AT&T’s bid to build a nationwide, US public safety network – FirstNet – can finally move forward. But the 25 year, $40bn commitment doesn’t ensure a financial success.
At the end of March AT&T was chosen by the First Responder Network Authority (FirstNet) to build and manage a nationwide broadband network for US first responders and public safety agencies.
Covering all 50 states, five territories and Washington DC, AT&T expects to spend about $40bn over the life of the contract to build, operate and maintain the network.
FirstNet, in turn, will provide AT&T with 20 MHz of spectrum to power the network, along with payments of $6.5bn over the next five years.
On its face, the arrangement would seem like a win-win.
US first responders – the likes of fire fighters, police departments, and ambulance services – get access to an interoperable, broadband communications network promising to deliver on the capabilities and scale economics of a global technology like LTE.
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AT&T gets billions of dollars in funding, access to spectrum and a shiny new network – albeit one that it will be building – to sell into the public safety community.
Sounds great, right? Well, there’s always risk
Unfortunately, the reality is not that simple.
While AT&T has been contracted to build the FirstNet network, each state has the discretion to either opt-in or opt-out of the plan.
States that opt-out will need to provide alternate plans for building their first responder network, but those plans could cut AT&T from the picture.
Some states, in turn, might commit to opting-in only if AT&T builds the network to their specific demands, but that could, ultimately, raise network deployment and operations costs.
Perhaps most worrying, as noted by GlobalData research, is that AT&T is not alone in selling communications services to public safety, and supporting FirstNet does not change that.
Verizon and Sprint, for example, have been successful selling into public safety, building private networks for state and local government agencies, offering push-to-talk services and leveraging their existing, public networks.
AT&T’s association with FirstNet and the network it is building to support public safety needs will, doubtless, help its sales efforts but they won’t supply a captive market.
Will states choose to opt-out of FirstNet? Will they put demands on AT&T that increase its FirstNet-related costs? Will other carriers in the US re-double their efforts to compete for public safety business?
Each unanswered question highlights that winning the FirstNet contract is just the first step in a long project for AT&T.