Another interesting area that I have researched is the Utilities industry. I have gathered a lot of data on this industry and clearly see its fit in the Public Safety Broadband play. They have an abundance of cash and assets (as illustrated below). These numbers are a little bit dated (two years), but it gives you a great idea of what one of the potential players could look like when it comes to Public Private Partnerships.

Here is a more specific breakdown on the Utilities industry in whole.

Just some guy and a blog….

As part of my specialization I research all the major vertical market segments and the impact that telecommunications has on them. Some of my work is basically analyzing the markets for opportunities of which telecommunications can advance even further, especially as they relate to the rollout of the Public Safety Broadband Network. Hospitals are closely tied to the Public Safety arena…after all without Ambulances or EMT type personnel then who is better qualified.

Did you know there that in the US healthcare sector includes more than 820,000 hospitals, doctor offices, emergency care units, nursing homes, and social services providers, with combined annual revenue of over $1 trillion. Major companies include Kaiser Permanente, HCA, and Ascension Health. The sector is highly fragmented: the top 50 organizations hold just 15 percent of the market. Hospitals are the least fragmented industry: the top 50 hospitals account for 30 percent of total hospital revenue.

The industry includes about 6,000 general hospitals; 20,000 nursing homes; 15,000 diagnostic labs; 30,000 outpatient clinics; 120,000 dentist offices; 200,000 doctor offices; 75,000 day care facilities; and 50,000 family and social services providers. Of the 6,000 US hospitals, around 75 percent are for-profit. Most doctor offices, nursing homes, outpatient and urgent care centers, and day care facilities are run as for-profit enterprises.

These are a lot of internal state entities that would require access to the Nations Public Safety Broadband Network being laid out by the NTIA. I hope they haven’t forgotten about this market.

Just some guy and a blog…

Just as an example; here is the breakdown of the Wireless Patient Tracking solutions for this market…

I wonder how long it will take for the FCC to realize that the rural broadband initiative can be achieved through its plans for the Public Safety Broadband Network (PSBN).

Although the initial deployments of the PSBN will be for Public Safety specific uses; it won’t be long before the abundance of bandwidth and low usage statistics start to become evident during its initial tenure. This may open the door for expansion of the FCC Broadband initiative to include private wireless as a method of touching the rural Americans; not just the wireline as is the case today. This could put a whole new spin on the FCC’s Connect America Fund. 

As parts of the PSBN start to come online, and solidify in its daily operations, the FCC and the NTIA could start to harvest the under-utilization of the PSBN during non-emergency timeframes. A key way to develop this usage could be through a mechanism of RFPs. In short, the FCC (or a State entity) could initiate RFPs that the carriers would bid-on in order to get access to the rural customers within the wireless/wireline footprint of the PSBN. This would generate a win-win-win scenario whereas everyone would get what they want: the carriers get access to the customers without having to build; the rural Americans get broadband access; the Public Safety gets better utilization and funding for its broadband deployments; and the State and Federal Government resolve a standing issue of broadband to all Americans, plus a strong infrastructure for Public Safety. 

For a carriers point of view though, it will be imperative to know how such opportunities would be administered, i.e. would the State or Federal Government let the RFP and/or would they be obligated to buy access to the rural customers, or would they just compete to fill a void of service offerings to the rural America? The opportunities are abundant, but from my perspective, it would be wise for the State and the Federal Government to utilize their Public Private Partnership arrangement, associated with funding the PSBN, to enforce revenue sharing, or a “price for access” model; much like a carrier would do to them. In essence, instead of the carrier selling access to the State, the State would sell access to the carrier; then the carrier would sell broadband service to the rural customers.

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There is plenty of deployment, interoperability and integration issues being addressed by the vendors and the engineers — but it may be an observation worth bringing-up – that is the lack of development around a sound business model to build and sustain that technical platform. After all, it’s easy to just pass over the topic of paying for the network when the entire basis of perception is on a non-revenue and private platform. Plus, it doesn’t help to propose grants and tax dollars without any real consensus on how the money should be spent – case in point would be the DOE stimulus money for SMART Grid; money put into the market too quickly without administering a real business model beforehand. Nor does it help that the market conditions kill our entrepreneurial spirit of creativity by forcing us into the “reliance” on the government to come up with the plans and funding to get things started. In reality without that foundation of a solid Public Private Partnership (P3) business case; some States may find themselves way out in front of the pack only to have to turn-around and come back because the industry made a turn. What is the solution?

