Big-picture question about FirstNet’s commercial role bubbles to the surface

During last week’s hearing about FirstNet, U.S. senators focused on the need to address rural issues, including topics like deployment timelines and coverage for first responders in sparsely populated areas—geographic regions that tend to be served last by the commercial space, if they are served at all.

Given this commercial history and the fact that FirstNet is in the process of selecting a team of commercial partners, the senators’ desire to protect rural public-safety users is understandable. However, Congress did a good job protecting those interests by including rural-coverage requirements in the legislation that established FirstNet.

This fact is cited repeatedly by FirstNet officials, who note that the nationwide request for proposals (RFP) includes a stipulation that the percentage of rural buildout equal the percentage of urban buildout in each phase of deployment during the next five years, when the primary construction of the Band 14 700 MHz public-safety broadband system is supposed to be finished.

Now, some state and public-safety officials have expressed concerns with FirstNet’s rural-coverage plans in the RFP, in terms of how much coverage is required. But the reality is that the offeror teams bidding on the FirstNet contract are not limited by that, they know that they are competing with other teams, and they know that the FirstNet evaluation is going to look at rural-coverage plans when making its selection decision.

In other words, it is impossible to pass judgment on FirstNet’s rural coverage until a contractor is selected and the deployment plans are unveiled. In addition, it will be important to note how much money the contractor will be paying FirstNet on an annual basis, because “extra” funds can be reinvested into the network for technology upgrades and to address gaps in coverage and capacity.

Of course, these funds will be available because FirstNet’s contractor will be able to leverage the 20 MHz of Band 14 spectrum to sell broadband service to commercial users on a secondary basis to public-safety use. Monetizing those airwaves is crucial, because the $7 billion that Congress provided FirstNet is nowhere near the amount needed to build this nationwide public-safety broadband network, much less operate and maintain it.

“$7 billion doesn’t go as far as it used to,” FirstNet CEO Mike Poth said during the hearing, and it is true.

Selling commercial services on the FirstNet system is a fundamental tenet of the law that Congress passed. Given this, it was interesting when one senator asked whether FirstNet would be competing against telecom providers in rural areas, including those in geographic locations that has so few potential customers that it is difficult for even one provider to serve the area.

(Editor's Note: Such questions at this hearing may mark a turning point for FirstNet. It's interesting to see lawmakers shift from asking if FirstNet will build a network to where it will be deployed and how the business model works.) 

Poth deftly sidestepped the inquiry—a wise move, as the answer probably does not fit well into the limit response time that panelists are given during a hearing.

Officially, FirstNet will not offer commercial service directly to customers, so it will not compete against existing providers directly, except for public-safety customers—and we have to wait until a deal is signed to learn who qualifies as a public-safety entity that will receive favorable pricing and priority access to the network.

In the commercial space, excess network capacity will be sold through the contractor via various business models, likely ranging from a more-traditional retail model to the wholesale, open-market vision espoused by Rivada Mercury.