Industry and public safety entities have raised questions about the National Telecommunications and Information Administration’s proposal for annually reviewing fees that will be charged to access the nationwide public safety broadband network being overseen by the First Responder Network Authority (FirstNet). A sticking point is NTIA’s suggestion that it won’t review fees for their reasonableness. Others sought clarification about certain issues or asked NTIA to allow further comments to be submitted to provide time for parties to review FirstNet’s request for proposals (RFP).

Comments were filed by yesterday’s deadline in docket no. 151209999-5999-01 in response to a notice of proposed rulemaking released last month proposing rules governing NTIA’s annual review of fees that will be charged to access the FirstNet network (TRDaily, Dec. 14, 2015).

Under the Middle Class Tax Relief and Job Creation Act of 2012, which established FirstNet, NTIA must review FirstNet fees annually and only fees approved by NTIA can be assessed.

“This document proposes rules that will enable NTIA to execute its duty to review specific fees proposed by FirstNet in a manner compatible with FirstNet’s need to operate as a business in a competitive marketplace,” the NPRM said. “NTIA proposes to execute its statutory fee review duties to afford FirstNet as much flexibility as possible to establish its business and budgetary goals and to adjust those goals as necessary to respond to the day-to-day realities of the broader competitive marketplace in which FirstNet must operate. Ultimately, NTIA intends to implement a fee review process that allows FirstNet to respond to changing market conditions and the demands of its vital and dynamic customer base: first responders.”

NTIA said Congress has charged it only with examining whether FirstNet fees “are, in aggregate and in combination with any FirstNet non-fee-based income, sufficient, but not in excess of, the projected funds that FirstNet needs to recoup the total expenses required to carry out its statutory obligations in a given year.”

The NPRM said that “NTIA proposes to define the term ‘fee,’ for purposes of its statutory obligations under Section 6208(c) of the Act, to mean FirstNet’s direct collection of money that is generated from the three categories established in Section 6208(a) of the Act: 1) network user fees; 2) lease fees pursuant to a covered leasing agreement (CLA); and 3) fees from entities seeking access to or use of any network equipment or infrastructure constructed or otherwise owned by FirstNet. Under this proposed rule, NTIA can direct FirstNet to address only those proposed fees that fall into one of these three categories. Further, NTIA proposes that it will not evaluate the reasonableness, or similar subjective attributes, of the specific fees assessed by FirstNet or its prospective partner or partners as contemplated in the Act.”

In its comments, NTCA urged “NTIA to take a broad view of its oversight responsibilities consistent with the Act and its overall public safety aims.” The group added that “contrary to NTIA’s assertion, a ‘reasonableness’ review of the fees contained in Section 6208 is indeed necessary as matter of policy.”

NTCA disagreed with NTIA’s suggestion that Congress did not intend for the agency to determine the reasonableness of fees. And it said that the Act “contemplated a NPSBN first and foremost for the benefit of public safety users, with the fees paid by public safety and other entities ultimately flowing back to the construction and maintenance of the network. Only by reviewing and approving the individual fee categories can that be possible.”

NTCA argued “that the Offeror has a clear self-interest in setting the covered leasing agreement fees at a low rate, perhaps below market value …”

“It logically follows that if the Offeror was indeed able to access FirstNet’s spectrum at an unreasonably low rate, the Offeror likely would then be able to offer a commercial wireless service at a comparably low rate – thereby unfairly skewing the commercial marketplace and placing existing service providers at a competitive disadvantage,” NTCA added.

The Idaho Bureau of Homeland Security also said NTIA should review FirstNet fees for their reasonableness. “We submit that FirstNet, sought to run as a business and enjoy the flexibility that a private corporation may enjoy, is in the business of interoperability as stipulated in the findings of the 9/11 Commission’s Report.  That being said, it may not be the best policy to not review the reasonableness of fees assessed by FirstNet if the primary consideration at the end of the day is that the finances are in the black,” it said. “Considering Idaho is primarily composed of rural small agencies and volunteer agencies, if there is no oversight to how the fees are assessed, it may invite the potential to have disproportionate ratios of fees.”

Regarding’s NTIA’s statement that “[p]ublic safety users themselves will determine whether FirstNet’s proposed user fees are reasonable in comparison to the fees they are offered by competing providers,” the bureau said, “While this statement is absolutely true, what sense does it make to not implement some oversight of fees to begin with, as opposed to coming to the realization years down the road and at the expense of billions only to find not enough agencies wish to participate and this entire endeavor is for not?”

AT&T, Inc., said that NTIA’s “NPRM acknowledges the complexity of FirstNet’s task, setting forth an appropriately modest approach to NTIA review of FirstNet’s fees. With some adjustments for practicality and predictability, NTIA is on the right path.” AT&T said that it “is concerned that NTIA’s fee review process may not afford FirstNet adequate time and predictability to obtain fee approval, or guidance to deal with practical challenges that may arise if NTIA does not timely approve FirstNet’s fee proposal. … A key component of FirstNet’s ability to remain solvent will be its ability to set and assess fees in a timely manner. Like any business, FirstNet will need certainty that its fees will be approved in time to begin collecting for services at the start of a new fiscal year. Although the NPRM specifies the standards and process NTIA will use for fee review, it simply acknowledges that it must complete its fee review ‘on an annual basis.’ The NPRM does not specify when FirstNet must propose fees or how long NTIA’s review process will take. AT&T proposes that NTIA provide more certainty by providing a precise timeline for fee review.”

