More unknown variables
We’re entering an Internet of Things (IoT) era in which machine-to-machine communications are expected to explode, with billions of sensors, drones and video cameras providing situational information in real time that would have been unattainable before. Many of these devices are consumer-oriented items designed to make life easier, but lots of them have primary public-safety purposes—for instance, a drone that provides a video feed from a hard-to-reach accident location—and others may have public-safety uses only in particular circumstances.
The point is, we don’t know how many sensors or other devices should be connected to the FirstNet system, nor do we know the rates or conditions involved in doing so—even the commercial market in this area is nascent.
It’s difficult to evaluate the value of potential synergies, because they can vary greatly, depending on the entity or group that eventually partners with FirstNet. FirstNet officials are correct to identify synergies as a key component—opportunities certainly exist—but balancing economic and operational implications can be challenging.
For instance, the example of shared backhaul was mentioned as a potential synergy during the Industry Day event. That makes a lot of sense in most situations, if there is an assurance that FirstNet traffic will be prioritized during an emergency, which may require extra costs. Without the backhaul priority, the prioritized access from the field device to the LTE base station could be of limited benefit in certain situations.
But the biggest unknown surrounds monetizing excess broadband capacity to secondary commercial users.
It’s important. In fact, FirstNet officials have reiterated several times that the business model doesn’t work over the long term unless revenue can be generated from the network’s excess capacity.
And there is no doubt that FirstNet’s licensed spectrum—20 MHz of contiguous airwaves in the prime 700 MHz band—is extremely valuable. Based on the bids in the AWS-3 auction, the value of FirstNet’s spectrum would be $17 billion, according to an Industry Day presentation. In fact, the spectrum likely is worth more than that, because 700 MHz spectrum has better propagation characteristics than the 1.7 GHz and 2.1 GHz spectrum sold in the AWS-3 auction.
But there is a catch, and it’s a big one. The AWS-3 bidders were assured of its commercial customers being the prioritized users on the auctioned spectrum. By contrast, any FirstNet partner is assured that its commercial customers will be secondary users on FirstNet spectrum, because public safety will have prioritized access to the spectrum and associated network capacity.
How much does this depreciate the value of FirstNet spectrum? No one really knows, because an arrangement like this has never been done before with wireless broadband technology on a wide scale.
Conventional wisdom is that public safety normally won’t use a lot of bandwidth except when responding to large emergencies. Such incidents are infrequent, and they would only impact commercial access to the cell sectors at the scene, not the entire network.
Still, the reality is that a FirstNet partner will assume the very real risk that its commercial customers could be shut out of the FirstNet system during an emergency. That means it is important for a FirstNet partner to have access to other “offload” networks that utilize different spectrum, so commercial customers can still have service during such emergencies.
(From the cheap seats, this looks like a situation that would be more enticing to a partner with access to a lot of sites—thereby lessening the impact of losing access to some FirstNet cell sectors during an emergency—and a healthy number of “offload” network opportunities. But I certainly could be wrong; there are reasons why I am a journalist and not a wireless entrepreneur/network designer.)