NTIA Releases Preliminary Guidance on Evaluation of Opt-Out States

July 19, 2016–The National Telecommunications and Information Administration today released a public notice providing preliminary guidance on how the agency plans to review proposals from states that want to deploy their own radio access networks (RANs) rather than having the First Responder Network Authority’s (FirstNet) partner do so. Among other things, NTIA said that greenfield builds are unlikely to be approved because they would not demonstrate cost effectiveness, and it said it might reduce grant awards to take into account cost increases that FirstNet will face as a result of states building their own RANs.

“The FirstNet nationwide public safety broadband network must be sustainable and provide seamless broadband service across the country,” said NTIA Administrator Lawrence E. Strickling. “The first guidance we are releasing today respects each state’s right to choose to build its own radio access network, while still ensuring that first responders have access to a nationwide broadband network that will improve their ability to respond to emergencies and save lives.”

Under the Middle Class Tax Relief and Job Creation Act of 2012, which established FirstNet, states that want to deploy their own RANs must submit their alternative plans to the FCC, which is charged with reviewing whether they would comply with minimum technical interoperability requirements. If the FCC approves a state plan, the state has to apply to NTIA for authority to secure a spectrum capacity lease agreement with FirstNet. States seeking to build their own RANs may also apply to NTIA for grant funds to help cover those costs.

The public notice released today noted that states whose alternative plans are approved by the FCC “must make five separate technical and financial demonstrations to NTIA. The state must demonstrate: (1) That it has the technical capabilities to operate and the funding to support its RAN; (2) that it has the ability to maintain ongoing interoperability with the NPSBN; (3) that it has the ability to complete the project within specified comparable timelines specific to the state; (4) the cost-effectiveness of the state alternative plan submitted to the FCC; and, (5) comparable security, coverage, and quality of service to that of the NPSBN.”

The notice provided initial guidance both on how NTIA would review an application from a state for authority to enter into a spectrum capacity lease agreement with FirstNet, as well as its request for grant funds. NTIA said it plans to issue a Federal Funding Opportunity (FFO) for the grant program by the date FirstNet delivers states plans. NTIA said it would review together any state applications for both lease authority and grant funds. It said it would process applications on a rolling basis.

“The Act does not spell out deadlines for the submission of grant applications to NTIA. However, given the need for the NPSBN to be built in a timely manner, the upcoming FFO notice will establish deadlines by which a state must file its application,” NTIA said. “NTIA tentatively sets this deadline to be no later than 60 days after the FCC has approved a state’s alternative plan.”

“NTIA is developing a process for determining funding levels for each state that may apply for a RAN Construction Grant,” according to the public notice. “In developing this process, NTIA may take into consideration cost increases FirstNet will incur should a state assume the responsibility to conduct its own RAN, and may reduce a final grant award accordingly. For example, FirstNet may incur increased costs to mitigate additional operational risks to the NPSBN, and losses of cost efficiencies, if a state assumes responsibility for the construction and operation of the RAN within its boundaries.

“Additionally, should a state conduct its own RAN, FirstNet may bear increased expenses related to interconnection of the state RAN to the NPSBN and mitigation of potential interference by the state RAN to the NPSBN operations in a bordering state,” the public notice added. “Further, the final grant award amount to a state may be impacted by financial factors, such as how efficiently FirstNet and its partner(s) can build the RAN for that state and the projected income from that state’s partnership agreement(s) and all other revenue sources.”

The public notice also said that “RAN Construction Grant allowable costs will be limited to categories of costs, such as equipment, construction, installation, contractual, and other associated costs related to construction of the state’s RAN as detailed in the state alternative plan approved by the FCC. Ongoing maintenance, operation (inclusive of all recurring costs), and improvement costs are not eligible grant expenses.”

“Applicants will be required to disclose the value of any partnering agreement that will enable and support the state in the construction and/or operation of the state RAN,” the public notice added. “Further, a state must demonstrate how any such agreement and state policies and procedures will ensure that revenues from such an agreement will be used only for constructing, maintaining, operating, and improving the state RAN pursuant to the Act and not for any other purpose.”

The notice also stressed the importance of any alternative plan being cost effective.

“In determining cost-effectiveness, NTIA may assess areas, including but not limited to, the proposed federal and state partner share of the RAN cost; the value, use, and revenue return of spectrum and other assets; and overall financial value of the proposed plan,” it said. “For example, a state plan that proposes a ‘greenfield’ build (one that does not leverage existing infrastructure and/or a public-private partnership and deploys a network solely consisting of new components) is not likely to demonstrate cost effectiveness. Additionally, the Act makes clear that a nationwide buildout can provide significant economies of scale across state boundaries that can leverage existing infrastructure when feasible and reduce the cost of NPSBN RAN construction in any given state or territory. NTIA will take these cross-border economies into account in the context of a state opt-out plan’s cost effectiveness.”

Comments on the notice are due Aug. 18 and can be submitted to SAPP-comments@ntia.doc.gov.-  Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily