Urgent Matters

What just happened? A review of key factors considered during the FirstNet ‘opt-in/opt-out’ decision period

by Donny Jackson
Jan 05, 2018

All states made their "opt-in" decisions for FirstNet by the Dec. 28 deadline given to governors. Although the final choices were all the same, states took many different paths and considered a wide variety of factors in making their FirstNet decisions.

So, what did we learn during the FirstNet “opt-in/opt-out” decision period? Here are some of the key takeaways:

This was a negotiation. Even before the “opt-in/opt-out” decision period began, FirstNet officials said that states would not have a lot of wiggle room to negotiate enhancements to the FirstNet deployments plans for each state and territory, noting that the network ultimately had to fit within the constructs of the FirstNet-AT&T nationwide contract.

In fact, officials in some states cited this position as a reason why their governors made early “opt-in” decisions based on initial state plans, noting that the state officials did not believe that they could alter the FirstNet/AT&T package significantly. Instead, they wanted to “opt-in” early, with the hope that doing so would accelerate FirstNet deployment within the state and initiate competition—primarily with Verizon—that would benefit public safety.

But everything is negotiable, at least to some extent. With this in mind, other states decided to determine just how much.

These states took a decidedly different approach, issuing requests for proposal (RFPs) to select vendors to build an alternative RAN under an “opt-out” scenario. Early on, some observers even equated the initiation of RFPs as an early indication that a state’s governor planned to make an “opt-out” decision.

Yes, it was difficult to believe that a governor would make an “opt-out” decision without completing an RFP—after all, why go through the trouble of committing to build and maintain an alternative RAN without knowing whether an alternative-RAN deal would be better than the FirstNet plan? However, the inverse of this--the notion that all states issuing RFPs were on the verge of making an “opt-out” decision—simply was not the case.

There were a few states that issued RFPs because they seriously were considering an “opt-out” decision. But many more states issued RFP for different reasons. Some states viewed the procurement process as free research, and others just wanted to be able to say that they had explored all options before making an “opt-in” choice. Most did not even select a winner from the procurement.

However, one thing was clear: virtually all wanted to use the RFP results as a source of leverage—the lone source of leverage, according to some—while negotiating with FirstNet and AT&T in an effort to enhance the FirstNet deployment plan.

How well did this work? From the outside, it’s impossible to discern how much initial state plans were changed, because only an inner circle of people in each state were privy to the state plan, and even fewer learned of the evolution of each deployment plan.

But it was very clear that there was widespread disappointment in states when the initial FirstNet state plans were distributed, and it was just as apparent that state officials became much more comfortable after face-to-face meetings with FirstNet and AT&T officials in the summer. Meanwhile, it was clear that input and negotiations helped state officials become increasingly accepting of the FirstNet deployment plan, even if they stopped short of offering ringing endorsements.

Incentives matter. Another sign of the negotiating process were sporadic public indications that states were able to secure certain network enhancements from AT&T. In Colorado, an official claimed that AT&T agreed to deploy an additional 36 sites in the state, while others sought accelerated deployment timelines or the position of extra deployable communications units within the boundaries of their state or territory.

What became clear was that AT&T often agreed to such concessions in a state or territory, but only if the governor made an “opt-in” decision within a certain time period. In Vermont, the governor said AT&T agreed to build six additional sites in key locations, but only if the governor made an “opt-in” announcement by Dec. 1. In New Hampshire, AT&T made clear that its offer of enhanced coverage for the state—99% population coverage and 98% geographic coverage—would expire after the Dec. 28 deadline.

Indeed, many sources credited this incentives-based approach as a key reason why all states made “opt-in” decisions by the Dec. 28 deadline, because governors did not want to leave a better, incentive-laden deal on the table, if they did not believe the “opt-out” alternative to be a realistic choice.

Without the incentives, there was a much greater likelihood that some states would have allowed the deadline to pass without making an “opt-in/opt-out” decision—something an AT&T executive even predicted would happen in multiple states. After all, the base state plan still would have been implemented, because making no decision was to be treated as accepting the state plan; however, it became apparent that only a proactive “opt-in” decision from the governor would allow the state to receive the benefits of the incentive offerings.

All states and territories are different. FirstNet officials stated this repeatedly for years, but exactly what this meant became much clearer as RFPs were issued and during the “opt-in/opt-out” process.

In some cases, it was civics lesson in state-government operations. Before the FirstNet saga unfolded, how many people outside of New Hampshire knew about the state’s Executive Council, which shares considerable political and contractual powers with the state’s governor? Or that a 25-year deal is not allowed in many states (in many states, the limit is a 10-year contract; in Oklahoma, only one-year deals are allowed), making it much more difficult to consider the “opt-out” alternative to FirstNet?

Many states lacked the assets needed to make the “opt-out” alternative work. In extremely rural states, monetizing spectrum is not really an option, because spectrum already is readily available and inexpensive. In addition, these states typically lack the kind of metropolitan markets that are attractive to the commercial wireless market.

Furthermore, many states lack the technical expertise to oversee the deployment of a statewide LTE network. This human-resource issue would be complicated by the fact that the state would not be working alone. At all times, it would have to answer to FirstNet and AT&T to meet their network guidelines and make changes according to their timelines, which may not always be in sync with the needs or wants of the state.

“This has the potential to be a project-management nightmare, one source said of the prospect of a state implementing a FirstNet alternative RAN.

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