AT&T filing with SEC outlines new payment schedule to FirstNet Authority

AT&T will pay more than $5.1 billion during the next five years to the FirstNet Authority, which plans to use this money to help fund the $8 billion commitment to enhance the nationwide public-safety broadband network (NPSBN) that is being built and maintained by AT&T, according to the carrier’s recent filing with the SEC.

AT&T made the declaration last week in its annual 10-K report to the SEC, which includes the accelerated schedule of “sustainability” payments to the FirstNet Authority. After making a $195 million payment to the FirstNet Authority in 2023, the new schedule calls for the following payments to be made during the next five years:

Last month, the FirstNet Authority board announced plans to invest more than $8 billion into enhancements for the FirstNet system during the next decade, including money to pay for full 5G capabilities via a 5G standalone (SA) c ore and expanded NPSBN coverage. Of the total $8 billion commitment, $6.3 billion was included in a network investment to be executed by AT&T, and another $2 billion in coverage enhancements are expected to be revealed in the future.

As part of the network-investment announcement, AT&T agreed to provide FirstNet subscribers with always-on priority and preemption across all of AT&T’s 5G commercial spectrum—as well as the Band 14 airwaves licensed to the FirstNet Authority—beginning in March. AT&T has been providing such priority and preemption across the carrier’s commercial 4G LTE spectrum since being awarded the FirstNet contract in 2017, but this is the first time a similar policy has been announced for 5G spectrum.

However, such an aggressive network-investment commitment would not have been possible at this time under the payment schedule included in the original 25-year contract between AT&T and the FirstNet Authority, because the FirstNet Authority simply would not have had enough money to invest in the near term. However, the announcement network investment is realistic with the new payment schedule.

Under its contract with the FirstNet Authority signed in 2017, AT&T is required to make annual “sustainability” payments to the FirstNet Authority for the right to offer commercial operations on the 700 MHz Band 14 spectrum licensed to the FirstNet Authority—subject to priority and preemption by public-safety subscribers.

These sustainability payments from AT&T are scheduled to total $18 billion during the 25-year life of the contract with the FirstNet Authority. Of this amount, about $3 billion is expected to pay for the FirstNet Authority’s operations, and the other $15 billion is required to be invested in a manner that enhances the FirstNet system.

AT&T has not changed the total amount of sustainability payments it will make to the FirstNet Authority, but the new payment schedule does accelerate the amount of the annual payments, which originally were heavily loaded toward the latter years of the agreement.

As a result, the $5.1 billion that AT&T is scheduled to pay the FirstNet Authority during the next five years dwarfs the amount that the carrier has paid since winning the NPSBN deal in March 2017.

During the first seven years of the contract, AT&T’s annual payments totaled less than $1 billion—$990 million, according to the SEC filing—so the FirstNet Authority is scheduled to receive more than $17 billion in sustainability payments from the carrier giant.

One other FirstNet-related item mentioned by AT&T in its SEC filing was the fact that the company had received $6.404 billion of the possible $6.5 billion it could have received from the FirstNet Authority as of the end of 2023.

In December, the FirstNet Authority validated that AT&T completed the initial five-year nationwide buildout of FirstNet on time and on budget, as AT&T had announced last spring. An AT&T spokesperson has informed IWCE’s Urgent Communications that has received the maximum total of $6.5 billion from the FirstNet Authority.

AT&T’s filing with the SEC was submitted a day after AT&T suffered an hours-long outage on Feb. 22, which was not mentioned in the report.