Unanswered questions loom as governors prepare to make ‘opt-in/opt-out’ FirstNet choices

Without question, these facts are significantly helpful to governors of states and territories that must make their “opt-in/opt-out” decisions by Dec. 28, which may be part of the reason why more than 45% of the governors that received initial state plans on June 19 already have announced “opt-in” choices.

For these states and territories, the driving reason for the decision varied significantly. Some were genuinely enthusiastic about the FirstNet/AT&T plan, while others perceived the lack of a viable “opt-out” alternative or simply did not want to deal with the project-management challenges associated with overseeing RAN development and maintenance for the next 25 years.

In addition, many governors simply do not want their states or territories to assume the financial obligations of building and maintaining a public-safety RAN for such an extended period. If an “opt-out” state’s contractor goes bankrupt or cannot execute the technology upgrades within FirstNet’s nationwide timeline, the state is responsible for ensuring that public-safety users are not impacted.

Many sources have suggested a performance bond as protection for the state, but trying to get a financial institution to underwrite a 25-year bond for an ill-defined project—remember, no one knows what 6G technology looks like or might cost to deploy in 15 years—promises to be difficult and expensive, at best. It is even more problematic in states that do not allow long-term contracts that are more than 10 years in length, which can add even more uncertainty for both the state and the vendor. Contract renewals can be tricky, if problems emerge

Furthermore, it is unclear how a failed “opt-out” venture would be unraveled—a topic noted by FirstNet board members during their meeting last month. For instance, if a contractor needs to borrow money to deploy the state RAN and then declares bankruptcy, what happens to the operation of the public-safety RAN?

Use of the spectrum likely will be the most valuable asset, but FirstNet likely will not approve a spectrum-lease agreement that would jeopardize spectrum rights in any way. The network equipment would have some value, but would a state—or FirstNet—be comfortable with an arrangement that could result in the RAN being held by creditors that will be focused on recovering a portion of their investments, as opposed to meeting the needs of public safety? If neither the spectrum nor the network equipment is used as collateral, would investors provide the capital necessary?

In short, governors do not want to put their states or territories in a position of having to pay for maintenance and upgrades to the public-safety LTE RAN, which could prove to be a sizable capital cost. No state wants to deal with such a potential uncapped expense, particularly if they already are wrestling with severely underfunded pension programs.