If FirstNet does its job, ‘opt out’ is not a practical choice for states

As part of the legislation that allocated the 700 MHz D Block spectrum to public safety and earmarked $7 billion for a new entity known as FirstNet to make the dream of a dedicated first-responder broadband network a reality, Congress included language allowing each of the 56 states and territories to “opt out” of the FirstNet project. Under the law, the governor of each state and territory can choose to have its jurisdiction “opt out” of FirstNet, if the governor rejects the deployment plan that FirstNet has for the state or territory.

This “opt-out” language quickly captured the imaginations of many in the public-safety communications industry. Within weeks of the legislation becoming law, certain vendors were lobbying state leaders to exercise the “opt out” clause and build their own broadband networks. This was especially appealing to state officials that were told that public-private partnerships used to deploy a first-responder broadband network could result in new revenue streams for their cash-strapped states.

But today—almost two years after Congress enacted the legislation—there is growing sentiment within the industry that no state or territory will choose to “opt out” of FirstNet, because doing so would create a potential uncapped financial risk that no jurisdiction wants to assume in this struggling economy.

There are numerous reasons for this sentiment, many of which are easy to understand once some common misperceptions are clarified:

(1)     States and territories that choose to “opt out” are not opting out of FirstNet entirely. There will be a first-responder broadband network in that state regardless that must meet FirstNet’s requirements—the difference is that the “opt out” state would have build and operate the network, instead of letting FirstNet do it.

(2)     States and territories that choose to “opt out” cannot use partnership deals to bolster their general funds. Any money received as part of a public-private agreement must be reinvested into the network, not offset shortfalls elsewhere in the budget.

(3)     A state or territory that chooses to “opt out” can present a plan to the FCC that would make it eligible to receive some funding for the buildout of the network. However, the state/territory then would be on its own to pay for the operations of that network in perpetuity.

To recap, this means that a state or territory that chooses to “opt out” will have created a lot of extra work for itself (and statewide network deployments are never easy), will not be allowed to use any “profits” from the network to address financial shortfalls elsewhere, and may face the very real possibility of having a never-ending drain on its state budget to pay for ongoing operations, maintenance and technology upgrades.

Given these realities, it’s understandable why industry experts believe few—if any—states or territories will choose the “opt out” option, unless FirstNet fails to present a reasonable plan to a state or territory.

“We spoke with the writers of the bill, and that’s what they were trying to protect against—the [potential] failure on the part of FirstNet,” FirstNet board member Craig Farrill told IWCE’s Urgent Communications during an interview conducted at the LTE North America conference in Dallas. “What if FirstNet doesn’t come forward and deliver? What if they promise and fail? Then the state could say, ‘We’re going to opt out, because this plan isn’t viable.’

“It wasn’t as much about how many states are sitting there with $300 million to put in the ground [to build a statewide LTE network]. There’s not a lot of them; I think the number is zero. [States] need to be able to be assured that their needs are going to be met. FirstNet is really here to listen to the needs and meet the needs of the states in a collaborative effort.”