States push back against preliminary FirstNet legal interpretations on opt-out alternative

In the public notice, FirstNet contends that a potential opt-out state must negotiate a spectrum lease with FirstNet. But the state of Texas notes that FirstNet is not mentioned in the opt-out approval progression and that NTIA must follow the criteria outlined in the law to determine whether a spectrum lease should be granted.

“FirstNet assumes that FirstNet—rather than NTIA has decision-making authority over the entry of spectrum leases with opt-out states, despite the clear indication in the Spectrum Act that opt-out states must apply to NTIA for a spectrum lease,” the Texas filing states. “FirstNet’s contention is contrary to the plain language of the statute that places the decision with NTIA.

“It should not be assumed by FirstNet that Congress’ specification of NTIA rather than FirstNet as the authority for entering spectrum capacity leases with opt-out states was merely an oversight or otherwise a mistake by Congress.”

Texas also disagreed with the arguably the most important legal interpretation proposed by FirstNet in the public notice—that opt-out states and territories should not be allowed to keep revenues generated within their jurisdictional boundaries.

FirstNet officials repeatedly have noted that the business model for the proposed nationwide public-safety broadband network is largely dependent on the ability to redistribute “excess” revenues—from user fees and/or secondary use of excess network capacity—from the handful of very densely populated states and territories to help fund the network in more sparsely populated areas of the country.

For the most part, states and territories agree that any revenues generated from the operation of the network should be reinvested in the network and should not be available for use in a state’s general-fund budget. However, several states noted that they should be allowed to keep any network revenues within their jurisdictions. In fact, Texas notes that the law stipulates such an approach when addressing covered leasing agreements (CLAs) enable a commercial operator to provide consumer services over network capacity not used by public safety.

“The act itself requires that revenues generated under a CLA entered by an opt-out state must be used only to support the RAN within the state: ‘Any revenue gained by the state from such a leasing agreement shall be used only for constructing, maintaining, operating, or improving the radio access network of the State,’ the Texas filing states.

“Certainly, if fees from any secondary CLA users should be used only within the state, it follows that fees from primary users should also be used within the state.”

Another point of contention noted by several state commenters is FirstNet’s proposed interpretation of what constitutes a “cost-effective” RAN plan by a potential opt-out state. FirstNet has indicated that it would rather see excess revenue from densely populated states be used to subsidize network efforts in more rural areas of the country instead of allowing an opt-out state to keep revenues within the state in a manner that would result in a “gold-plated” network and that cost effectiveness should be based on what is best for FirstNet overall, not just the opt-out state.