Urgent Matters

If FirstNet does its job, ‘opt out’ is not a practical choice for states

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FIrstNet officials say they will work with each state and territory to devise a deployment plan for a first-responder broadband deployment in the jurisdiction that will become part of a nationwide network. If this strategy is implemented successfully, it's doubtful that any governor will choose the "opt-out" option.

As part of the legislation that allocated the 700 MHz D Block spectrum to public safety and earmarked $7 billion for a new entity known as FirstNet to make the dream of a dedicated first-responder broadband network a reality, Congress included language allowing each of the 56 states and territories to “opt out” of the FirstNet project. Under the law, the governor of each state and territory can choose to have its jurisdiction “opt out” of FirstNet, if the governor rejects the deployment plan that FirstNet has for the state or territory.

This “opt-out” language quickly captured the imaginations of many in the public-safety communications industry. Within weeks of the legislation becoming law, certain vendors were lobbying state leaders to exercise the “opt out” clause and build their own broadband networks. This was especially appealing to state officials that were told that public-private partnerships used to deploy a first-responder broadband network could result in new revenue streams for their cash-strapped states.

But today—almost two years after Congress enacted the legislation—there is growing sentiment within the industry that no state or territory will choose to “opt out” of FirstNet, because doing so would create a potential uncapped financial risk that no jurisdiction wants to assume in this struggling economy.

There are numerous reasons for this sentiment, many of which are easy to understand once some common misperceptions are clarified:

(1)     States and territories that choose to “opt out” are not opting out of FirstNet entirely. There will be a first-responder broadband network in that state regardless that must meet FirstNet’s requirements—the difference is that the “opt out” state would have build and operate the network, instead of letting FirstNet do it.

(2)     States and territories that choose to “opt out” cannot use partnership deals to bolster their general funds. Any money received as part of a public-private agreement must be reinvested into the network, not offset shortfalls elsewhere in the budget.

(3)     A state or territory that chooses to “opt out” can present a plan to the FCC that would make it eligible to receive some funding for the buildout of the network. However, the state/territory then would be on its own to pay for the operations of that network in perpetuity.

To recap, this means that a state or territory that chooses to “opt out” will have created a lot of extra work for itself (and statewide network deployments are never easy), will not be allowed to use any “profits” from the network to address financial shortfalls elsewhere, and may face the very real possibility of having a never-ending drain on its state budget to pay for ongoing operations, maintenance and technology upgrades.

Given these realities, it’s understandable why industry experts believe few—if any—states or territories will choose the “opt out” option, unless FirstNet fails to present a reasonable plan to a state or territory.

“We spoke with the writers of the bill, and that’s what they were trying to protect against—the [potential] failure on the part of FirstNet,” FirstNet board member Craig Farrill told IWCE’s Urgent Communications during an interview conducted at the LTE North America conference in Dallas. “What if FirstNet doesn’t come forward and deliver? What if they promise and fail? Then the state could say, ‘We’re going to opt out, because this plan isn’t viable.’

“It wasn’t as much about how many states are sitting there with $300 million to put in the ground [to build a statewide LTE network]. There’s not a lot of them; I think the number is zero. [States] need to be able to be assured that their needs are going to be met. FirstNet is really here to listen to the needs and meet the needs of the states in a collaborative effort.”

Discuss this Blog Entry 9

Anonymous (not verified)
on Jan 16, 2014

56 States and Territories? Want to re-think that sentence?

Anonymous (not verified)
on Jan 18, 2014

50 states, PR, Guam, US Virgin Islands, American Samoa, Northern Mariana, Washington DC=56

Anonymous (not verified)
on Jan 16, 2014

In these days of tight budgets and likely budget cuts coming, it will be interesting to see what Public Safety Agencies think of having to fork over Billions to build and run something like this. While it will have cool capabilties, will these agencies really feel this is the best way to spend this amount of Money?? Could they not do better with more personnel or better equipment or vehicles?? I have a feeling that this sort of thing is more driven by the vendor community than the user community!

Jim Bell (not verified)
on Jan 16, 2014

Case well made; opt out is not a practical choice. But neither is the resultant strategy of mixing an enormously complex network design and build out with a mega dose of political correctness.

It is difficult to understand how “[States] need to be able to be assured that their needs are going to be met. FirstNet is really here to listen to the needs and meet the needs of the states in a collaborative effort” can work. Is one to assume that for the first time in history all these jurisdictions and agencies will come into alignment on a universally acceptable plan? If they don’t, the vision of a nationwide interoperable network is doomed to fail. What’s the chance?

What knowledgeable resources exist within the state governments to contribute to and validate the technical aspects of a network design and vouch for the statewide acceptance of operational features and protocols? State’s rights have an important place in our democracy but it is not the mechanism by which complex technology systems succeed. If consensus buy-in is required FirstNet faces an impossible task. The FirstNet objective needs a more appropriate strategy if the intent is to ever deliver improved first responder interoperative communications.

bob (not verified)
on Jan 16, 2014

That title is the whole story in and of itself. FirstNet is a great concept and if properly executed will change (for the better) criticial communications in a ways we can only barely imagine.

But right now, after over a year, can't even get a business case together. Things are being delayed (like the spectrum auction) and intentionally slowed down to the point of nearly complete inaction. And the Board calls are so over correographed I have stopped laughing at them.

Of course, it would be nice to see addressed another reason for a state to opt out - States vs Federal rights. The Feds can't "force" a PS LTE down a state's throat if the state doesn't want it. And the state which opts out for that reason does not incur all the additional fiscal risks detailed in the article.

And does the public really want a Federal overlay network in the light of all the privacy and Gov't spying issues in the news lately? That would be an interesting debate.

Anonymous (not verified)
on Jan 17, 2014

This article pitifully dares states to think for themselves. Regardless of their intentions to opt out or not, state and territory decisions will be not be well informed if they have not done their own independent planning prior to receiving a proposed plan from FirstNet. How will they know that the plan presented by the federal government is actually going to meet their needs if they haven't done the groundwork on their own before it arrives? They are going to get a network one way or the other and will have to put skin in the game regardless of opt in or opt out. Shouldn’t they be sure regardless that their skin in the game will derive value for the first responder community and the citizens? With 90 days to make a decision, there isn't a way to make a good decision unless they did their homework long before the plan shows up requiring a decision. Imagine telling the governor that "we have a plan for a new federal network in our state and they designed it for us". How do we expect most governors to respond to that???

HolyMoly (not verified)
on Jan 17, 2014

Constitution? Tenth Amendment? Hello? How utterly depressing no one mentions the Constitution in any discussions of NPSBN. FEDGOV cannot compel states to carry out federal law. This is elementary!

Anonymous (not verified)
on Jan 18, 2014

I believe your state is probably represented in Congress...

on Jan 21, 2014

Donny,
There is one very good reason for a state to opt out that was not covered herein: Local politics.

Over the next 10 years, of the 56 states and territories, a dozen states will likely have a PSBN built in their state that costs $100M+, and three or four will likely have built (for them) a network costing over a billion dollars, depending upon the use of a carrier or other model.

No governor is willing to walk away from the prestige of such a large, high profile opportunity, particularly if that state can award the contract to a vendor with very high local content.

If FirstNet wanted to enhance their probability of success for NPSBN subscriptions across the nation and build significant goodwill with states, they could provide detailed specifications Governors could use to let statewide RFP's, make points locally, and enhance their relationship with the Federal Government.

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