Wednesday, April 5, 2017

FirstNet and AT&T - Judge makes mistakes due to lack of awareness? Or was evidence purposefully left out in the hearing?

So, I’ve been reading some of the press clippings on the award to AT&T. There seems to be some discrepancies in why the award should have even been considered. Now don’t consider this in anyway as support for the Rivada proposal over AT&T’s bid, as I stated in an earlier article, two years ago, the Rivada had no dog in this fight for the nationwide RFP. It is pretty clear that the law specifies "proven technologies", thus pitching the “Spectrum Arbitrage” solution was a dead end. Plus, a real player would have to be an established player with deep pockets. But, I also stated in a related article, at the same time frame, that AT&T would not meet the demands either, and even highlighted the fact that AT&T actually doesn’t build anything, they rely on the contractors to actually design and build their solutions (detailed designs and actual builds). This fallibility was present in the court findings as well.

All of this contention between an AT&T and Rivada court case stems from the fact that the FirstNet “Opt-In” solution was also a disaster from the start. The “top-down”, “centralized federal solution” will not work. I have illustrated, on several occasions, that the only viable solution to the success of the Public Safety Broadband Network was through the State “Opt-Out” route. But, what does a “guy with a blog”, and probably the only known published expert in the delivery of Public Private Partnerships for large-scale telecom solutions, know about such things? Sorry to say…I’m really the only one. That’s not a bragging point, that’s just stating the fact that I was the only one that happened to stumble into this topic more than 10-years ago -- and wrote about it. 

Back to the articles, specifically the RCR article dated April 3rd. In the write-up they state that the findings listed that FirstNet considered 4 main areas of the proposals for comparison.

·      Performance and Technical Risk

“For performance and technical risk, FirstNet observed that ‘[c]oncerns associated with interoperability with opt-out states, reliability/availability, and coverage’ could ’cause first responder lack of access to NPSBN services at a critical event and lead to loss of life, serious injury, and/or failure to meet mission objectives and requirements.’” 

·      Cost Risk

“With respect to cost risk, [FirstNet] noted that ‘Congressionally allocated funding for the NPSBN” might be “inadequate to execute deployment and operations’ if the winning contractor ‘undervalued’ FirstNet’s excess spectrum capacity.”

·      Schedule Risk

“FirstNet assessed the schedule risk as ‘high’ because (among other things) ‘[t]he current anticipated schedule is aggressive’ and ‘there is a potential that FirstNet may not have enough Government allocated funding . . . to pay for full nationwide coverage . . . resulting in a slower rollout.'”

Having some type of a placement to compare other bids is understandable, but when you start the whole process off with the notion of a "carrier solution is the only viable solution", then the criteria becomes useless.  

I’m not going to go into any great detail of the Rivada bid, primarily because I foresaw the lack of a true bid from the start, thus don’t find it necessary to degrade someone’s honest effort. The following is what the Judge said:

Evaluators determined that Rivada Mercury’s proposal to build and maintain FirstNet’s nationwide public-safety broadband network (NPSBN) was “risky” because of uncertainty surrounding third-party funding, teaming agreements and its wholesale-broadband-market business plan, according to a court ruling”

One thing you need to know, no one is well suited for third-party financing. In the past, I highlighted that “third-party” financiers won’t make a real investment without some assurance of a payback. I can assure you that AT&T did not have a fixed based of investors either, so in this case it comes down to who do you believe more. How can you use this as a comparative variable if both parties couldn’t produce real investors? A Private Equity firm will not be "full-in on the deal" until they have enough information to make a sound decision. Nobody will just blindly give Billions without some due diligence, so in short, neither Rivada or AT&T really has any investors, thus should be equal in the stance of risk. Doesn’t this make the comparison null and void? I witnessed this firsthand while presenting the State Opt-Out P3 solutions.

“AT&T’s bid wasn’t perfect, either….AT&T’s failure to ‘provide evidence of executed teaming arrangements with core subcontractors”

Can anyone tell me why FirstNet finds that “failure to provide evidence of executing teaming arrangements with core subcontractors” is not the biggest red-flag in the fleet? I mean AT&T supposedly has all the TURF contractors, and then some, knocking on their door everyday trying to get more, or keep, contracts with AT&T. How can someone like an AT&T not be able to know how to execute contracts with contractors? The simple answer is that AT&T can execute contracts, but decided not to demonstrate strongly in that area purposefully. Why? Why would AT&T not want to show strong contracting capabilities when everyone that has been in the industry for the last 15 years knows that’s not true? Couple of reasons come to mind; one they lacked a strong person on the team who could communicate that in the proposal; two they forgot; or three they did not have faith in FirstNet’s success.

The reason “failure to provide evidence of executed teaming arrangement with core subcontractors” became an issue, and the reason AT&T did not include the background in their solution, was because they didn’t know what that contractor should do, so, just like the financiers, nobody understood what really needed to be done yet. How do write a teaming agreement if you don’t fully understand the intentions of FirstNet, thus resulting in a no-confidence solution? The truth is AT&T did not, and may still not, feel that FirstNet is actually going to succeed in its pursuit. Plus, how much to you want to bet that there was a lot of meetings between investors and contractors that resulted in a lot of “we’ll just have to wait and see before we can make a decision” meetings? In the end, AT&T is probably one of the most capable and knowledgeable entities on the planet that understands contracting protocols; for them not the achieve confidence level in this aspect of their proposal should raise a number of red-flags.

“Several significant areas where AT&T’s proposal had unbalanced pricing and/or increased risk to FirstNet.”

Pricing is the key to "self-sustainment" and "self-funding" capability. Without good pricing you can't make enough money to attract the right kind of investors, thus sustainment and funding become a huge risk factor. From what I understand, Rivada actually did better than AT&T in this regard; one because the defined their service billing options and initial product offerings. AT&T is planning on using their existing product lines and offerings, but for specialized priority preemption services just reek of high costs, let alone the cost of customized products for Band-14 support. 

Being that the judge already declared that Rivada’s solution was also “risky”, and now suggests that AT&T’s proposal also had a great deal of risk, then why would the RFP proceed? Shouldn’t they just shit-can this approach and start over? Or maybe take an alternative path? Why should we risk Billions of dollars, and the most valuable spectrum on the planet, to two bidders that had extreme areas of risk? Why does FirstNet think that they have to force this award to move forward? The bigger solution would be to not award and change course. After all, if all the bids in opposition to the awardees bid are classified as "not meeting the credibility factor", then doesn’t that mean a sole-source contract? Or maybe lacks the ability to stay competitive and thus should be thrown out?

“Rivada Mercury’s proposal “contain[ed] ‘deficiencies and/or [a] combination of significant weaknesses that, if accepted, would introduce excessive, increased risk,’ making successful performance ‘highly unlikely,’” according to the U.S. Court of Federal Claims decision.”

The same can be said about the AT&T proposal. The fact is the proposals were two different solutions to accommodate what FirstNet advertised. But, given that FirstNet was already leaning towards a “carrier relationship model” as the only real viable solution – in their minds – then any other proposed solution did not stand a chance. So, it didn’t matter what any other entity would make a pitch, even if the solution was solidly in line with every aspect of the law as written – like my model for the Opt-Out States – the decision was already made in the minds of the board and the FirstNet organization before the RFP was even written. What do you think the FirstNet organization, and the board, were actually doing during the phase of “outreach”? How much can you learn from the same crowds while you present the same slides?

I remember a phone call with TJ Kennedy, and a few others, back in 2014 which demonstrated the true nature of what FirstNet was doing. This call was taken long before the RFP was released. In that conversation I pitched the alternative and why FirstNet should get behind the Opt-Out States. What I got in return was “I’m trying to create a national carrier here, show me the numbers that will change it.” How would you know you are creating a “national carrier” if you haven’t even really started the outreach process, the process that supposedly would gather all the intelligence you need to know what you want to do? Just go back and look at the very first slide deck presented by Mr Ferril and the FirstNet Board at the time!

FirstNet’s idea of success was established during the first week the law was signed. FirstNet’s plan from the start has been to grant access to the spectrum AT&T, then deploy the Public Safety Broadband solution in collusion with AT&T by deploying onto their existing infrastructure with the hope that the solution will be upgraded later on to quite the supporters of “public safety grade network” requirements.  The lesser of two evils.

“the SSA cited AT&T’s considerable experience building and operating nationwide wireless systems, noting that the carrier’s position “meant that it would ‘be able to construct, operate, and maintain the NPSBN [ . . . ], serve public safety users, commercialize the excess spectrum capacity, and make the required [p]ayments to FirstNet,’” according to the court ruling.”

Name one network that AT&T has truly built? A lot of people don’t understand that AT&T is an operational firm, not a construction and execution firm. AT&T’s business model is built on top of a network that was built by its contractors. AT&T’s primary goal is to just monetize access and services that the network can render. AT&T has the capability, like any firm, to design and construct such networks, but they don’t due to cost.

