State, Local Officials Complain About FirstNet Fees

FORTH WORTH, Texas — State and local public safety officials complained today about the First Responder Network Authority’s (FirstNet) plans for having its network partner, AT&T, Inc., build radio access networks (RANs) in states, especially termination, spectrum lease, and other fees in draft spectrum management lease agreements (SMLAs).

During a session this afternoon at the Competitive Carriers Association’s Annual Convention here, Michael Saltzman, project manager in Massachusetts Executive Office of Public Safety & Security, complained that under the draft SMLA delivered to his state, it would have to pay $530 million over 25 years to lease the FirstNet spectrum and could face a $2.9 billion termination fee if it opted out and then sought to end the agreement early.

“Those numbers were scary. But what was scarier than the numbers were no one knew where they came from,” he said. He said that he won’t suggest the fees and penalties in the SMLAs are a “scare tactic” to prod states to opt in, “but I think it went the other way. I think it has upset people to the point where they want answers, and so, therefore, they’re not as apt to move forward aggressively until the answers are given.”

Twenty-five states and two territories have opted in so far, and governors face a Dec. 28 deadline to make an opt-out decision.

New Hampshire Gov. Chris Sununu (R.) wrote governors this week asking them to hold off opting in to the FirstNet system to help press for information from federal officials on penalties and fees that states and territories could be liable for if they opt in (see separate story).

Last week, Mr. Sununu signed an executive order establishing a committee to review the “regulatory and financial risks” to the state if it seeks to opt out of having AT&T build its RAN (TR Daily, Oct. 16).

AT&T also must pay FirstNet spectrum capacity fees, and it faces disincentive payments if it falls short of adoption milestones.

In response last week to questions about the SMLAs, a FirstNet spokesman said, “Building and operating a RAN within a state or territory is major undertaking with significant responsibilities. The SMLA is required by FirstNet’s enabling statute to ensure that an opt-out state’s RAN is sustainable and supports the Nationwide Public Safety Broadband Network. The SMLA terms and conditions are fair and balanced to ensure the state’s network is self-sustaining for 25 years and are in parity with the terms and conditions that FirstNet’s nationwide contractor is expected to meet in opt-in states.”

“I think this hard sales pitch doesn’t go well in public safety,” Mr. Saltzman said today of AT&T. “They came into this thinking that we were just another group of customers, and I think they got a rude awakening in some of the first meetings that they presented at.” He also said that there was “not enough detail” in the original state presented by FirstNet. He said the state submitted more than 100 questions, of which about 50 were actually answered.

He also suggested that there was skepticism that AT&T would be able to adequately service first responders in Massachusetts given Verizon Communications, Inc.’s approximately 80% public safety market share in the state. “They haven’t proved it to us,” he said.

Another issue is local control, Mr. Saltzman said. He noted that his state issued a request for proposals (RFPs) on an alternative state plan and that it is reviewing two semi-finalists.

Scott Edson, executive director of the Los Angeles Regional Interoperable Communications System (LA-RICS), said his organization has written California Gov. Jerry Brown (D.) asking him not to make a decision on whether to opt in or out without getting input from LA-RICS. It also asked the governor to issue an RFP. Mr. Edson also noted that the state is reviewing answers from FirstNet and AT&T to questions it had on its state plan. “Some of the answers are satisfactory and some of them are not,” he said.

Of the state plan, he said, “It’s a little vague, there are coverage issues, and there’s a concern for interoperability.” He said the state has asked FirstNet and AT&T “to clarify, to solidify” that it would be compensated if more than 70 LA-RICS cell sites are transferred to AT&T.

Mr. Edson also said there is a concern that AT&T’s network is not public safety grade. The state has asked AT&T to build more sites and add more generators, he said, adding that “they said they probably will, but they have not committed.” He suggested that issuing an RFP would at least provide the state additional time to consider its options.

Berge Ayvazian, senior analyst for Wireless 20/20 LLC, a consulting firm whose clients include Rivada Networks LLC, which lost out to AT&T on the FirstNet contract and is hoping to convince states to opt out and contract with it to build state RANs, suggested that states should issue RFPs “to control their own destiny” and should not rush to opt in.  “In general, states have been rushed into making an opt-in decision,” Mr. Ayvazian argued. Eighteen states have issued RFPs and eight have issued RFIs, Mr. Ayvazian noted.

He said states should use a scorecard when assessing their options. His company’s 12-criteria scorecard does not analyze the FirstNet-AT&T plan very favorably. For example, it says the plan is “inadequate” for Band 14 coverage, quality of service, and priority and preemption.

Chris Moore, senior vice president for Rivada and former chief of the San Jose Police Department, said a drawback of opting in with FirstNet is “there is no contractual obligation between … the state and the provider,” and so there won’t be any local control.

“It’s not supposed to be easy” for states to opt out, Mr. Moore added. “That said, it’s not supposed to be impossible.”

John Nakahata, a partner at Harris, Wiltshire & Grannis LLP and an attorney for Rivada, complained that the government has not been transparent in the amount and rationale of termination, spectrum lease, and other fees that states would have to pay. “There’s no transparency on these fees and the rationale for it,” he said. —Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily