There is a lot to understand about the upfront process that a State must perform before FirstNet presents its plan – in November! You should note that FirstNet isn’t making it any easier for the States to “Opt-Out”. Pushing their schedule forward to come up with a solution that will be presented in November is not done by mistake – it’s done by design. FirstNet knows the State will have to accommodate a lot of information before a Governor can make a decision, and that the 90-day period following FirstNet’s presentation to the Governor is way too short for such a decision, thus their pushing the timeline so expeditiously. It’s not to FirstNet’s advantage that the Governor get a competing bid.

If a State wants to really investigate its “Opt-Out” solution against the “Opt-In” solution, then it needs to get the ball rolling. That ball needs to start with a good conceptual understanding of how their P3 (Public Private Partnership) will be put together; which equity players are interested; what is the capability of your EPC (Engineer, Procure and Construct) contractor; and what technical roadmaps will be established. If you go by FirstNet’s rules that means a State only has 10-11 months to put together a viable “Opt-Out” solution to compare against FirstNet’s plan.

Once you have your P3 strategized, and your team selected that you want to move forward with, then you can start to focus on deliverables. Using your selected EPC (this is the entity that is really putting the team together) the State will need to fund the Analysis stage. The Analysis Stage is the phase where we formulate package deliverables that will be utilized for the Governor and the follow on phases of work. These deliverables will be required for the Governor to make a sound call on either “Opt-Out” or “Opt-In”. Some of the deliverables, and probably the most important, will be the Revenue Projections and Product Forecast; Market Analysis; a resulting schedule for rollout using the marketing material and the projected revenue; and the overall design solution based on the projections and requirements laid out.

When the Governor makes the “Opt-Out’ decision, which I’m only going to discuss because it’s the only real option that makes any sense, it becomes the catalyst for the P3 to really start engaging with Private Investors to fund the DBOM (Design, Build, Operate and Maintain) solution for the State. Most importantly outlining the Revenue Projections and the Product Portfolios for the newly established broadband company within the State. Nobody is going to invest without knowing what the market is, how much revenue they will get back, and over how much time. At the same time the EPC contractor will start the Approval stage for the State with the NTIA. Once the approval is granted, then the EPC will help the State apply for its grant[1]from the NTIA to help build its solution (you should note that in the “Opt-In” scenario the State actually has to help fund the FirstNet’s build using the State tax-base[2]). Simultaneously the EPC will also file for the use of the spectrum for the State with the FCC.

Once the Approval is granted, not the Grant approval, the P3 consortium will execute under a new broadband company for the State, with the State being part owner, thus acquiring revenue to re-inject its equitable proceeds back into the State’s Public Safety needs. You should note that the law does not say anything about the State not putting its share towards Public Safety. The law only states that “FirstNet” has to re-invest any money it brings in – the law says nothing about the State. But to be fair I would encourage any revenue the State makes through its P3 be re-invested back into First Responders.

So in short, if the State Governor decides to “Opt-In”, then it will be facing the issue of helping to fund FirstNet’s plan. If the Governor decides to “Opt-Out”, then the State would get funding from the NTIA (part of the $7 Billion that FirstNet got from the sale of other spectrum assets). That’s a hard decision to be made? What would you do with that Grant?

There are many possible scenarios on what to do with the Grant money, but one thing is for sure, the funding has to be used for the DBOM of the State’s Public Safety Broadband Network.

As an example, once the Grant is approved, those funds would go to help the State design-build its interoperable solution. The injection of the cash could be in the way of an availability payment to cover Priority 1 First Responder using the access of the new broadband company; or it could be priced equity shares within the NewCo for the State to increase its share of ownership, thus more revenue. There are many ways we can fry up this fish.

The important thing to remember out of all of this — if the Governor wants to have apples-to-apples comparison between “Opt-Out” versus “Opt-In”, then it needs to start developing this strategy quickly. You don’t want to be left behind when all the States start crashing the party to do the same thing.

Here is a flow of what seems to be working:

Just read Donny Jackson’s article entitled “Here are somenotes about FirstNet that you may not have known before” (April, 2016) There was an interesting take on what he wrote in the article about revenue.

I may be mistaken, but to me this sounds like some competitive positioning. Is FirstNet starting to take an offensive posture with regards to State Opt-Outs? TJ’s statement about selling “nationwide coverage” to federal agencies may in fact be a false advertisement if you ask me. If a State decides to Opt-Out, then that would make the FirstNet statement of an all inclusive nationwide coverage a false narrative. The fact is the law states that a State can sell revenue based services through its own Public Private Partnership (P3).

In the end, what we are talking about is that a State actually will not be selling anything in regards to any type of broadband service, if they are using the P3 model I am proposing, the only entity that will be selling broadband services will be the privately based entity that is created by the P3. The State will just be a minority shareholder in that company, mainly for the purposes of ensuring Public Safety and First Responder prioritizations.

For TJ to come out and state that they will be talking to the same customers as a given Opt-Out State would, only illustrates the fact that they are starting to understand that they need to start envisioning their own SWOT analysis to remain competitive. Once again, from what I can tell, FirstNet still believes that it is a national carrier, or is striving to be a national carrier, not an oversight organization to help insure the Public Safety Broadband Network gets built for Public Safety. Nowhere in the law does it say anything about FirstNet being a national carrier. IN fact it states just the opposite. But, lets go along with the idea.

So if FirstNet is already talking with some federal agencies and is selling “nationwide coverage” as a product, then they will be open to legal action as it is in fact trying to act like a privatized commercial entity. I can side with the idea that we do need one entity liaison the federal contracts with any given State P3, or FirstNet itself, but that entity should not be FirstNet. FirstNet doesn’t have any jurisdiction to act in that capacity, let alone try to compete as a commercial entity. There is one entity that does have the ability to work in that regard…hello GSA. Now don’t get all excited, most federal entities, outside of GSA themselves, think they can do a better job, but the fact is putting together a direct deal with a State, States, or FirstNet itself, isn’t rocket science. The agency will setup a yearly SLA for service with auto-renewal clause. Depending on what priority group the federal entity falls within, will dictate its SLA agreement for prioritization, while at the same time ensuring its untethered access to statewide, regionwide, and nationwide coverage.  Why does FirstNet think it needs to control the relationship between a federal agency and a State?  How the network is paid for is based on the same science the federal agencies use today when negotiating broadband services from carriers; only in this instance they will have priority and complete coverage. FirstNet may be able to assist with guidance on how the services should be contracted, but only from the standpoint of interoperability and approved vendor solutions.

If FirstNet wants to be out front of the pack, and offer some great advantages, then it really needs to sell itself like a private entity…. good luck with that (see my recent article about DOC and FirstNet). While FirstNet is out there trying to better itself over an Opt-Out State, the opportunity to join the State, and have its own shareholder position, gets further behind and more difficult to correct later on. All they will do is piss off the State Governors, thus losing their ability to self-fund and self-sustain. FirstNet needs the States more than the States need FirstNet.

There is a strong political tie with a majority of the red leaning States. If the nationwide FirstNet model becomes caustic and unapproachable due to political infighting, then FirstNet needs to understand that it only takes 3-4 States opting out to kill their aspirations. I can assure you that the political ties will be unbeatable if FirstNet tries to strong-arm the State Governors, ultimately putting the nail in the coffin for FirstNet’s plans. In the end, it still does not impact the State’s right to monetize the use of the spectrum for the betterment of its Public’s Safety and First Responder resources. And, it still does not keep the State from executing its own P3 to build its own piece of the bigger broadband network.

But hey I’m….

Just some guy and a blog…..

Don’t bite the hand that feeds you.