Pennsylvania hearing focuses on financial risks associated with FirstNet ‘opt-out’ alternative

Vulakovich said he did not know how a vendor would be able to secure insurance to pay a potential $5 billion penalty, but Ganley expressed confident that it could be done, downplaying the likelihood that an opt-out effort with his company would fail.

“We wouldn’t assume that risk directly,” Ganley said. “I know some people in Lloyd’s of London that you could phone, and they’ll insure pretty much anything, as long as you pay them enough money.

“So, it is insurable. The thing is, how real is the risk? Of course, that’s something that the insurance underwriters assess.”

This sentiment that Rivada Networks would provide financial assurances that would result in its “opt-out” proposal being a no-cost/no-risk option to the state of Pennsylvania was repeated numerous times by Ganley during the hearing.

Rivada Networks’ bid proposes “a Band 14 network that is fully paid for, at no cost to the state. And what we have done in that instance is that we are bonding that,” Ganley said. “So, that is to say you don’t have to trust us that this thing is fully paid for, we bond it—we provide insurance-company bonding that we will be able to build, complete and finance that Band 14 network and roll it out across the state.”

Ganley said the Rivada proposal includes LTE coverage for “well over 90% of the geography of this state,” public-safety subscriptions starting at 1 cent per month, and an opportunity for the state to generate revenues by leasing space on state-owned towers to Rivada. Rivada plans to provide its coverage by deploying about 1,200 sites in Pennsylvania, and Sprint would serve as Rivada’s carrier partner in the state, according to a company presentation prepared for the hearing.

Stackhouse questioned whether the state was in a position to provide co-location space to an opt-out vendor, noting that most of the state’s tower sites already are at capacity and that many of them were not maintained properly by a previous vendor.

Ganley and other Rivada speakers stated that one key reason state officials should consider the “opt-out” alternative to FirstNet is to have greater control over Pennsylvania’s public-safety RAN, including a direct contract with a vendor, as opposed to depending on FirstNet to compel AT&T to meet public-safety requests.

“The quality, maintenance and constant upgrade of the network is something that we have in our submission to your state RFP—we detail how we do it, and we bond it to the state,” Ganley said. “You don’t get that, by the way, going another route. We contract with you on exactly how we perform and what we will do. You will have a contract that—if we break—you’ll have bonding and you can collect on the bonding.

“So, you will have absolute transparency and accountability provided by a contract with us. And that contract will be bonded, so that’s how you know you’re going to get that thing sustained and funded for the duration of the 25 years and beyond the 25 years, if the license is extended beyond the 25 years. The revenues being generated off the commercial, sub-priority access to that network are what is used to help fund everything that I’ve described.”