A solution for this situation is to simultaneously start to pursue a solid foundation of a business model that works for your State in coordination with the Federal Board, or FirstNet. If it will cost you roughly $750 Million to build 3000 towers within your State ($250k X 3000); then you should script a business model that secures the benefits of the LTE platform, much the same as a carrier does. But you must design the solution that expands upon the notion of building a private network of networks. This developed business model needs to incorporate all aspects of revenue generation; revenue from handsets, revenue from leasing options, revenue from investors, and funds from the State and Federal budgets. All of these elements are tied to together so it is essential that equal participation be the norm. When you force the hand of one element over the means of the others, all you are doing is imposing the weaker link methodology – that is the network, and the business case, will only be as good as its weakest link. In this case it may be over-engineered to a point that it hides the benefits of a “self funding” platform.

So how do you get started? You need to start having knowledgeable discussion around the P3 concept and how all the players (State and Federal entities) will take part; how the technology can be exploited; what investment scenarios can be made; and what are the long-term objectives. It will be crucial to bridge the technical adaptation of the LTE platform with a solid business case objective wrapped within a P3 vehicle. My suggestion; there are only a few of us that have the technical background and the P3 expertise, I would start employing those resources now that will help mold your plans for the future. Once the market turns around, it will be too late, you will be forced to play with the rest of the herd or forced to follow behind.

Just some guy and a blog….

There has been a lot of traffic in regards to the Public Safety Broadband Network and its impending rollout throughout the United States. But there seems to be a lot of confusion as to why the Utilities, Transportation, and all State Agencies, must get on-board with the solution. It’s a complex question to answer, but using the Utilities as an example, I will try to convey a high level theory.

The primary reason is of course cost, Money. Money is the end of the line for all our efforts. But even eliminating the money issue you can see that there are three additional primary reasons: market forces at play; the domination of wireless commercial telecommunication advances; and the definitive fight against time.  I say, “wireless telecommunication” because the predominate talk today is around the complexities to install the wireless communications fabric the will run the entire Public Safety solution – or LTE.

The market surrounding telecommunications, in whole, is one of divergence and consolidation. As the carriers’ move further away from their dependence on the “old” network infrastructures of 2G and 3G, and more towards an all IP based architecture of 4G, it puts a strain on the Original Equipment Manufacturers (OEMs). It forces the OEMs to rethink their product lines to accommodate the 100 Million users each carrier services, in short, they have to downsize and eliminate the old and develop the new. As the carriers move into the IP fabric of more wireless dominance, so does the need for expanded and costly infrastructure and the pressure of the OEMs to design and develop products that will operate on it — in this case LTE.

With that said now picture a huge wave pool. The carrier creates the wave and those that rely on what the carrier sells, i.e. OEM, contractors and users, will be forced to ride that wave. As it stands we are currently in a wave of LTE and wireless. There is no turning back on the where this wireless wave is going — and by the way this is no typical wave — it’s a tsunami. A tsunami that is having deep and lasting impacts on the entire world and we are years away from when the calming of the oceans start to happen. Those impacts will, and are, having a huge impact on the Utilities as case in point.

You see the Utilities are one of those entities that is riding this huge wave and, unfortunately, they committed to the wave way too soon and have put themselves in the bad position of sitting at the bottom of the wave as it builds to its highest point. Having been a surfer in my youth, I know the feeling of committing too soon only to have that bone-crushing, ten-footer, crash on top of you. Its not a lot of fun and can be downright scary at times. But you just let your body rock and roll under the waves like a rubber dummy and wait for the point in time to make a dash for the surface. Meanwhile, everyone else is sitting back, riding the wave, or laughing at you on shore.

This is not entirely the fault of the decision making capacity of the Utilities, after all the excitement of the SMART Grid market, and the influx of stimulus money, paid a political toll that only forced them to commit to their deployments and the technology of the time. In this case that technology selection was WiMax and 3G cellular.

WiMax is better known as the Betamax of wireless. Now there are those who steadfast with their claims about WiMax, and that it still has a role to play, but its just a matter of time when the wave takes over the OEM manufacturing process — and the users commitment — will force the technology out of the picture all together.

