Governors making an “opt-in/opt-out” decision by the end of the year have to consider more than simply whether they like the deployment plans presented by FirstNet and AT&T, including the ability for a state’s vendor to address potential risk factors during the next 25 years, according to panelists on an IWCE webinar this week.

“I’ve heard a lot of people talk about, ‘You opt out, if FirstNet doesn’t meet all of your requirements.’ Well, that doesn’t make any sense,” Joe Ross, a partner at Televate consulting firm, said during Wednesday’s webinar, which is available on demand. “It’s really about what is the solution that best serves your community. And it’s really not about just what’s in the law about building, operating and maintaining the RAN. If you opt out, you’re really responsible for a whole lot more than that.

“You’re responsible for customer service. You’re responsible for many of the bells and whistles associated with a network. There are going to be application requirements. There are going to be device requirements. There’s going to be sustainability requirements. There are also risk factors to think of.”

Indeed, understanding those risks—and ensuring that they are addressed in a manner that does not expose the state to unwanted liabilities—is critical for governors contemplating an “opt-out” decision that would make the state responsible for building and maintaining the LTE radio access network (RAN) within its borders, instead of by AT&T on behalf of FirstNet, Ross said.

“It’s not just about who’s got the best network, and who has the best plan. It’s also about whether you can secure all of the federal approvals, and—importantly—will you be able to negotiate a [spectrum] lease with FirstNet, based upon whatever that alternative plan is?

“At the end of the day, it’s all about, ‘Do the benefits outweigh the risks?’ Does the opt-out alternative that you are being presented give you all of the coverage, capacity, etc., that you’re looking for, and has the opt-out vendor basically been able to mitigate all of these risks. The lease is between the state and FirstNet. So, to that extent, it’s the state that’s liable for all of the requirements in that lease. Has an opt-out vendor mitigated all of the financial and other risks associated with opting out, and what risks remain?”

Given that an “opt-out” state is liable for the requirements in the spectrum lease with FirstNet, there have been discussions during the past few years about the best approach to make this happen. A common practice with other government construction contract is to have the vendor provide a performance bond that is designed to provide the government with a financial guaranty that the work will be completed, even if the vendor were to declare bankruptcy before the project is done.

But such bonds typically are provided for projects that have a clear scope of work—for instance, the construction of a building—that can be completed in 10 years or less. In the FirstNet scenario, an “opt-out” state’s vendor would be responsible for building, maintaining and upgrading the RAN for a 25-year period, with the scope very unclear as the network evolves to 5G and beyond, particularly during the latter half of the performance period.

Dominick Arcuri, principal at DVA Consulting and moderator for the webinar, acknowledged the problems that the situation presents for a potential “opt-out” state and its vendor.

“My assessment would be that the state certainly would need to have a firm commitment from a vendor that they would partner with for an opt-out approach and agree on what the vendor could provide,” Arcuri said. “There would have to be some type of bonding, I believe. Can you do one for that period? That might be difficult to obtain.”

Ross echoed this sentiment.

“I’ve seen RFPs that address that specifically,” Ross said. “[But] I’ve never a proposal, so I don’t know to what extent the vendors that were bidding have complied with all the requirements.

“There have been some RFPs that went out that sought to protect the state from such events. Whether or not it’s feasible is another question.”