FirstNet's RFP is expected to be released this week as more potential bidders are emerging. Popular belief is that at least
one Tier 1 wireless carrier will be involved, and the "conspiracy" theorists like Jonathan Schildkraut at Evercore ISI think Verizon (NYSE: VZ) is a good candidate, in part due to its existing spectrum position in 700 MHz, its reputation for network quality and the relationship it has been building with rural partners for LTE buildouts.
Last week, AT&T's (NYSE: T) senior EVP of Technology and Operations John Donovan said during a Citi investor conference that FirstNet represents a good opportunity that AT&T sees as a "rare event" and one the operator will pursue aggressively.
Asked at the same conference if Verizon was evaluating a FirstNet opportunity, Marni Walden, EVP and president of Product Innovation & New Businesses at Verizon, said it would be "premature" for her to comment. "I think FirstNet has an RFP coming out, so I think it's premature for us to comment on this time, so I think I saw somebody with a FirstNet badge walking around in the audience, so maybe they would be a good one to talk to," she said, according to a transcript on the company's website.
Verizon has been pretty mum on the subject, but given AT&T's stated desire to participate, that just might push it over the edge. As long-time advocate and consultant for public safety communication systems Andrew Seybold notes, if Verizon was on the fence, the fact that its arch rival AT&T announced it will aggressively participate probably will bring Verizon to the table.
Either way, there are a lot of things any potential bidder needs to consider. During an appearance at the same Citi conference last week, T-Mobile (NYSE:TMUS) EVP and CTO Neville Ray said there's a lot of operator engagement coming from the FirstNet team, and while the low-band 700 MHz spectrum that FirstNet will provide to its nationwide partner is obviously meaningful, there are a lot of unknowns about how rigid and strict the requirements are going to be and how much time an operator will need to commit. It's also easier to get "clean" spectrum at auction, and T-Mobile has made it abundantly clear that it's interested in the upcoming 600 MHz auction. "It's a huge thing to think about," Ray said of the FirstNet project.
It's easy to see why an operator would think twice about getting involved in FirstNet. The sheer amount of liabilities on the line have got to be enormous. This is the network, after all, that public safety officials' lives will depend on, and the whole "priority access" thing is not fully baked or proven, at least in the minds of some skeptics.
IWCE's Urgent Matters spells out a lot of the questions potential bidders hope to see answered in the RFP. Another unanswered question is how this public safety network will work with emerging 5G standards, which, while not yet written, would certainly seem to need to be considered. Then again, that could be another area where Verizon will play its hand, given that it can demonstrate the work it's doing through its 5G Technology Forum.
According to Urgent Communications, FirstNet CEO Mike Poth has said FirstNet is seeking a partner for a deal that's designed to last at least two decades, and the winning bidder will have to make a "significant investment" to deploy the first-responder network on FirstNet's 20 MHz of broadband spectrum. Knowing that it's a long-term plan should give at least some assurance to the bidders, but any operator and vendors interested in getting the contract also need to be willing to invest big-time in the network.
FirstNet has said bids must be national in scope, but they could have one or a number of operators on a team to ensure full coverage, including rural. One might consider the idea that two carriers could pair up to offer a system for public safety. That would certainly provide redundancies and back-up. But it's highly unlikely that AT&T and Verizon would ever dream of hooking up on such a project. The two can't even agree to a roaming agreement for push-to-talk (PTT), even though they both use Kodiak Networks' PTT technology. The idea that they would ever come together on anything – even something as crucial to the public safety as this public safety communications network – is unlikely to be entertained.
As for the potential bidders, operators like AT&T and Verizon have experience bidding on federal government projects and presumably know how to mitigate risks or manage them to their benefit, and they employ reams of attorneys to make sure contracts are written to protect their interests. Rivada Networks also hasn't been shy about making its interest known. Systems integrators like Northrup Grumman probably are weighing their options. But, as Seybold points out, there could be untold bidders emerging that we won't know until the day they make themselves public. Some bidders likely don't want to be known lest they tip off their competitors.
The RFP comes out any day now and it will answer a lot of questions -- and probably raise a lot more. But it should give us a clearer picture of who will be bidding on FirstNet and whether AT&T and Verizon will be among the competition. --Monica