Oklahoma Planners Envision FirstNet Contracted Out to Private Equity
FirstNet doesn’t have to cost states all the taxpayer dollars people fear, a telecom consultant argued. He said that’s despite an established belief that the $7 billion in federal money devoted to building the federal public safety broadband network is not sufficient and will hurt the project. Private equity can and should cover the brunt of what will be enormous costs, said Michael Myers, a consultant speaking on a state planning panel Friday afternoon. The FirstNet Oklahoma Panhandle Region Coordination Element (FORCE) has begun holding a series of talks since its formation earlier this year. Its Friday talk centered on how to bring utilities into the picture and emphasized Myers’ plan.
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"We want to become the poster child,” said Zac Perkins, corporate services vice president of Tri-County Electric Cooperative. The co-op is the company behind FORCE, which describes itself as “a partnership between electric cooperatives, public safety groups and tribal, local and state government representatives” (http://xrl.us/bn39re). Tri-County sees opportunities for building out its own network with FirstNet, Project Manager William Hadala said. He pointed toward “an opportunity to be reimbursed” in certain ways and embarking on a public-private model with Oklahoma state government.
The only way to build out “large-scale” telecom projects like FirstNet is a public-private partnership model, said Myers. The Dallas-based telecom consultant laid out a detailed model he'd worked on for years. The federal and state governments would own 51 percent of FirstNet and private investors would own 49 percent. Private equity would pay for the buildout and engage in 30 to 50-year contracts, managing the broadband projects with the oversight of government. “It’s probably the best model” to create the nationwide system without new tax burdens, Myers said. There would be rewards for government, public safety and investors, he said. “All of these entities need broadband service."
Myers sees benefits for a variety of players and said his model will help provide “a solution to rural broadband access” and “the shortage of spectrum that everyone is facing.” States will save tremendous capital and will move toward fixed annual payments under this system, said his presentation. Private equity would recoup investment from the 49 percent ownership and what he estimates would be long-term fixed recurring revenue from state and federal entities that pay to use the public safety network. The more partners using the system, the better, he added. He included versions of his proposal in both FirstNet comments to NTIA (http://xrl.us/bn39nn) and in a presentation (http://bit.ly/Vb5m5U) this fall. He slammed the FirstNet board’s initial architecture proposal and “any information” from FirstNet, NTIA and the FCC as “drastically deficient in addressing the critical issue of funding,” in comments to NTIA. Finances should be a top consideration because FirstNet will likely cost $50 billion to $100 billion to build and a tenth of that to annually maintain it, his comments said.
FirstNet should create a “financial action team” and a business case based on contracting out the network to big financial firms, and create a broad template that states should follow, in the Myers plan. “You don’t want every state and territory trying to do their own model,” Myers said Friday. States should use the $135 million in implementation grants pending from NTIA to assess and audit all their resources and create estimates for how much it would cost to build out FirstNet LTE, the plan proposed. States should then execute the federal FirstNet template in a request for proposals that lays out timelines, design specifications, state resources and that specifies the 51-49 ownership arrangement, which would be advertised to private equity firms. The result would be a secure, private and sufficiently hardened network that states and the federal government would still control, Myers said.
Electric utilities should make sure to get “politically involved in what the state is doing” in preparation for FirstNet, said Perkins. The “worst-case scenario” would be for government to make decisions that would affect utilities’ daily operations as utilities lack any sort of seat at the table, he said. Tri-County advocated for utility inclusion in its FirstNet comments to NTIA (http://xrl.us/bn39n9).