Month: June 2013

FirstNet, the State of California: now they have the spectrum but what business model will they go with?

/ drmikemyers / Leave a comment

I have to congratulate the State of California to be the first in getting its full use of the 700 D-Block spectrum from FirstNet. Now it will be interesting to see how California starts to nourish that seed it just planted.  Even though Rep. Rosenberger of Ohio was congratulating the State of California, and FirstNet,he does illustrate the point that a real business plan now needs to be created – a business plan that betters what they already have and how it can foster the development of the State. His point should be read as a plan that empowers the State to build a holistic and influential case of fostering the States economic engine as well as its Public Safety requirements. By allowing the state to be creative in its approach and take ownership in its execution can best be fostered through a Public Private Partnership (P3) that doesn’t require taxpayer money – essentially a P3 that uses Private Equity.
For the last two years I have been preaching about a P3 that will do just that – give the state the power and the necessity to build its entire Public Safety Broadband solution without the use of taxpayer money yet still provides a good source of revenue in fulfilling its self-sustainment needs as laid out in the federal legislation. This P3 not only helps the states, but it can also help FirstNet.
FirstNet can still pursue its course of trying to build its own solution so that states can have a choice of service; yet at the same time FirstNet can take a stake of ownership in each of the states P3 efforts that are represented through their recurring revenue stake of that ownership. In short, those states that feel uncomfortable with managing their own deployment can allow FirstNet to build it for them, but they will miss out on the advantages of a P3 model. At the same time for those states that “opt-out” FirstNet can still benefit by taking a small share of the P3 ownership model to which they can reinvest their share of the recurring revenue into the national roadmap of FirstNet. This will allow for both parties, the states and FirstNet, the benefit of the P3 where as a majority of that benefit will remain with the state. You should note, its essential that the state still be required to build their own network under the interoperability and design characteristics that FirstNet layouts as to insure a national holistic solution.
In the end, our course forward is all about the best model. California now has a hold on the spectrum that they can now monetize for their advantage. There are only two real options: “opt-in” with FirstNet, or “Opt-out” with their own P3 model. FirstNet can benefit from both models, but the State can truly benefit from only one – the P3. Then again we are talking about California here and we have seen stranger things come out of the state in the past.
Just some guy and a blog….

FirstNet Business Model: Come buy this car!

/ drmikemyers / Leave a comment

Have you ever gone into a car dealership and you get bombarded with sales men pitching all the electronic gadgets in a car, but fail to highlight the terms and conditions of your purchase? 
How would FirstNet, and its planned business model, compete with the Public Private Partnership model commissioned at the State level? It’s actually quite simple: the FirstNet model needs to be able to completely deploy and fund the entire Public Safety Broadband Network without using any taxpayer funding. On top of that it must be able to monetize the use of the spectrum so that each and every State can retain ownership of hundreds of millions in user fees and contracts while at the same time covering 100% of the geography to include the rural territories. If FirstNet can come up with a model that does this then I am on board!
The fact of the matter is FirstNet is trying to create just another national carrier that is in coordination with the commercial carriers so that each and every State can pay for service just like it does today – from the same commercial carriers – but this time from a so called “private” national provider. There is no plan to allow the State to reap the benefits of monetizing its own spectrum covering its own State. It also has no plan of constructing the network on its own dime. The fact of the matter is that each and every State will pay for another commercial carrier type service, but in this instance they will also have to pay for its own build in their own geographical coverage area. What a deal! So I can buy new service from a broadband company and pay for its build out as well? Sounds good to me! (a hint of sarcasm) After all it’s just taxpayer money, right?
The big word (or words depending on how you write it) of the day is “Opt-Out”. What does “Opt-Out” actually mean when a State would be responsible for paying for its own backhaul on the “Opt In” scenario? Plus, how heavy is the load when you have to list all your own assets so that this provider can ride your investment for his own benefit? They want to include your hard-earned assets in their plan of building a national private broadband service provider to which you will have to pay for service from? It just doesn’t make any sense to me. The “opt out” solution is actually the best solution. You can create your own state owned “private broadband company” to which you have direct oversight and you get direct say in its support for your own State Public Safety Service Organizations. Am I missing something here?
Let me get this straight: through the Public Private Partnership model with private equity I can build a state RFP based on the assets and the specifications of my own State entities who in turn are willing to pay an annual usage charge (SLA) to create recurring revenue? I can then advertise that RFP to the private equity market who in-turn is willing to come in and pay for my entire statewide broadband network without any taxpayer money? I can maintain local control with a local hiring process to keep my own people employed? All I have to do is share with the private equity awardee 49% of the recurring revenue of which I get to keep 51%? I can reinvest my 51% into the public safety solutions for my State and pay for the First Responder communication gear? I can also control the contractual arrangement; divert risk away from my state agencies and entities onto the P3 broadband company; and have “self-sustainment” with a 30-year contract for managed services with a P3 broadband company I control?          Nah…. I’d rather pay for the service from an over-reaching federal agency who promises me that they will come into my own state to build it for me of which all I have to do is go to my legislature to ask for tax increases to help fund my own portion of that build as well as my long-term payment for their service offering. That’s the way I’m use to it! (Really big hint of sarcasm)
“Well, I screwed it up real good, didn’t I?” (Richard M. Nixon)
“Sometimes you do something, and you get screwed. Sometimes it’s the things you don’t do, and you get screwed.” (Chuck Palahniuk creator of Fight Club)
Just some guy and a blog…

