FirstNet changes key terms of draft spectrum-lease agreement with Dec. 28 deadline approaching

FirstNet yesterday afternoon changed terms in its draft spectrum management lease agreement (SMLA) in a manner that potentially reduce “opt-out” states’ financial liabilities significantly in the case of a failure in alternative radio access network (RAN) performance or public-safety adoption of the alternative FirstNet service.

These were two of the issues in the original draft SMLA that were cited most by state officials wrestling with “opt-in/opt-out” decisions during recent months. If an “opt-out” state’s alternative-RAN effort failed to meet FirstNet standards—from a financial or functionality standpoint—the state would seek to become part of the nationwide FirstNet system, the state would be responsible for “termination fee” payments up to $15 billion in the case of California.

Officials in many states described these proposed payments as “punitive” or “draconian,” expressing a belief that the figures were designed to scare state officials into making the less risky “opt-in” decision, in which AT&T would build the state RAN as part of the carrier’s nationwide deployment effort.

In addition, officials in some state—most notably, California—have expressed concern that the public-safety-adoption targets for its state were unrealistic, although FirstNet said the adoption targets cited in the draft SMLA were the same as those that AT&T has committed to meet as part of its nationwide contract.

Both of these issues were addressed late yesterday afternoon in a FirstNet e-mail to state officials and in an update to the “FirstNet Facts” section of the FirstNet web page.

“As FirstNet has always done with its outreach and consultation, FirstNet listened to the states’ concerns and is clarifying some information in the model SMLA for states seeking to opt-out,” according to the FirstNet e-mail. “For example, if the opt-out state build or operation of its RAN fails during the term of the SMLA, the state will only be responsible for the actual cost of reestablishing the RAN in the state.  The revised SMLA makes clear that these actual costs will be recommended through an independent, third-party assessment.”

In recent public meetings, FirstNet CEO Mike Poth has stated that the figures included in the original draft SMLA were costs that were estimated based on a “worst-case” scenario of FirstNet having to rebuild the RAN in an “opt-out” state as a “greenfield” deployment. The e-mail and the updated “FirstNet Facts” section of the FirstNet web site represent the first written confirmation of this position.

“Any failure of an opt-out state-built RAN over the next 25 years imposes considerable costs and risks on the nationwide network and public safety, impacting both the opt-out state and every other state,” the updated web site states. “If the opt-out state build or operation of its RAN fails during the term of the SMLA, the state will be responsible for any actual costs that FirstNet reasonably incurs in reestablishing the RAN in the state, so that public-safety users can continue to perform their life-saving missions with minimal disruptions to their communications.

“These actual costs, to be recommended through an independent assessment, will only be known at the time the state can no longer operate the RAN.”