AT&T exec expects ‘many’ governors will not make FirstNet ‘opt-in/opt-out’ decision

Governors in “many” states and territories will not make a FirstNet “opt-in/opt-out” decision, effectively making an “opt-in” choice by taking no action by the Dec. 28 deadline, according to John Stephens, chief financial officer (CFO) for AT&T, FirstNet’s nationwide contractor.

Stephens noted that no state or territory governors have announced their intentions to pursue the FirstNet “opt-out” alternative, which would make the state responsible for building and maintaining the LTE radio access network (RAN) instead of letting AT&T handle the deployment and operation of the RAN. To date, governors in 31 states and two territories have announced “opt-in” decisions.

“They’ve got to decide by Dec. 28, but many of them are just going to let the time expire and automatically opt in,” Stephens said during a Morgan Stanley conference in Barcelona earlier this month. “The leadership in many of the state governments … and territorial governments have more important things to do.

“Think of the people in Houston, the people in Florida or the people in Puerto Rico. We’ve had a lot of natural disasters in the United States, and those governments are focusing on what they should focus on—taking care of the people and restoring good quality of life—so they may not react to the FirstNet opt-in process. They may choose to be automatically opted in on Dec. 28.”

Governors in Texas and Puerto Rico already have announced “opt-in” decisions. Florida’s governor has not made any announcement yet, but a state commission studying the FirstNet situation has recommended that the governor make an “opt-in” decision.

The notion that governors might not make an “opt-in/opt-out” decision is not a new concept. For years, industry sources have cited the inaction route as one that could be politically expedient for governors in numerous scenarios—most notably, those who do not want to support federal-government intervention in their state but also do not want to expose the state to potential legal and financial issues associated with the “opt-out” alternative.

Meanwhile, legal questions are being raised in Vermont whether its governor has the sole authority to make the “opt-in/opt-out” FirstNet decision for the state.

In the 2012 law creating FirstNet, governors are charged with making the “opt-in/opt-out” decision for each state and territory. Some states previously have raised the issue of a need for legislative input into the decision, but many determined that legislative input would not be necessary under an “opt-in” scenario, because an “opt-in” decision would not obligate states to spend—or guarantee—any funds on the network.

However, the Vermont legal opinion—written by legislative counsel Maria Royle in a memorandum to state Rep. Stephen Carr—notes that Vermont could see a budgetary impact from an “opt-out” decision, because the federal government would provide a $25 million construction grant to help fund deployment of the alternative RAN. Vermont has issued a request for proposals (RFP) to solicit bids from vendors willing to build the alternative RAN under an “opt-out” scenario, and the commission overseeing the procurement process “is actively considering one bid in particular, submitted by Rivada Networks,” according to the memorandum.

“In addition to any financial and regulatory risks associated with both the FirstNet State Plan and the competing bid submitted by Rivada Networks, key elements relevant to a decision on which option is best for Vermont include: network reliability, security, interoperability, cost, governance, access management and prioritization, and coverage and capacity capabilities,” the memorandum states. “The policy implications of either option, therefore, are quite extensive.”