FirstNet, the States, and Private Equity to deliver the National Public Safety Broadband Network…..take note carriers this is a great opportunity for you as well!

/ drmikemyers / Leave a comment

Here I sit in another airport waiting about to board another plane to talk about the Public Private Partnership. In taking a temperature of how things are progressing I would have to say that things are in fact progressing — at least in the background.

It is becoming evident to the influencers that the only real possibility of delivering this network is through a Public Private Partnership between the State, FirstNet and Private Equity. Unless of course a State really does want to raise taxes to fulfill the capital needs of building their own solution. To tell you the truth I have spoken with more than 30 States now and I have yet to find one that is real thrilled with going back to their State Legislature to ask for a budget. And there doesn’t seem to be many supporters of the Federal Government coming in to build it either. Let alone a State that really believes the Federal Government will be able to fund the entire solution, especially a State’s portion, of the national rollout of Public Safety Broadband. In reality, if a State hasn’t realized it yet, they will be the ones left holding the bag on this if they believe the Feds will come in and do it for them. Too many promises from a Federal Organization promising to be a broadband provider … and using a similar commercial carrier model that has caused so much headaches in the past.

The fact is that a majority of all the build will execute at the State level — local contractors, local resources, local contracts, local constituents, local legislation. This is actually a good thing. It allows the State to implement its own private entity to design, build, operate and maintain the State’s broadband solution so that the State can benefit from the monetization of the spectrum allocated by FirstNet. And yes, of course, this will all be done per the technical requirements of interoperability outlined by FirstNet. It’s not about the technical solution; it’s all about the management and financial governance.

The opportunity lies with the State — Local State entities, i.e. police, fire, EMS, Utilities, Transportation, etc.. will all be able to disperse the risk of the technology curve into a centralized organization within the State and controlled by the State via board ownership representation. Not only that … it will allow those same State entities to concentrate on their own business models and to subsidize the PSBN architecture by using the assets and investments already made in advancing their own telecommunication business needs. I won’t get into all of them here but there are bunch of pluses in pursuing the Public Private Partnership model I have been presenting. Just the fact that a State can control and fund an entire broadband solution for the State without having to ask for a budget from State Legislature should be a deal maker alone. Can you imagine the political future of an incumbent, or newly elected official, if he/she were to run on such a platform?The job creation and the fostering of broadband service models to excel a States commerce causes are another great highlight. The solution has even been highlighted by the President in a recent “Presidential Memorandum — Expanding America’s Leadership in Wireless Innovation“:

“Expanding the availability of spectrum for innovative and flexible commercial uses, including for broadband services, will further promote our Nation’s economic development by providing citizens and businesses with greater speed and availability of coverage, encourage further development of cutting-edge wireless technologies, applications, and services, and help reduce usage charges for households and businesses.”

The fact of the matter is that this Public Private Partnership is the only viable solution to which all that partake can benefit from — to include the carriers and FirstNet (especially the carriers). Even though the network is prioritized for First Responders the fact is that we are creating a great infrastructure tool that will dramatically change the landscape of how all State and Federal Government can operate when it comes to broadband wireless access. The consolidation into all IP (Internet Protocol) networks using private broadband wireless will change the mindset in how the government will allocate funding and grants to support broadband access across the nation touching all facets of social context, especially as it relates to the Government supporting the people and the national infrastructure that we all need.

Imagine: instead of FirstNet worrying about spending the $2 Billion in grants, and the prospects of truly acquiring the additional $5 Billion through the sale of spectrum, what if they could just use that money to outfit a national entity to control the network nationally and then focus on ownership percentage in each of the State’s P3 implementations? I can guarantee you that they would make a lot more money for reinvestment than trying to fight against the flood of taxpaying concerns. If the State can avoid the taxpayer base, and the budget approval process of their own State Legislature, FirstNet can do the same.

Just some guy and a blog….

Way to go Harris County Texas!

/ drmikemyers / Leave a comment

Really good ideas being tested in Harris County. Most were under the belief that Harris County in Texas was testing LTE. I in fact was one of those people. They are not really testing LTE but rather applications. This is really a great idea! This idea needs to be developed to include all the users of the PSBN. Test Utilities, Transportation, Agriculture and Forestry to include DoD and DHS type solutions. Of all the testing being done so far this is probably the most important. Even more important than what is going on with the PSCR. Allow me to explain.

The technology of LTE is not new anymore, but what is missing is the potential for M2M and B2B type applications that make up a great deal of the ecosystem of applications that will connect and integrate — at the applications layer — all the First Responders and Public Safety Services Organizations. What I’m afraid of is the lack of money. We need to invest a great deal into what they are doing in Harris County. If there is anything that BTOP should be used for is just such development and testing.

They also really need to brand this and market it to the community. This essentially is the real test bed for a true physical App Store and development framework. We can’t hide the gem that it is.

Just some guy and a blog….

What if FirstNet wants to do a deal with the carriers more than the carriers want to do a deal with them?

/ drmikemyers / Leave a comment

Things change — what if Verizon doesn’t give a crap about FirstNet? What if FirstNet has high hopes of working with the carriers, but the carriers don’t have any interest in working with them? In actuality it wouldn’t be the first time – I mean look at the Universal Service Fund and how well that is being rolled out. What if a commercial carrier signs up to partner with FirstNet by expanded infrastructure only to have the Federal and State taxpaying mechanism fall short of its planned objectives? Who will be left holding the bag? My bet the carriers.
If I were a carrier and I had $30 Billion invested in the stacked technologies of 2G, 3G and now 4G consolidated into huge infrastructure costs…why would I want to just add more infrastructure on top of what I already have? Especially when I’m actually trying to reduce the overhead of my infrastructure so that I can reap the benefits on selling the more lucrative content and services that deliver a better ROI than the ever decreasing ARPU (Average Rates Per User).
If this is indeed the case then why would FirstNet continue down the path of believing that a commercial carrier relationship is what they need to deliver the Nationwide Public Safety Broadband Network? The first thing that comes to mind are ideas of grandeur, or maybe just the lack of experience. Or maybe their plan is starting to fall apart…what then? The reality is that if you don’t funnel your idea based off a viable business model you will be taking everyone down a path of confusion that will ultimately lead to a lack of confidence in your actions. Is that what’s happening now? I mean we’ve been hearing the same message now for the last 9-months. To me it’s a matter of fact that the industry is losing faith and the reality is setting in. Everyone is starting to realize that if anything is going to get done with FirstNet — it will have to happen at the State level. Frankly would we think anything different? Can anyone name a Federal program that actually works?
What will happen with the spectrum? Without spectrum the State’s can’t build anything. What concerns me is a recent statement by one of the FirstNet members who stated “what’s in it for FirstNet? What should FirstNet expect for its share of revenue?” Who is the spectrum allocated for again? Such statements throws me for a loop, because I thought the network was for first response. Or is this a characteristic of a commercial executive trying to build a Public Safety network? In reality FirstNet stands a better chance of collecting more revenue by partnering with the State’s than trying to do it alone. But it’s starting to look like FirstNet is trying to utilize $7 Billion in grants and spectrum sales just for the sake of spending…what really scares me is that they might not even know it. If they were to just allocate the spectrum to the States and then take a share of each State’s P3 model – the model I promote – to which they could reap the benefit of much more revenue than they would have ever experienced otherwise. Plus the taxpayers could get their money back – our money back.
Time for FirstNet to gravitate to my model that let the State’s lead the effort of monetizing the spectrum for the own use….a shared effort of FirstNet and the State.
Just some guy and a blog…