AT&T operates in a cyclical process of product management and product development. Design and construction firms operate under a hierarchical approach – with a beginning and end in sight. If you try to perform both as a cyclical and hierarchical firm, you will undoubtedly become overly burdened with costs to operate and function. It’s one or the other. You either operate on a long-term budget of cyclical products; or you operate on a hierarchical cost plus scenario. If you try to do both, then the competition will beat you on every turn due of cost. Performing under a cyclical and hierarchical solution carry’s steep overheads that deplete profit. If you’re a company that relies on profit to maintain its shareholders, then you focus on cost savings, thus can only perform on of the two options – AT&T is a cyclical operations firm, not a construction firm. Therefore, the AT&T solution would not have met the obligations of “construct, operate and maintain” either.

Given that both firms did not meet the objectives, then doesn’t this aspect of the bid become moot as well? How can one say that Rivada’s solution is any less risky than AT&T’s, or vice versa? The fact is, if the Judge really knew what it was she was dealing with, and had all the information at hand, then she would have easily seen that both parties had contributing high-risk positions in their proposals. In the end, this is just another red-flag as to why this RFP, and the award, were rushed to accommodate a timeline over the needs of justifiable decision making.

“AT&T also could leverage its subscriber base of 130 million customers to ensure that devices that can operate on 700 MHz Band 14 airwavesthe spectrum licensed to FirstNet—would be manufactured in meaningful quantities, according to evaluators.”

Maybe 30 years in the industry just isn't enough to understand why a Judge, who has reviewed this entire solution in weeks, can justifiably state such non-sense. How does leveraging a “customer” base, on existing commercial infrastructure that is not on Band-14, have anything to do with Public Safety operating its own devices on its own spectrum? Maybe the assumption is that because AT&T has delivered such services before, on other allocated spectrum, using other devices, then they are best positioned to deliver the solution for Public Safety? There is no link between 130 Million subscribers and Public Safety users -- nothing. The entire context of allocating the D-Block, band-14, spectrum to Public Safety was for the purpose of getting Public Safety off the shared commercial networks of those 130 Million users. If AT&T’s network is so great, then why adjust what Public Safety already uses today? Why allocate any spectrum to Public Safety at all?

Meaningful quantities.  I believe what the definition in this context for “meaning quantities” has to do with OEM support for products onto a new network, that by using the installed base of 130 million users gives you weight over the OEMs to manufacturer handsets and dongles that meet the specification of Public Safety. This is a nice thought, but in this case, if Public Safety will be installed on Band-14, then I’m sorry but all the handsets will have to be adjusted to accommodate a new chipset that can work on Band-14, or at least a new SIM chip.  The only problem here is that you can install a new chipset on a toaster, as long as you have that toaster still working on a deficient commercial network, it will still not communicate after a disaster. The object is to get a new, hardened, public-safety-grade network, not a new handset with a new SIM card.  The fact is that the OEM influence has nothing to do with the installed base, unless you are planning on deploying on the existing commercial grade networks.

What I think happened in this regard, is that Judge was not provided all the information she needed to make a sound decision. The absence of the supporting material could have been a mistake, or pure lack of knowledge, but most likely stems from the competitive landscape FirstNet imposed on the market to enforce their agenda of the Opt-In solution. Could it be that evidence was withheld?

Through the Opt-Out solution, and given the number of users for a State’s P3, the OEMs will be all over the State Opt-Out deployment plans. As an example: for the State of Colorado you have over 900 priority-1 First and Secondary Responding agencies and entities; priority-2 users of existing Utilities, Transportation and other government based entities; added with the priority-3 users of commercial bandwidth, illustrates way more customers than a single-private-carrier would entertain, or be allowed to entertain. In fact, the OEMs may sway from the carriers with advanced manufacturing into many other tools and assets that can connect into the State Opt-Out network.

In short, the Judges wording, and thought process, was trying to link the association of OEM manufacturers with the 130 million existing users of AT&T and its influence on Public Safety market space to generate needed equipment. For someone who knows telecom such conclusions lacked consistent understanding and may actually have been influenced by carrier lobbying activity in defining their own definition of how the OEM markets react. If you provide the manufacturers a sound solution for administering hardened broadband services, and the solution generates revenue for them, then the OEMs will follow. In this case, users of the Opt-Out solution were not understood (more Rivada’s solution) and the only solution that was presented was a carrier based commercial service option (AT&Ts solution). Rivada’s solution was a “build your own network solution” and the AT&T proposal was a “use our existing network solution”. If you apply the law, as written, then the Rivada solution actually came closer to meeting the goal, but then again this Judge did not consider the law itself, just the RFP and the process thus the disqualification of Rivada. The RFP was written for AT&T, if not by.

In conclusion, all this chaos is providing more fodder for the Opt-Out States. So keep it up.

But who am I other than….

Just some guy and a blog….

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