Thu Sep 1 13:52:49 2016
The State of New Hampshire
Or Is That the State of Confusion?
The state of New Hampshire issued a bid request with an RFP for Public Safety broadband services. At the time I wrote that I thought New Hampshire should have used an RFI or Request for Information instead of a Request for Proposal but it had already issued the document. I was later told and read that several responses were received, and I assumed New Hampshire would then wait for the FirstNet state plan to be delivered to it by FirstNet and the chosen contractor before moving forward with the RFP. Now, according to the state’s website, it appears as though New Hampshire is planning to pre-award the contract to one of the bidders.
It does not make any sense to me for the state of New Hampshire to move forward for a number of reasons:
1) It does not know who will win the FirstNet RFP.
2) It cannot officially opt out of FirstNet until the contract is signed and the state plans are delivered. Then it has to seek approvals from the FCC, the NTIA, and FirstNet for various and sundry things.
3) The FirstNet awardee is permitted to then go back to any opt-out state and try to convince the state to sign a contract with it.
4) There are still unresolved questions about who is entitled to receive income derived from the secondary use of the FirstNet spectrum.
Nonetheless, it appears as though New Hampshire is planning to move forward with this bid award. In reviewing the contract, as published, I have a few questions and a few concerns. The first has to do with the wording of Section A of the contract on page 4 which states in part:
“the ability for the network to be sufficiently monetized; projected EBITDA margins achieved; actual costs expended; demand for secondary commercial use of this spectrum over time; and price erosion and fluctuations over time; and therefore are not fixed outcomes guaranteed by (the bidder).”
However, what is missing here is whether the bidder or the state will be responsible for any shortfalls that may occur due to underuse of the system by the Public Safety community or by the failure of the bidder to fully monetize the use of the spectrum on a secondary basis. Will the state be held responsible for making up these shortfalls or will the vendor end up having to make up the difference?
Next up, on the same page and described at Section B. Work Task 4, the bidder has promised to help the state of New Hampshire in developing a plan to convert the 12.5 MHz of the 700-MHz narrowband spectrum licensed to the state to broadband spectrum for use by the state. The law that created FirstNet did permit the conversion of the 700-MHz narrowband spectrum but I do not believe it was ever intended that it would become a mixed use, broadband and narrowband portion of the spectrum. In reality, if New Hampshire were to obtain permission from the FCC to make use of this spectrum for broadband services it would have a huge negative impact on all of the nearby and neighboring states including New York, Maine, Vermont, and Massachusetts, and perhaps our Canadian neighbors to the north.
The question should be asked as to why a state the size of New Hampshire, with a total population of 1.38 million and an average population per square mile of 147 (2010 Census report), needs more broadband spectrum for Public Safety use? The 20 MHz of FirstNet spectrum will more than serve the first responders and citizens of New Hampshire. The only reason I can see that the contractor even proposed this shift from narrowband to broadband is to find a way to monetize that spectrum in addition to the FirstNet spectrum. In any event, if this were to be approved by the FCC it would create a huge problem for the surrounding states. You simply cannot share the same spectrum with both narrowband and broadband systems.
A visit to the FCC Universal License System (ULS) and RadioReference.com shows that most of the Public Safety communications in the state of New Hampshire are on the VHF or 150-170-MHz band. There appears to be a very robust statewide system for Public Safety voice in operation across the state. If the plan is to replace that with 700-MHz broadband at some point in time, the logical move would be to make use of FirstNet’s broadband spectrum rather than to try to build a new and very expensive broadband network on a completely different portion of the spectrum (today’s 700-MHz narrowband channels). Further, in a letter to the FCC dated May 23, 2014, the state certified it was then in compliance with FCC rule section 90.529 (b)(1) regarding the first substantial service benchmark of coverage of 1/3 of the state population by June 14, 2014. The letter further states, “The build out of the State of New Hampshire 700 MHz Digital Radio System Network will enable New Hampshire and surrounding States (emphasis added) and Local Public Safety Users to communicate directly on the 700 MHz band as needed on a day to day basis or during declared emergencies, incidents, or large scale public events.” (this refers to the 700 MHz LMR spectrum not to FirstNet’s spectrum)
So the State of New Hampshire appears to be ready to try to change out its existing 700-MHz channelized LMR voice system for a new broadband system. An interesting decision since it will have to solve numerous interoperability issues, interference issues, and find a company willing to build one-off broadband equipment for that band. The cost to convert an LMR system on 700-MHz to a broadband cellular-type system has to be huge. The number of sites needed will be more than four times the number for the higher powered voice systems and equipment built for that band, if it does manage to obtain FCC permission, will be available only at a premium in price because beyond New Hampshire at this point, there will be no other demand.
It appears as though the selected vendor is hedging its bets. It announced it had submitted a bid to FirstNet for the nationwide deployment and has, apparently successfully, convinced at least one state if not more that it should not wait for FirstNet’s proposal prior to making an award for an opt-out contractor. I still believe as I have all along that any state that signals it may opt out before finding out what FirstNet and the partners are offering them is doing a disservice to its first responders and its citizens.
The current 600-MHz spectrum auction is an attempt at matching what existing users think the spectrum is worth (TV stations that never paid for the spectrum) and the broadband operators and others who want to use the spectrum. At the moment it looks as though a Plan B is being put in place by the FCC. The amount of money the TV stations (collectively) say they want to move off of the spectrum is a whopping $86+ billion. After the second component of the forward auction, meaning the broadband operators and others that want to make use of the spectrum, the bid total is only $22 billion. In other words, as of today, the bidders do not think the spectrum is worth as much as the TV stations think it is.
So Plan B means that the FCC will go back to the TV broadcasters, reduce the amount of spectrum that will be available, run the reverse part of the auction again to see if TV operators will be any more realistic, and then run the forward auction again. The NAB is jabbing at the carriers because the carriers have been saying there is a spectrum shortage but the TV stations appear to be overly greedy, causing a disconnect between the reverse and forward auctions. The final outcome of the auction is unknown but it now appears as though the 63 bidders are a long way from what the TV stations say they want to be paid to move down-band or close their doors and call it a day. It will be interesting to see how this turns out. Both the TV stations and the broadband players have a lot of clout with Congress so it is possible that if there needs to be action taken by Congress to bring the bidding back on track it will be slow to come and will end up delaying the auction even more. Those who submitted a response to the FirstNet RFP should be feeling pretty good about now.
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