwise, the rush to award is forcing a timeframe on the outcome. But, I’m confident that President Trump’s Administration will have a good look at what is going on and will see the amount of discourse and reluctance to create such a top-down federal government program as the deal breaker, non-sense, and a complete waste of time and taxpayers money.  

So where do we go from here? We have a lot of States putting out RFPs for their Opt-Out solutions, i.e. Michigan, Colorado, Alabama, Arizona, California (RFI) and New Hampshire to name a few. The bigger issue is that FirstNet, by trying to force the State's hand, the States feel pressure to create their own solutions “as to compare opt-out vs. opt-in”. This behavior is injecting confusion and trepidation into the market. Why would a Rivada, Motorola, or leading private equity teams want to respond to an RFP without an assurance that its money is well spent on a solution that will be implemented? Why layout your entire hand of cards before anyone has even looked at the deck yet? How do we get around this? It’s quite simple on how we can fix this whole thing, and I will get to that soon, but FirstNet will not like it.

Even though the writing is on the wall as to how many States are considering their own path moving forward, at last take I counted 37 States talking about Opt-Out, it’s quite evident that the chatter around the topic alone should be of great concern to FirstNet and AT&T. By moving forward with their plan they run a very high risk of failure if more than 4 States decide to Opt-Out. The rationale is that the spectrum, that would have been allocated to FirstNet’s partner, will go to the State, thus FirstNet footprint starts to shrink exponentially. AT&T’s prime directive is to acquire the spectrum to expand its own consumer base coverage – not Public Safety’s needs. The separation of FirstNet prioritization and the allocation of physical spectrum for secondary use is proof alone as to how AT&T will move forward, but what happens when the States start taking on the responsibility of using their own spectrum?  Worse yet, what happens if AT&T deploys on the D-Block spectrum only to have it pulled back when the State feels it isn’t getting what it requires? Risk, risk, risk!

FirstNet’s funding will also start to be depleted. Those States that realize that Opting Out is the best course, they will all start to apply for their portion of the 6.5 Billion grant allocated to Public Safety Broadband (6.5 B / 56 (States and Territories) = roughly 116 Million each). You can do the math yourself; if 4 States Opt-Out (average States) then we are looking at a rapid reduction of 464 Million from the 6.5 Billion bottom line (4*116=464). What happens if all 37 States Opt-Out, that would mean 4.3 Billion is gone from FirstNet’s coffer, thus forcing AT&T into a predicament that, if it wants to proceed, must cough up more than 4.6 Billion in lost capital -- and we haven’t even begun to discuss covering the rural areas yet. Who wants to bet that AT&T will be successful in that route?

FirstNet touts that AT&T is going to pay them 5-6 Billion for a contract lasting 25 years. Well that’s great, for FirstNet, but doesn’t come close to being inclusive as to what type of contract each individual State could have with one-on-one contracts with AT&T, or Verizon, or T-Mobile, or anyone they choose…. simultaneously.  I can tell you that such a contract will make the current AT&T contract look like a grain of sand on the beach. But this kind of commonsense is not part of the FirstNet plan. FirstNet’s plan is all about speed-to-market and the shutout of State Opt-Outs, they are in a defensive posture of protecting their own ideas as to what’s best for Public Safety – no matter the consequence.

As I spoke about earlier, the answer to all this is sitting right in the hands of the Governor of each State. In order to activate an entire ecosystem of broadband infrastructure, that has real meaning and is well balanced with all its participants needs, all it needs to do is say “we Opt-Out”. Once that is made clear then the State, its Public’s Safety, its economic engine, and its competitive roadmap to connectivity can commence. Imagine all the jobs creation and revenue potential that is sitting in the hands of the Governors as we speak. Why wait? Eventually someone needs to tell the Governor that he is boss, and he either needs to sit down at the table and start carving up the meat, or be the one laying on the table. Not making a decision is killing the opportunity and killing the State’s ability to foster expansion. I can tell you that building a broadband company for the State, when the spectrum comes for FREE, is driver enough for the private investments to flow into the State.

But I’m ….

Just some guy and a blog….

No comments:


Words to Live By: “Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… The ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… They push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.” (Steve Jobs)