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Funding


FirstNet board initiates public-notice proceeding on relationship with ‘opt-out’ states

  • Written by Donny Jackson
  • 9th March 2015
FirstNet board members approve a public notice that seeks input on FirstNet's relationship with states and territories that choose the “opt-out” option, including how revenues generated by opt-out states can be used. Policies associated with these topics could have a significant impact on FirstNet’s efforts to establish a business model that ensures long-term sustainability, according to FirstNet Chairwoman Sue Swenson.

What is in this article?

  • FirstNet board initiates public-notice proceeding on relationship with ‘opt-out’ states
  • FirstNet board initiates public-notice proceeding on relationship with ‘opt-out’ states

FirstNet board initiates public-notice proceeding on relationship with ‘opt-out’ states

FirstNet board members today approved a public notice that seeks input the relationship between FirstNet and states/territories that choose the “opt-out” option, including how revenues generated by opt-out states can be used. Policies associated with these topics could have a significant impact on FirstNet’s efforts to establish a business model that ensures long-term sustainability, according to FirstNet Chairwoman Sue Swenson.

Under the 2012 law that created FirstNet, each of the 50 states and six territories will have the choice of (1) adopting the public-safety broadband plan proposed by FirstNet, or (2) it “opt out” and can deploy its own radio access network (RAN) that meets FirstNet standards and interoperates with the rest of the nationwide system. Despite the “opt-out” moniker in the law, there is no option that allows a state to not be part of the FirstNet system in some way.

While “opt-out” alternative is clear in the law, there are many questions surrounding the details of FirstNet’s relationship with an “opt-out” state. Perhaps the most important of these is whether revenue generated from subscriber fees in an ‘opt-out” state must remain in the state, or whether it can be distributed to other states and territories in FirstNet.

“FirstNet has three primary sources of funding: $7 billion in cash, fees from selling excess spectrum capacity, and subscriber fees,” FirstNet Chairwoman Sue Swenson said during the special board meeting. “In general, the better job we do leveraging the first two sources, the more we can lower subscriber fees for public safety. As you know, this is very, very important to the overall program.”

If subscriber-fee revenues from densely populated states and territories—the most likely candidates to choose the “opt-out” path—were kept within the jurisdiction, it would have a negative impact on FirstNet’s ability to pay for the deployment of services in other parts of the country, Swenson said.

“As we have said from the beginning, $7 billion will not deploy the nationwide network that public safety needs,” Swenson said. “Most states will need the revenue generated by a few high-density states.”

With this in mind, FirstNet’s initial legal interpretation of the “opt-out” clause in the act is that “Congress intended to give states the option to customize the radio access network to meet local needs but did not intend the exercise of that option to deny funding to other states substantial funding to many other states, particularly rural states,” Swenson said.

“Instead, we are seeking comment on our interpretation that will maintain the appropriate balance between the funding for all states and a particular state’s rights under the act. We believe our interpretation in this regard is reasonable and particularly important, given the act’s requirements regarding rural-deployment milestones and our duty to ensure the deployment of a nationwide network.”

In addition to subscriber-fee revenue, the public notice also seeks input on the use of revenue from covered leasing agreements, which allow FirstNet or an “opt-out” state to lease excess network capacity to a partner—perhaps a commercial carrier—on a secondary basis.

One stipulation in the law for is that “any revenue gained by [an “opt-out”] state from such a leasing agreement shall be used only for constructing, maintaining, operating, or improving the radio access network of the state.”

Of course, before a state or territory can build its own RAN, it must reach a spectrum-lease agreement with FirstNet. That spectrum-lease arrangement can be structured to ensure that FirstNet does not suffer significant funding losses that could impact its service in the rest of the nation, according to FirstNet Chief Counsel Stuart Kupinsky.

“There are actually a number of ways that can be addressed,” Kupinsky said during a press conference after the board meeting. 

1 | 2 |
FirstNet board initiates public-notice proceeding on relationship with ‘opt-out’ states
Tags: Public Safety Funding Long Term Evolution (LTE) News NTIA/FirstNet Policy Public Safety Public-Safety Broadband/FirstNet Regional Coordination State & Local Government News

4 comments

  1. Avatar Anonymous 10th March 2015 @ 12:53 pm
    Reply

    Why would any State allow the
    Why would any State allow the federal government or it’s idiot creation “First Net” to steal funding from it? Since when is any law that legislates theft on this scale even legal? Who cares about whether First Net even exists and the bigger question, why should it exist?

    • Avatar Anonymous 13th March 2015 @ 5:43 pm
      Reply

      I’m in agreement with your
      I’m in agreement with your line of questioning… If a State so chooses to OPT-OUT and create it’s own First Responder/ Public Safety Net then the State should be the only one to get a return from those who it leases too. There is no justification for passing any funds gained from State to Federal government when the State has funded it’s own network. Aside from licensing the bandwidth as commercial cellular companies do that should be the only expense that the Federal government can charge the State. Any other “fees” that the Feds would sanction against the State (ie: the State’s customer base leasing fees) would be an act of extortion…. Just saying..

  2. Avatar Radio Sgt 10th March 2015 @ 9:50 pm
    Reply

    Police do not need or want
    Police do not need or want firstnet. It is a boondoggle of massive scale. 7000 Million dollars and they dont have enough money? And that is just to build it. Keeping it going is another thing. Graft.Corruption. Hands in the till. Quarter million cushy jobs for connected lawyer cronies. Let each state run their own net and keep Washington out of it. Fold this miss now.

  3. Avatar kramw 20th October 2015 @ 5:57 pm
    Reply

    Previous comments are
    Previous comments are ridiculous. It costs a state nothing to have Firstnet build a network in the state. Agencies in the state are not required to use Firstnet, so if it is no good, they can lease or build their own. On the other hand, if a state opts out, they have to finance and build their own network, and presumably they will want to force all their first responders onto that network, whether it is good or bad. The money to be made by leasing out 10 MHz of 700 Mhz when it is not needed for first responders is not going to generate much revenue, even if the state gets to keep the revenue.

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