Industry demands answers from FirstNet on network’s cost and business model

FirstNet board members has just approved the spectrum-lease agreement with the Los Angeles Regional Interoperable Communications System (LA-RICS). It is the first spectrum-lease arrangement approved by FirstNet.

What is the current status? All seven Broadband Technology Opportunities Program (BTOP) recipients that received the largest grant amount—$154.6 million, have been negotiating a spectrum-lease arrangement with FirstNet—the licensee for public safety’s 20 MHz of broadband spectrum in the 700 MHz swath—since February 2013. Although the base agreement was supposed to be completed by May, two 30-day extensions have been granted, so that the BTOP recipients could finalize the terms of their deals with FirstNet.

Although spectrum is one of the viable network’s factors, when referring to Public Safety Networks, there are also other major issues that need to be considered before the upcoming RFI/RFP. Interoperability across a common standardized network where all agencies could intercommunicate is urging, selecting also the right robust technology that could vary from microwave to satellite solutions. What about the role of the commercial mobile networks, are they the roaming partners and what else could they contribute?

Teri Takai, member of the FirstNet Board of Directors , in her recent interview commented, “FirstNet over the next few months will be engaging in extensive outreach with state, local and tribal entities and territories to better understand their unique public safety needs and challenges. Currently is running a “listening tour” seeking input from vendors and public safety communities”.

If FirstNet is still in “listening tour”, still working on a serious financial plan, what is the timeline moving forward? A timeline to build that expected new infrastructure is still in plans, when the Congress has already contributed $2B and offered the spectrum that keeps sitting there without anybody using it to generate revenues. The Congress is signaling to the vendors, to develop equipment and devices, announcing a $7B value market, rushing them to deliver in a short term. The remaining $5B is expected from auctions in the next 2-3 years. The current funding ($2B) is not enough to build a nationwide network that will cover each sqm, which is not part of the legislation yet, but definitely could warm up the engines in a combination with the spectrum availability.

However, FirstNet needs to show a financial plan that answers industry’s concerns. “What is the cost of the new network and what is the business model” Who is taking the financial risk? Will Wall Street put money in as it already claimed? The current national footprint does not have enough users to sustain any cost. Currently, there are about 5.4 million PS estimated US users. Will they pay any subscription? Probably not since most of them are already using and paying fees to use the mobile commercial networks.

Some of the best options would be to go with the numbers and built infrastructure that could “fit in” the budget, selecting the right private partners and vendors that could deliver and guarantee the network’s safety meeting the requirements.  It would be really difficult costwise to maintain and upgrade the network as the new LTE releases arrive. Operationalizing innovations in the field could be also another option to overcome business hills and technicalities. Commercializing spectrum to maintain PS operation, as in the beginning not all spectrum will be needed for mission critical applications could generate some revenues. A secondary spectrum usage from carriers in a case to case mode could generate revenues under the strict condition that PS agencies could grab it back when needed or at least as much as it was required at any given time. That could work with carriers that need additional capacity but definitely not with major players in large markets.

Closing this note, Canada and UK are mirroring and following closely any FirstNet’s moves and decisions. Thus it is extremely important FirstNet to succeed during 2013 and set the ground for more robust PS networks with sustainable business models that could be implemented in other markets.

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