Report: N.Y. system costs much higher

A recent comptroller report indicating that local agencies in the state of New York could pay almost 800% more than anticipated to access the new state wireless network, or SWN, is based on several erroneous and unrealistic assumptions, said officials for the SWN project and network vendor M/A-COM.

The December 2006 report from the office of New York Comptroller Alan Hevesi projected that public-safety agencies in the state would pay $790 million — $490 million in financing costs — to buy radio equipment to access the $2 billion SWN network over the 20-year life of the contract with M/A-COM. The $790 million figure dwarfed the $100 million estimate provided by a M/A-COM official while the massive project was being bid.

“If our $2 billion investment in SWN is to be worthwhile, then equipment must be made more affordable to encourage government entities to use the system,” Hevesi said in a statement.

But representatives from both SWN and M/A-COM contested the report’s cost estimates, stating the cost to local agencies that want to access the statewide network will not be nearly as expensive as the comptroller’s office suggested.

Probably the most notable criticism of the comptroller’s report is the fact that Hevesi’s office presumed all 65,000 first responders in the state of New York would receive a new radio purchased from M/A-COM and financed it over the 20-year life of the contract. But most agencies do not finance the acquisition of portable radios; instead, they purchase the equipment, said SWN spokesman Rob Roddy.

“I think that’s what we expect to happen,” he said. “Local governments, in particular, would be more likely to buy them outright than absorb those finance charges.”

If public-safety agencies choose to finance a radio purchase, they typically finance for only five years, said M/A-COM spokeswoman Victoria Dillon.

“[The comptroller’s office officials] looked at financing one radio for 20 years, which is not really how it works,” she said. “I can’t even imagine anyone financing a radio for 20 years.”

The SWN spokesman, who noted that most of the report reflects positively on the project, said the comptroller’s office also presumed that all new radios purchased would be the most expensive model offered by M/A-COM — costing about $3500 per handset — when most of first responders accessing the network will not need such advanced equipment.

In fact, it’s anticipated that many New York public-safety agencies will not buy new portable radios at all. M/A-COM’s IP-based VIDA system is designed to let agencies use their existing private radio equipment and interface with the SWN via a network-level gateway. Assuming that all 65,000 first responders will receive a new radio is not “practical or realistic,” Roddy said.

“Only local governments that sought to be full partners with the state and adopt SWN as their radio network would be required to buy compatible equipment,” he said. “But the majority of counties are going to use gateways to connect their legacy systems to the state’s new system — in which case, they wouldn’t have to buy new radios.”

Although the comptroller’s report claims that the $790 million projection was based on interest-payment estimates provided by M/A-COM, the figure does not reflect the vendor’s price lists for the project, Dillon said.

“[Representatives of the comptroller’s office] constructed a worst-case scenario, and then, as I understand it, they calculated the interest incorrectly anyway — we can see where they got the number, but we can’t get to their [projection],” she said. “There’s a lot of things about their calculations and how they presented it that are kind of questionable.”

Some observers of New York state politics also questioned whether the report was crafted to enhance the reputation of the comptroller. Although re-elected to the post in November, Hevesi had been embroiled in a scandal alleging that his state employees were instructed to drive his wife to appointments at the cost of hundreds of thousands of dollars to taxpayers. Indeed, just weeks after his office issued the SWN report, Hevesi announced his resignation.

One other aspect of the comptroller’s report expressed concern that M/A-COM had not yet licensed its proprietary technology to other vendors — a stipulation in the contract designed to provide public-safety agencies with choices when buying equipment. Dillon said the vendor long ago made licensing-agreement offers to other vendors, but it’s too early to expect the other vendors to act on the matter.

“The reality is that there are no users on the system yet — it’s not built. So if you were a radio manufacturer, would you be eager to sign a license agreement?” she asked. “Once it gets closer to the time when people are going to procure radios and the state can give them a better idea of what the volume might be, then we’re going to work toward those agreements.”

Roddy echoed this sentiment, noting he is confident the licensing agreements will be finalized when the SWN is operational in the first New York counties in the fall of 2007.

“M/A-COM really is on top of it,” he said. “They’re just waiting until we get a little further along until they need those agreements in place. And the manufacturers aren’t in any hurry until there’s a market, so it’s understandable.”