Urgent Matters

FirstNet’s latest legal interpretations make opt-out alternative less appealing to states, territories

by Donny Jackson
Oct 20, 2015

After last week’s release of the text for 64 FirstNet legal interpretations, many in the industry question whether the “opt out” alternative for states and territories really is a practical option.

It is a right that state lobbyists fought hard to include in the 2012 federal legislation that created FirstNet, which is charged with overseeing the development and maintenance of a nationwide public-safety broadband network—the ability for a state or territory to “opt out” of FirstNet. After last week’s release of the text for 64 FirstNet legal interpretations, many in the industry question whether “opt out” really is a practical option.

This is not a surprise. FirstNet officials have indicated their intentions on the subject for some time; the final legal interpretations just codified them. FirstNet took logical positions in the interpretations, given the organization’s mandate to build a nationwide network with limited funding. After all, this is going to be a difficult challenge as a nationwide project; trying to integrate a bunch of opt-out states into the system promises to be more difficult and could have a negative impact on its economic viability.

Before delving further into the topic, we must provide an important clarification for anyone reviewing the “opt out” alternative for the first time: choosing the opt-out alternative does NOT mean that a state or territory would actually get out of FirstNet. The “opt out” term is used in the law, but it is not a very accurate depiction of the alternative.

Under the current law, every state and territory will be part of the nationwide public-safety broadband network overseen by FirstNet. For states and territories, the opt-out alternative is about determining which entity will build and maintain the LTE radio access network (RAN) within the jurisdiction.

The path of least resistance is for a governor to accept the plan offered by FirstNet, which then is responsible for all costs associated with the buildout and maintenance of the public-safety LTE network within the state or territory. The alternative is for the governor to choose the “opt-out” alternative, which would call for the state to deploy and maintain the RAN within its borders while continuing to use FirstNet’s LTE network core and 700 MHz spectrum.

By law, the decision rests with the governor of each state or territory. The reality is that a governor unilaterally making a decision to opt out—thereby the state or territory to pay network costs in perpetuity—against the wishes of the state legislature and others would be taking a huge political risk, but that is allowed by law.

Soon after FirstNet was created, many governors expressed interest in the opt-out alternative, which was understandable—it was something new, and it outlined a specific role for each governor.

In addition, the opt-out process got many governors thinking about myriad possibilities and synergies.

Some saw FirstNet as a chance to generate revenues within the state that could be used to bolster depleted budgets still suffering from the aftermath of the global credit crisis of 2008, but FirstNet officials quickly tried to quash this notion, noting that the law mandates that revenues be put back into the network.

Many officials from densely populated states liked the notion of putting revenues back into the network, figuring that keeping the revenues within the state would mean that first responders in their jurisdictions could get access to a better network with lower subscriber fees.

But FirstNet’s legal interpretations undermine that idea, removing most of the “reward” potential from the risk/reward equation that governors must weigh. Without getting into a lot of legalese, FirstNet’s position is that densely populated states choosing to opt out must contribute financially to the nationwide public-safety broadband initiative, just as they would had they accepted FirstNet’s deployment plan for the state.

“We need to ensure that any revenue that’s generated—particularly in highly dense, populated areas that will generate significant value for the excess capacity available—that that money is appropriately reinvested back into the network in a way … that benefits the entire nation,” FirstNet Acting Chief Counsel Jason Karp said during the last FirstNet board meeting. “We don’t want the national deployment to, in any way, suffer because a particularly rich state that is able to generate significant revenue because of that population density retains that revenue to create essentially a higher-quality radio access network in their state than we have in other localities around the country.

“It’s critical that we are leveraging the high-density, high-revenue-generating areas in order to pay for the deployment nationally. We think that’s absolutely what Congress intended. We think that’s the intent of the act and what the act says, and we reiterate that conclusion [in the final legal interpretations].”

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