Along with that WiMax decision came with the commitment to cellular 3G mesh solutions to connect the fabric of the SMART Grid metering infrastructure. This too was not entirely the fault of the Utility alone. Their decision to go with a 3G wireless solution was the technology being sold by all the major carriers at that time. LTE wasn’t even a viable solution yet. But that wave built up fast to the point that the wireless carriers saw that they had no choice but to commit to the 4G LTE solutions that ultimately enveloped the commercial carrier world (actually ever commercial carrier in the world has committed to LTE). With that commitment to 4G LTE, so came the commercial carriers notice to the Utility players that the 3G solutions they just sold them will be end of life within the next 5-10 years. This is the break in the wave that allows the Utility to shoot for the surface.

Most of those SMART Metering deployments have, or are, just wrapping up, which means they are already considering the next upgrade to replace the SMART Meters with radio interface chip sets that will talk LTE. This is a hard cookie to swallow being that a typical Utility likes to put technology in that lasts for 20-30 years — minimum. But, if they don’t upgrade then it will cost even more later to maintain (being that the OEMs won’t want to maintain tooling for the old devices) and ultimately be forced to upgrade when the options are less prevalent.

Could this have been avoided? Is it a bad thing? So where to go from here? The choice is clear to me…the Utility must commit full throttle to the technology. By buying into the complex architecture of the SMART Grid solution, they bought into the technology curve as a business. There is no going back. After all, you can’t just rip out all your SMART Meters … can you? Realistically though, they too are here to stay. But the decision to commit to LTE raises another complex issue. If the Utility commits to 4G LTE as its eventual wireless solution for SMART Metering — they will need spectrum. Thus comes the Public Safety Broadband Network (PSBN). It’s the surfer on the surface grabbing you by the arm to pull you out of the water.

In order to build out the entire national infrastructure of LTE, LMR (integration), microwave, fiber, and control/datacenter elements for the PSBN, it will cost roughly 70-100 Billion dollars (installed assets). The Federal Government allocated 7 Billion total with 5 Billion from auctions yet to happen and the remaining 2 Billion available in grants. The grants will be allocated to each State for a max grant total of 135 Million per State (most likely matching funds as well). It may be just me, but there seems to be a problem Houston. If you tally that up you get, roughly, 6.7 Billion (almost 7 Billion) and if matching funds are instituted — you get roughly 13 Billion. I’m no mathematician, but that’s not even close to 70 or 100 Billion needed. As an example, AT&T services 100 Million subscribers that accommodate 96% of the population mass of the United States. It has installed assets of 107 Billion. I think that may cover Internationally as well… not sure…. couldn’t see the split in the international versus US operations in their 10K filings.  

Ultimately the answer is in the States ability to generate enough cash to build their portion of the national solution. That need opens the door to a Public Private Partnership that would allow State entities, and departments, like a Utility, to play a crucial part. The Utility needs the technology and the PSBN needs cash.

This relationship opens the door for some great benefits for the Utility. One obvious opportunity is the Utilities currently installed telecommunication infrastructure, which could be utilized for the PSBN to offset infrastructure costs. A more pressing opportunity is the added cost savings to a Utility by not having to run a capital program to install the wireless infrastructure themselves, which is what they would typically do…as was the case of the SMART Metering installs. In essence, the Utility can put the risk on the State Public Private Partnership to deliver its broadband access for its SMART Metering infrastructure, thus saving the cost of having to build it themselves, ultimately eliminating their capital program requirements all together. Plus, it will shore-up a fixed annual operational cost model, at a fraction of a capital program, to pay for the broadband service it needs.

There is one other area that the Utility could benefit from — that being the investment option associated with the Public Private Partnership itself. As with all the State entities that would require access to the broadband services, they could all become stakeholders of the private investment itself. In short, they could also invest, monetarily, into the State Public Private Partnership, further reducing its fiscal footprint associated with their broadband needs by recouping money through a shared revenue model. The long-term revenue generated from the annual costs associated with buying the service from the State PSBN Public Private Partnership.  

In the end, it’s quite important that all the viable State agencies, and entities, that require access to the broadband LTE service, be a player in the Public Safety Broadband Network rollout. Together they all bring something that is complimentary to the overall success of the program and that will ultimately allow the entire nation to ride some awesome waves of change. 

Just some guy and a blog….

I was on a call this morning that got me thinking about the sources of funding for the Nations Public Safety Broadband Network (PSBN). You have the usual suspects of funding sources, i.e. State and Federal tax dollars through grant programs, but there are a many more sources that could be garnered.

Beyond the typical Project Financing realm, and doable within the framework of a Public Private Partnership, you have a host of government and commercial/corporate vehicles.

In the commercial/corporate vehicles you have commercial lenders, capital market bonds, equity funds, credit agencies, development finance institutions, bilateral agencies, multilateral banks and sovereign wealth funds. There are many forms of grants, loans, bonds and tools utilized with varying degrees of complexities and politics, but they are doable and used quite often everywhere in the world….some more than others. 

Government vehicles within our borders tend to be isolated to large-scale projects and programs and are delivered through a complex mechanism of grants, bonds and agency budgets.  But most particularly are the budgets allocated to State Agencies through Federal Agencies. A good example would a State’s internal Department of Transportation. A statewide deployment of PSBN will undoubtedly require the involvement of the States Department of Transportation (most particularly mass transit and highways). Being that the Federal Government has allocated $7 Billion to stimulate the creation of the nations PSBN — that is just one course of available funding. Another course would be through allocated budgets within the Federal Highway Administration as well as the Federal Department of Transportation. The organizations already allocate a certain amount of funding to help build the inherent technologies that secure and maintain major transportation projects, i.e. Intelligent Transportation Systems (ITS). There is no discerning differences between an ITS program and the requirement for broadband access within the State DOT. One view is from the DOT business objectives itself (running transportation for the State) and the other is the DOTs requirement for Public Safety; both function using the same technologies. We can then easily ascertain that it is feasible that these sources of budget allocations could also be considered as part of the overall allocation for PSBN. This is not unique to the transportation market…the same can be said for power and the DOE (Department of Energy), or Forestry and the DOA (Department of Agriculture), etc..

Another, and more lucrative alternative, is the private investment scenario. I covered this in an earlier topic on the make-up of a Public Private Partnership. In short, there area available sources of funding through private investors to buy a shares of the P3 SPV (Special Purpose Vehicle). The SPV will be equipped to generate long-term recurring revenue – which is a prime reason LTE was created in the first place…that is to make money. Private investors will see the liquidity of the long-term SLA arrangements between State and Federal Agencies and their required access to the LTE broadband services. In my mind this is probably the most lucrative of the sources of funding and could even impact the necessity to even use State or Federal funding programs. There would be no end-in-sight for the amount of private investors to help make this happen.

Just some guy and a blog…

I see strong similarities between the Public Safety Broadband Network and the classified networks of the Intelligence world.

With the advancement of the Public Safety Broadband network will come the ability to carry multiple forms of traffic. I am talking traffic above and beyond your typical video streaming and voice capabilities being advertised. Although it is a nice feature, it is only one of many features that can best be classified as M2M (Machine to Machine) or M2H (Machine to Human) interfacing. Allow me to explain.

There are many forms of data collection methods. In the intelligence world (unless its been updated since I last dealt with it) data collection and dissemination is broken into 5 major Intelligence arms; Imagery Intelligence (IMINT), Human Intelligence (HUMINT), Signals Intelligence (SIGINT), Electronics Intelligence (ELINT) and ultimately MASINT (Mass Spectrometry Intelligence).  As for the Public Safety Broadband Network there is no reason the same such alignment could be made. For IMINT it correlates to the streaming Video and Picture capabilities. For HUMINT it would be the alignment with Officer traffic, messaging and instant reporting functionality. For SIGINT you will see the typical patterns of call monitoring, text deciphering, code transmission and RF based signal propagation and analysis. For ELINT it could be the signal origination and electronic signal tracking scenarios. And for MASINT it could be the added advantage of chemical discernment videography and alternative forms of radio base imagery platforms, such as Synthetic Aperture Radar or LiDAR. Such intelligence collecting platforms work with discernable traffic patterns that ultimately communicate through a private classified network. This is just one comparison to one market segment, i.e. Police, SWAT, DoD, etc.. There will be a host of “other” traffic patterns as well.

Other traffic patterns could be made up of your typical SCADA based critical and non-critical forms of communication, i.e. Utilities, Traffic, mass transit, high-speed rail and infrastructure monitoring, etc.. The point I’m trying to make is the amount and variation of the traffic scenarios that could ultimately interface into this Public Safety Network will not just be about voice and video streaming.

The Public Safety Broadband Network (PSBN) will be comparable to a war fighter solution based off a Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) platforms. Essentially we would be at the starting point of major private and classified communication networks all subsets of the broadband technology. It’s important to remember that the PSBN will interface with more than the typical commercial carrier network.