FirstNet Aims to ‘Minimize’ Impact of Not Fulfilling Leases, Poth Says

First Responder Network Authority (FirstNet) Chief Executive Officer Mike Poth stressed at a House hearing today that FirstNet will work to “minimize” the impact on states and first responders of opt-out states that fail to fulfill the terms of spectrum manager lease agreements (SMLAs). He also said that the agreements provided to states are only “working draft” documents. Mr. Poth’s testimony during a hearing before the House communications and technology subcommittee sought to address criticism of FirstNet from state officials about the terms of draft SMLAs, including spectrum lease fees, charges for failing to meet subscriber milestones, and termination charges that for some states could run into the billions of dollars.

Oklahoma became the 28th state or territory today to opt in to the FirstNet system when Gov. Mary Fallin (R.) announced her decision. The state is the fourth to opt in after issuing a request for proposals (RFP) for an alternative state plan.

During today’s hearing, only a few lawmakers pressed Mr. Poth on the SMLAs, with others asking questions about interoperability, rural coverage, cybersecurity, and other issues.  Many made statements or asked questions favorable to FirstNet and AT&T, Inc., its network partner.

The most critical questions came from Rep. Anna G. Eshoo (D., Calif.), who noted that her state could face a $15 billion termination fee if it opted out and then failed to fulfill terms of its SMLA. Some state officials, including one who testified at today’s hearing, John Stevens, the statewide interoperability coordinator and FirstNet state point of contact (SPOC) for New Hampshire, have complained that the termination fees seem geared to penalize states that seek to opt out of the network and contract with a vendor to build their radio access networks (RANs). “Who came up with that? How do you make that determination? And why are there penalties?” Ms. Eshoo asked Mr. Poth. “Is this a penalty for not opting in?”

“No, absolutely not,” Mr. Poth replied.

“Well, what is it for?

He said that FirstNet wanted to share with states how much it could cost “if we had to reconstitute the network from zero after a state … implementation didn’t work, that it could be as high as that.” But he added, “We’re working with every state, including California, to minimize any of those impacts, and hopefully they wouldn’t even get to that point.”

Ms. Eshoo also asked AT&T’s witness how the carrier would ensure adequate coverage when it is not the dominant carrier in California. “They have some problems with you,” she told Chris Sambar, AT&T’s senior vice president-FirstNet, referring to public safety officials in the state.

Mr. Sambar replied that the state has asked AT&T to add sites in areas to improve coverage, which he said it would do.

Rep. Adam Kinzinger (R., Ill.) asked Mr. Poth if the SMLA terms are “take-it-or-leave-it.”

“The spectrum management lease is just a draft,” Mr. Poth replied, saying that FirstNet wanted to provide an early “working document” to states so governors would get a sense when deciding whether to opt out what the obligations of states could be down the road.

Final SMLAs for opt-out states probably won’t be negotiated for “about 2 ½ years,” Mr. Poth said, citing the process such states must go through pursuant to the law that established FirstNet. “We’re going to work with the states now …. to make sure that they feel comfortable,” Mr. Poth said.

In response to another question from Rep. Kinzinger, Mr. Poth said the National Telecommunications and Information Administration expects to release in “the next few days” a notice of funding opportunity for state alternative plans. Mr. Poth pledged to Rep. Kinzinger that FirstNet would work with Congress, states, and other stakeholders to answer questions about the network.

Rep. Eliot Engel (D., N.Y.) asked Mr. Poth how the financial obligations that would be imposed on opt-out states that fail to fulfill spectrum leases compare with obligations that AT&T must fulfill as part of its 25-year contract with FirstNet. “They’re very comparable,” said Mr. Poth, adding that FirstNet is not seeking to impose obligations on opt-out states that aren’t imposed on AT&T.

Rep. Engel asked what happens if an opt-out state doesn’t fulfill its obligations. Mr. Poth said it’s “impossible” to know for sure at this point, citing, among other things, changes in technology and when in a lease such a “default” occurred. “The only thing that I can absolutely say for sure is we will be working with the states during that entire time, and if there is a problem or a default, then we will work with them quickly to try and recover and restore that network with minimal impact to all on behalf of that state and public safety,” Mr. Poth said.

In his opening testimony, Mr. Poth also said that FirstNet would hold “AT&T accountable” during the life of the contract and said that “FirstNet has been open and transparent in every step.”

In her opening statement, Rep. Marsha Blackburn (R., Tenn.), the subcommittee’s chairman, stressed the importance of avoiding “a top down approach that could lead to failure.” “We must ensure that choice remains a paramount principle as the states and territories proceed with their decision-making and implementation,” she added.

“While there has been some debate on schedules of fees, subscriber levels, device availability, and whether the network will be able to deliver mission critical level services, I know the panel today can help us sort through all the issues to further everyone’s goal of making this a transparent and successful process.”

“A lot of hay has been made recently about the opt-out process and the costs for states that choose that route. States looking into opting out seem overwhelmed by the potential punitive costs and the risks they take on in building and managing their own network,” said Rep Mike Doyle (D., Pa.), the subcommittee’s ranking member. “Companies seeking to get states to opt out see this as barrier to their entry into this market and a stumbling block to meaningfully engage with states. To my mind, the costs and risks placed onto states for opting out are steep, because building and maintaining these networks is a hard and risky endeavor.”

He added, “Without access to the tens of billions of dollars necessary to build out a dedicated network of their own, states that opt out need to gamble on a private partner’s ability to leverage private capital, utilize a relatively small amount of shared spectrum, and undertake the build-out of a hardened multibillion dollar communications network.  And they need to do all of this in a time frame that is competitive with FirstNet and using technologies and systems that are fully interoperable.”

In his testimony, Mr. Stevens noted that New Hampshire is the only state with a complete alternative plan in place, which he said meets the state’s needs on coverage and cost better than the plan delivered by FirstNet. The alternative plan was prepared by Rivada Networks LLC, which lost out to AT&T for the FirstNet contract.

“We feel threatened by policy and procedure, not by law,” Mr. Stevens said. “FirstNet demands our transparency but refuses to be transparent themselves.” He complained that AT&T refuses to reveal actual pricing to states until they opt in and NTIA has said it may take two years to approve alternative plans.

Rep. Doyle asked Mr. Stevens if he was concerned that Rivada has not built a RAN.

Mr. Stevens said the alternative plan that Rivada prepared includes “safeguards” such as performance bonds.

But Brian Moran, secretary of Public Safety and Homeland Security for Virginia, which was the first state to opt in (TR Daily, July 10), said the FirstNet offer made sense for his state.

“Opting-in ensured, as quickly as possible, that our first responders have the right tools and resources to do their jobs, and are able to leverage the benefits of priority and preemption,” Mr. Moran said. “Public safety agencies in Virginia who are current AT&T subscribers have already taken advantage of FirstNet: Fairfax County Fire and Rescue Department’s wireless devices were moved over to FirstNet, which gave them priority service when they deployed to Houston after the flooding caused by Hurricane Harvey. There is no requirement for state agencies or localities to use the network or switch carriers, rather, opting-in has provided the option. Opting-in cost the Commonwealth nothing and does not commit the Commonwealth to any role in the FirstNet buildout.”

Mr. Moran said that opting out never made sense. “Virginia would have had to oversee the buildout of a highly technical broadband wireless network and assume all responsibility, liability, and fiscal accountability, maintenance, and management of users and customer care,” he noted. “Opting out would have required accepting the unknown, associated costs and risks for the ongoing deployment, operation, maintenance, and improvement of the network within the Commonwealth, which must be maintained in accordance with FirstNet’s policies. As a one term administration, in the midst of transitioning to a new administration in January 2018, attempting to oversee and execute a project of this magnitude and ambiguity would have put the state on unsolid ground.”

However, Mr. Moran acknowledged that “AT&T does not have sufficient rural and small market network coverage in Virginia to warrant many agencies switching to FirstNet. The network must be hardened to ensure public safety-grade reliability. Stakeholders have expressed a desire that the Nationwide Public Safety Broadband Network be compatible with other networks to ensure interoperability — the motivation behind the creation of the network — is achieved. Mission-critical voice and mission-critical, enhanced location with z-axis, vertical capabilities are critical functions of the network and should be prioritized.”

Mr. Moran also said during the hearing that “we need to maintain vigilance” over the FirstNet system.

Robert LeGrande II, founder of the Digital Divide LLC, a consulting firm whose clients include several states, and former interim chief technology officer for the District of Columbia, said that FirstNet “should ensure a level playing field for the State Opt-out process so that states are assured of their legislatively guaranteed right to make their own communications decisions.”

He said that “States should be able to choose their preferred network partner and be able to use that provider’s Core Network to serve its public safety users as long as that Core Network complies with industry best practices and standards and is interoperable with AT&T’s network.”

Ms. Blackburn asked what cyber protections the network will have.

Mr. Sambar said that one safeguard will be not permitting the AT&T public safety core to interoperate with the core of other providers. Doing that would introduce “vulnerabilities,” he added. He also said that AT&T’s public safety core would have end-to-end encryption. And he said that all devices will be certified and that public safety apps will be authenticated. AT&T also will run a dedicated public safety operations center, Mr. Sambar noted.

Rep. Leonard Lance (R., N.J.), vice chairman of the subcommittee, asked how interoperability will be ensured.

Mr. Poth said people using devices on other networks will be able to talk to those using devices on AT&T’s network. He said FirstNet also requires open standards for devices and applications. Subscribers to other carriers will not be permitted to use apps in the FirstNet apps store, but apps built to open standards could appear in other apps stores.

Mr. Sambar noted that 3GPP standards for LTE enable interoperability among networks. “We’re very interested in [an] open, interoperable” network, he said.

But Mr. LeGrande said that “core to core interoperability is what they do as a standard practice,” referring to carriers including AT&T.

Rep. Dave Loebsack (D., Iowa) said he was pleased that FirstNet is requiring AT&T to partner with rural carriers for at least 15% of its rural coverage nationwide. Mr. Sambar said AT&T plans to exceed the 20% mark. Mr. Poth noted that the contract also requires a rural component to each stage of deployment.

Rep. John Shimkus (R., Ill.) asked how to guard against overbuilding the coverage of rural carriers. Mr. Sambar said AT&T would not be able to meet the 15% milestone, much less 20%, if it overbuilt.  “Our goal is to use rural providers as much as possible,” he said. “In many cases, their economics are better than ours.”

Mr. Sambar also suggested that some states have been hoping to use excess revenues from the network for their general state budgets, which FirstNet says is prohibited. “That’s not what this about,” he said. “This is for first responders. … This is not a money-making schemeMr. Sambar also took a shot at a letter submitted to the subcommittee yesterday by Verizon Communications, Inc., which is hoping to compete with FirstNet by building its own public safety core and also offer priority service and preemption.

“This is not a spectrum deal,” he said. He also reiterated that core-to-core interoperability, which Verizon is seeking, could introduce cyber vulnerabilities.

Rep. Frank Pallone Jr. (D., N.J.), ranking member of the full Energy and Commerce Committee, asked Mr. Poth if the law made it clear that states are not allowed to build their own cores. Mr. Poth said it did. Mr. Pallone also said that when the law passed, some lawmakers were concerned about the diversion of 911 fees by states and thus required that all excess FirstNet revenues be reinvested into the system.

In a statement on today’s hearing, Brian Carney, SVP-corporate communications for Rivada, said, “The Subcommittee asked FirstNet hard questions about the basis for its proposed fees to opt-out states, and Rivada is pleased that FirstNet clarified that its penalties were just initial proposals subject to negotiation and that it would work with opt-out states to minimize the impact of any opt-out ‘failure.’ The ‘early draft’ SMLA gave many states the erroneous impression that FirstNet’s goal was to maximize the pain.  Opt-out states aren’t FirstNet contractors.  They are sovereign states accountable to their citizens, not FirstNet.”

In other FirstNet news, the FCC’s Public Safety and Homeland Security Bureau issued a public notice today announcing that Puerto Rico Gov. Ricardo Rossello has until Dec. 28 to decide whether to opt out of the network – the same deadline as states and non-Pacific territories, which got their state plans later.

“On September 29, 2017, FirstNet notified the Commission that 52 states and territories received the required statutory notice, commencing the 90-day opt-out decisional period for those states and territories. In an ex parte latter filed on October 31, 2017, FirstNet notified the Commission that it provided the required notice to the Office of the Governor of Puerto Rico on the same date as the other 52 states and territories. FirstNet states that due to Hurricane Maria, it was previously unable to confirm Puerto Rico’s receipt of the notice, but that it has now confirmed that the Puerto Rico governor’s office received FirstNet’s notice on September 29, 2017, commencing the 90-day clock, the bureau said.

Meanwhile, the District of Columbia has issued an RFP for an alternative state plan. Proposals are due Nov. 27. —Paul Kirby,

Courtesy TRDaily