Spectrum Sharing is Likely Value to AT&T of FirstNet

Spectrum sharing fundamentally is important because it can change the business model for existing and new potential providers of communications services, much as increased availability of unlicensed spectrum likewise allows incumbent and new service providers to create services and revenue streams. In other words, shared spectrum is important because it changes the value and cost of spectrum rights.

Many would argue that the nationwide first responder network proposed in the wake of the Sept. 11, 2001 attacks on the World Trade Center in New York have gone nowhere for 15 years because the business model was quite questionable. That FirstNet now will be built and operated by AT&T suggests that something significant in the business model has changed, as is true for several other access technologies or approaches.

In the case of FirstNet, what seems to have clearly tipped is the perceived value of building and operating a network that has great potential societal value, but a questionable financial return. The difference now is spectrum sharing, and the impact that has on potential value to offset the capital investment and operating costs.

The other new element is a $6.5 billion initial subsidy (most of which will be paid back over the 25-year contract length) to help build the network. Estimates of construction cost range as high as $40 billion.  

FirstNet, though, will have to sell its services to first responder entities, so the venture remains a huge gamble. In that sense, the tangible benefits might well be the use of 20-MHz of new 700-MHz spectrum, whenever the emergency services personnel are not using the network. That might be “most of the time,” as the network will rely heavily on small cells.

But state entities already operate their own emergency networks, and will have to be persuaded to switch to FirstNet.  That likely means a long, slow process, so AT&T planners are not likely factoring much revenue into their business models.

So FirstNet is valuable, in all likelihood, mostly as a way of gaining shared access to 20 MHz of low-band spectrum.

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