AT&T also said that “NTIA’s review should include contingencies that address the practical consequences of NTIA rejecting FirstNet’s fees.” For example, it should allow FirstNet to “operate under the prior year’s fees until rates for the new year have been approved. A true-up, while potentially complex, could be done once FirstNet’s revised fees are approved.”

Verizon Wireless, T-Mobile US, Inc., and Sprint Corp., said they did not file comments in response to the NPRM.

The Bay Area Regional Interoperable Communications Systems Authority (BayRICS) said “NTIA correctly points out that its ‘role is a relatively limited part of broader statutory provisions designed to monitor FirstNet’s financial condition and operational status.’ BayRICS generally agrees with other commenters that engaging in ‘a more detailed review of FirstNet’s fees would hamper its business ability and agility.’”

But it said it “is concerned about the specific definition of a ‘fee’ that would be subject to NTIA review. A myriad of FirstNet business models have been proposed with a wide variety of different potential revenue streams and fee structures. Until there is more clarity regarding the specific types of revenue FirstNet will collect, especially the specific fee structure incorporated into the public-private partnership model, a full review of these fee rules may be premature.

“FirstNet issued its Request for Proposals (RFP) to build the network on January 13, 2016, only one day prior to the closing of the comment period in this NPRM. BayRICS believes that a thorough review of the RFP, may provide more clarity and specificity regarding FirstNet’s fee structure, and the sources and types of revenue envisioned,” the filing said.

“Therefore, we request that the NTIA extend the comment period or provide an additional opportunity to submit future comments, to allow a reasonable time for parties to review the RFP and submit more informed input on this important matter,” BayRICS added.

“We agree with the scope of NTIA’s review and also agree that a reasonableness review is not required when evaluating FirstNet’s fees,” said the National Association of State Chief Information Officers. “The plain language of the Act does not contemplate a reasonableness review and we agree with the rationale detailed in the NPRM that a more detailed review of FirstNet’s fees would hamper its business ability and agility.”

NASCIO added, “Additionally, though not the subject of this NPRM but in a related matter, we hope that NTIA, in developing regulations for the cost-effectiveness review of an opt-out state’s alternative state plan will similarly limit its scope to only the necessary requirements: i.e. whether the opt-out state has sufficient funds to maintain the state’s RAN and not put undue weight on the opt-out state’s contributions to the NPBSN.”

“As NTIA correctly points out, its fee approval role is ‘relatively limited’ with its focus being whether the amount of FirstNet’s annual fees are sufficient to cover its total expenses, but not to exceed the amount necessary for FirstNet to carry out its statutory duties,” said the National Association of Telecommunications Officers and Advisors. “As such, NATOA agrees with NTIA’s proposal that it will not make subjective determinations that any network user fees, lease fees, or access or use fees from any network equipment or infrastructure constructed or owned by FirstNet are ‘reasonable, proportionate, or otherwise subjectively appropriate.’ NATOA agrees with NASCIO that engaging in ‘a more detailed review of FirstNet’s fees’ would negatively impact FirstNet’s flexibility to compete in the broader marketplace.

“However, it is important to point out that FirstNet just released its Request for Proposal (RFP) to build the network on January 13, 2016. As such, NATOA urges NTIA to keep this proceeding open for additional comments addressing its scope of authority regarding FirstNet fees that may arise in the RFP or consider the issuance of a Further Notice of Proposed Rulemaking on these issues upon the selection of a proposal later this year,” NATOA added.

The commonwealth of Pennsylvania said that “NTIA’s proposal to review and approve [fees] under Section 6208(c) based on FirstNet’s projected income and expenses in order to self-fund the network is appropriate.” But it said NTIA should provide more detail on “specific cost areas” and sought clarification on NTIA’s role in approving fees paid to FirstNet’s carrier partner. The state also said that NTIA should include state input in developing its methodology for reviewing and approving FirstNet fees.

“NTIA properly proposes a straight-forward approach to carrying out its responsibility under Section 6208(c),” the Association of Public-Safety Communications Officials-International said. “APCO agrees that ‘the Act’s purpose for the fee review is solely to support FirstNet’s obligation under Section 6208(b) to be self-funding.’ In other words, NTIA is to annually review the fees assessed by FirstNet, and approve such fees if, in aggregate and combined with other non-fee-based income, they are sufficient, but not in excess, of what’s projected as necessary to carry out FirstNet’s obligations for a given year. Thus, NTIA correctly delineates its responsibility by proposing that it ‘not assess whether individual or total fees in any given category described in Section 6208(a) are reasonable, proportionate, or otherwise subjectively appropriate in light of individual or total fees in that category, or any other category of fees listed in Section 6208(a),’ and ‘not analyze the terms and conditions of any CLA, or any other agreement between FirstNet and another entity, beyond those specific terms and conditions which establish any fees that meet the three categories described in Section 6208(a).’”

APCO also said that it “supports NTIA’s proposal ‘to defer to FirstNet on any need for reserves, working capital, or similar fund categories.’ NTIA rightly points out that ‘[t]o be successful, FirstNet will need to employ business strategies with flexibility and agility commonplace in the private sector.’ This means that FirstNet must be free to exercise its discretion to take such financial measures as it needs to fulfill its important responsibility to deliver an advanced, interoperable, nationwide public safety broadband network.”- Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily