AT&T to Pay FirstNet $18 Billion over 25-Year Contract, Poth Says

April 6, 2017–Under its contract with the First Responder Network Authority (FirstNet), AT&T, Inc., will pay FirstNet $18 billion in cash over the life of the 25-year agreement, far more than the $5.625 billion in payments that FirstNet had sought in its request for proposals (RFP), FirstNet Chief Executive Officer Mike Poth said today in a keynote speech at the Competitive Carriers Association’s Mobile Carriers Show in Las Vegas. Mr. Poth stressed that about $16 billion of the $18 billion will be reinvested into the network in rural areas, while about $2 billion will be used to fund FirstNet operations. During his first public appearance since last week’s AT&T contract award announcement (TR Daily, March 30), he also hailed the recently released (TR Daily, March 31) redacted version of a court opinion that permitted FirstNet to go ahead and award AT&T the contract.

Under the contract, AT&T must invest at least $40 billion, including the $18 billion to be paid to FirstNet, over the life of the 25-year deal, Mr. Poth noted. FirstNet is providing AT&T with 20 megahertz of 700 MHz band spectrum and $6.5 billion over five years.

The $16 billion of AT&T payments that FirstNet will reinvest in the network will go “into the rural areas to further expand the footprint that will already be out there,” said Mr. Poth, speaking to many rural carriers. Mr. Poth also stressed that AT&T in its bid met all 16 of FirstNet’s objectives, and he said that the bid exceeded rural milestones sought by FirstNet.He also emphasized that first responders in states that decide to have AT&T build their radio access networks (RANs) for the nationwide system will immediately be able to access AT&T’s LTE spectrum on a priority basis. By the end of this fiscal year, AT&T plans to add preemption for those users, he said. “That’s a contractual goal and a contractual statement,” he added. Mr. Poth also said that at least 20 rural telcos have agreed to partner with AT&T as “part of the first wave, and you know who you are.” Those telcos and AT&T will be “testing over about 2,000 antennas. That doesn’t mean it stops there,” he added.

He urged other rural companies that want to partner with AT&T to submit information today to FirstNet, which he said would forward it to the appropriate parties. “So there’s a lot of opportunities … because this is not a static deployment,” Mr. Poth said. “This is not a one-and-done contract. This is for 25 years, and the rural is an important component.” He noted that rural deployment is required in each of the five phases of the initial build-out.

Mr. Poth also said he feels like FirstNet was vindicated in the redacted version of the opinion released last week by the U.S. Court of Federal Claims. The original version of the ruling against Rivada Mercury LLC was sealed (TR Daily, March 17).

The court affirmed FirstNet’s view that Rivada’s bid was too risky and that it might not be able to fulfill the 25-year contract due to a “lack of financial stability,” in part due to its wholesale business model. “What got me really excited when I saw that opinion … is the validation of all the process that this acquisition did,” Mr. Poth said. “We weren’t out to select a [particular] company or a particular approach. We were out to select a solution that would provide the best value at the lowest risk for public safety.” —Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily