Public Safety Communications: Preliminary Information on FirstNet's Efforts to Establish a Nationwide Broadband Network
Published: 2015-03-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Public safety officials rely on thousands of separate radio systems to communicate during emergencies, which often lack interoperability, or the ability to communicate across agencies and jurisdictions. The 2012 act created FirstNet to establish a nationwide, interoperable, wireless broadband network for public safety use. In doing so, the act established numerous responsibilities for FirstNet, provided $7 billion from spectrum auctions proceeds for the network's construction, and required FirstNet to be self-funding beyond this initial allocation. As part of the effort, FirstNet is working with five “early builder projects” that have permission to build local and regional interoperable public-safety broadband networks.
This statement is based on preliminary information from GAO's ongoing review of FirstNet. This statement addresses (1) FirstNet's progress carrying out its responsibilities and establishing internal controls, (2) how much the network is estimated to cost and how FirstNet plans to become self-funding, and (3) what lessons can be learned from the early builder projects. GAO reviewed relevant FirstNet documentation and public-safety network cost estimates recommended by agency officials and experts; surveyed the state-designated FirstNet contact in 50 states, 5 territories, and the District of Columbia; and interviewed FirstNet officials and public safety and wireless industry stakeholders selected for their telecommunications and public safety experience, among other things.
section_title: What GAO Found
paragraphs: GAO's ongoing work has found that the First Responder Network Authority (FirstNet) has made progress carrying out the responsibilities established in the 2012 Middle Class Tax Relief and Job Creation Act (the 2012 act) but lacks certain elements of effective internal controls. FirstNet has made progress establishing an organizational structure, planning the nationwide public-safety broadband network, and consulting with stakeholders. Nevertheless, stakeholders GAO contacted cited upcoming issues, such as deciding the level of network coverage, which will be difficult for FirstNet to address as it continues to carry out its responsibilities. With respect to internal controls, FirstNet has begun establishing policies and practices consistent with federal standards, but it has not fully assessed its risks or established Standards of Conduct . Given that FirstNet faces a multitude of risks to achieve its complex objectives, fully assessing risks would help FirstNet respond to risks in a proactive way. Developing standards of conduct would help FirstNet address conduct and performance issues in a timely manner.
A nationwide public-safety broadband network is estimated to cost billions of dollars, and FirstNet faces difficult decisions determining how to fund the network's construction and ongoing operations. Various entities have estimated the cost to construct and operate such a network from $12 to $47 billion over the first 10 years. The actual cost of FirstNet's network will be influenced by FirstNet's (1) business model, especially the extent of commercial partnerships; (2) use of existing infrastructure; (3) efforts to ensure network reliability; and (4) network coverage. For example, the cost of the network will likely increase if FirstNet does not utilize commercial partnerships and at least some existing infrastructure. The 2012 act provides FirstNet $7 billion to establish the network. To become self-funding, FirstNet is authorized to generate revenue through user fees and commercial partnerships, the latter of which can involve secondary use of the network for non-public safety services. However, GAO's ongoing work suggests that FirstNet faces difficult decisions in determining how to best utilize these revenue sources. For instance, widespread network coverage can attract more users, and thus user fee revenue, but is expensive to construct and maintain, especially in rural areas.
FirstNet has taken steps to collect and evaluate information and lessons from the five “early builder projects” that are developing local and regional public-safety networks, but could do more to ensure that it properly evaluates and incorporates these lessons. For example, FirstNet has asked the projects to report on the experiences of their networks' users and has assigned contractors to collect and log lessons. However, preliminary results indicate that FirstNet does not have a plan that clearly articulates how it will evaluate those experiences and lessons. GAO has previously found that a well-developed evaluation plan for projects like these can help ensure that agencies obtain the information necessary to make effective program and policy decisions. Given that the early builder projects are doing on a local and regional level what FirstNet must eventually do nationally, an evaluation plan can play a key role in FirstNet's strategic planning and program management, providing feedback on both program design and execution and ensuring FirstNet has not missed opportunities to incorporate lessons the projects have identified.

section_title: Letter
paragraphs: I am pleased to be here today to discuss our ongoing work on the First  Responder Network Authority (FirstNet). The 2012 Middle Class Tax  Relief and Job Creation Act (the 2012 Act) created FirstNet as an  independent authority within the Department of Commerce’s National  Telecommunications and Information Administration (NTIA). FirstNet is  tasked with establishing a nationwide, interoperable, wireless broadband  network specifically for public safety (hereafter, the public safety network).  We are currently finalizing a report on FirstNet’s efforts; as such, the  findings that I am reporting to the Committee today are preliminary in  nature.
Communication systems are essential for public safety officials— especially first responders such as police, firefighters, and paramedics— to gather and share information during emergencies. Today, first  responders rely on thousands of separate, incompatible, and often  proprietary land mobile radio (LMR) systems for their mission-critical  voice communications. Oftentimes these LMR systems lack  “interoperability”—the capabilities that allow first responders to  communicate with their counterparts in other agencies and jurisdictions— which has been a long-standing concern. For example, during the terrorist  attacks of September 11, 2001, and also during Hurricane Katrina in  2005, the lack of interoperable public safety communications hampered  rescue efforts. To supplement these LMR systems, many first responders  also use commercial wireless networks for data transmissions. While  FirstNet’s public safety network will not initially improve the  interoperability of voice communications among first responders, the  network is expected to support important data transmission (such as  security-camera video feeds). For mission-critical voice communications,  public safety entities will likely continue to rely on their LMR systems for  many years.
The 2012 act established numerous responsibilities for FirstNet, allocated  billions of dollars for the network’s construction, and set aside radio  frequency spectrum on which it will operate. Public safety users of the  network, and potentially other “secondary” users, may be charged fees  to use the network, much as they currently pay to use commercial  wireless networks. To inform its work, FirstNet has been consulting with  numerous federal, state, local, and tribal jurisdictions, and is working with  five “early builder projects” that received federal funding to deploy local  and regional public-safety broadband networks similar to what FirstNet is  required to establish on a national scale. FirstNet also has to develop a  business plan that supports the upfront and ongoing costs of the network.
My statement today presents preliminary information from our ongoing  review—requested by this Committee—of FirstNet. My statement will  address (1) the extent to which FirstNet is carrying out its responsibilities  and establishing internal controls for developing the public safety network,  (2) how much the network is estimated to cost to construct and operate  and how FirstNet plans to become a self-funding entity, and (3) what  lessons can be learned from local and regional public-safety-network  early builder projects.
For our ongoing work, we reviewed FirstNet documentation—such as its  Requests for Information (RFI) and FirstNet board meeting materials— and compared FirstNet’s efforts with requirements established in the 2012  act. We also compared FirstNet’s efforts to establish internal controls  with criteria established in the federal Standards for Internal Control. We  reviewed cost estimates for a nationwide public-safety broadband  network from the Congressional Budget Office, the Federal  Communications Commission (FCC), and academics. We reviewed  documentation related to how FirstNet plans to collect and evaluate  lessons learned from the early builder projects—such as Spectrum  Manager Lease Agreements and Key Learning Conditions Plans—and  assessed these plans against key features of a well-developed evaluation  plan for pilot projects identified by our previous reports. To obtain  stakeholder views, we surveyed all 50 states, the District of Columbia,  and 5 U.S. territories (hereafter, states) and received 55 responses, for a  98 percent response rate. We interviewed FirstNet and NTIA officials  and a variety of other stakeholders, such as officials from state and local  public safety entities, commercial wireless carriers, subject matter  experts, public safety associations, federal agencies including FCC and  the Department of Homeland Security, and government officials in  Sweden responsible for establishing a public-safety communications  network in their country.current early builder projects (Los Angeles, CA; Adams County, CO; New  Jersey; New Mexico; and Harris County, TX) and three projects that were  canceled (Charlotte, NC; Mississippi; and San Francisco, CA).
We also interviewed officials from the five  Our ongoing review is being conducted in accordance with generally  accepted government auditing standards. We discussed the information  in this statement with FirstNet officials to obtain their views. As our work is  ongoing, we are not making recommendations for FirstNet at this time; we  plan to further analyze information related to these issues and provide  this Committee with a final report later this year. At this Committee’s  request, we also plan to review FirstNet’s efforts to satisfy key technical  requirements of the network in the future.
subsections: section_title: Background
paragraphs: The 2012 act established numerous responsibilities for FirstNet, most of  which relate directly to developing the public safety network. For example,  in establishing the network, FirstNet must  issue open, transparent, and competitive Requests for Proposals  (RFP) to private sector entities for the purpose of building, operating,  and maintaining the network; enter into agreements to use, to the maximum extent economically  desirable, existing commercial, federal, state, local, and tribal  infrastructure; promote competition in the public-safety equipment marketplace by  requiring that equipment for the network be built to open, non- proprietary standards; and develop the technical and operational requirements for the network,  as well as the practices and procedures for managing and operating  it.
In establishing the infrastructure for the public safety network, the 2012  act requires FirstNet to include the network components depicted in figure  1.
In developing the public safety network, FirstNet must work with a variety  of stakeholders. The 2012 act required FirstNet to be headed by a 15- member board with 3 permanent members and 12 individuals appointed  by the Secretary of Commerce. The 2012 act also required FirstNet to  establish a standing public safety advisory committee to assist it in  carrying out FirstNet’s responsibilities and consult with federal, regional,  state, local, and tribal jurisdictions on developing the network. For state,  local, and tribal planning consultations, FirstNet is required to work with  the Single Points of Contact (SPOC) who have been designated by each  state. Specifically, SPOCs are the individuals responsible for working  with FirstNet in their states, and FirstNet will work through these  individuals to gather requirements from key stakeholders in each state.  The 2012 act requires FirstNet to notify the states when it has completed  its RFPs for building, operating, and maintaining the public safety  network. Once a state receives the details of FirstNet’s plans, it has 90  days either to agree to allow FirstNet to construct a Radio Access  Network (RAN) in that state or notify FirstNet, NTIA, and FCC of its intent  to deploy its own RAN. The 2012 act required FCC, the entity  responsible for managing and licensing commercial and non-federal  spectrum use—including spectrum allocated to public safety—to grant  FirstNet the license to the public safety spectrum that the act set aside for   FCC has also conducted spectrum auctions, as required by  the network.the 2012 act, so that auction proceeds could be used to fund FirstNet.  The 2012 act provides $7 billion from these proceeds to FirstNet for  buildout of the network, and requires FirstNet to become self-funding  beyond this initial $7 billion by generating revenue through user fees and  other sources.
Requests for Waiver of Various Petitioners to Allow the Establishment of 700 MHz  Interoperable Public Safety Wireless Broadband Networks, Order, 25 FCC Rcd 5145,  (2010); Requests for Waiver of Various Petitioners to Allow the Establishment of 700 MHz  Interoperable Public Safety Wireless Broadband Networks, Order, 25 FCC Rcd 6783,  (2011). networks will be incorporated into its nationwide network, and has noted  that various factors could affect this determination.
section_title: FirstNet Is Making Progress Meeting Responsibilities but Lacks Certain Elements of Effective Internal Controls
subsections: section_title: FirstNet Is Making Progress Carrying Out Statutory Responsibilities
paragraphs: Our ongoing work indicates that FirstNet has made progress carrying out  its statutory responsibilities in three areas—(1) establishing its  organizational structure, (2) planning the public safety network, and (3)  consulting with stakeholders—but could face challenges in each of these  areas.
subsections: section_title: Establishing its Organizational Structure
paragraphs: As a newly created entity within the federal government, FirstNet has  taken a number of steps to establish its organizational structure and hire  staff. As required by the 2012 act, the Secretary of Commerce appointed  FirstNet’s inaugural Board Members in August 2012 and, in February  2013, established the Public Safety Advisory Committee (PSAC). In  April 2013, the FirstNet Board selected an Executive Director to lead its  day-to-day operations. Since then, FirstNet has hired, and continues to  hire, other senior management personnel to lead its organizational units  (such as a Chief Counsel and Chief Administrative, Financial, and  Information Officers), Directors and organizational chiefs to further lead  and perform its work, and other general staff. As of February 2015,  FirstNet had over 120 employees.
Stakeholders we spoke with and surveyed for our ongoing work  expressed concern that organizational issues have slowed FirstNet’s  progress, and could continue to do so. In particular, in response to our  survey, numerous SPOCs either noted that FirstNet’s placement within  NTIA could create “bureaucratic” obstacles or that FirstNet should be  more independent from NTIA. However, FirstNet officials told us that  while FirstNet has leveraged its relationship with NTIA in administrative  and legal matters, it exercises strong independence in decisions that are  directly program-related. Numerous stakeholders we surveyed and  interviewed were also concerned about the pace of FirstNet’s hiring,  noting that the federal hiring process is too slow, has not allowed FirstNet  to hire staff quickly enough, and has delayed FirstNet’s progress. For  example, FirstNet hired State and Local, Tribal, and Federal Outreach  Leads in June and August 2014, almost 2 years after FirstNet’s Board  Members were appointed, and is still in the process of hiring staff for key  positions. According to FirstNet officials, FirstNet faces challenges hiring  as quickly as it would like to due to government hiring procedures, but is  seeking direct hire authority from the Office of Personnel Management.
section_title: Planning the Public Safety Network
paragraphs: To plan the public safety network and help ensure that its approach is  open and transparent and meets the 2012 act’s requirements, FirstNet  intends to follow the Federal Acquisition Regulation (FAR) process for its  comprehensive network services procurement. This process will  culminate in one or multiple RFPs for “network solution(s)”—that is,  proposals for the building, deployment, operation, and maintenance of the  public safety network. To help it draft the RFP(s), FirstNet has sought  comments through an October 2012 Notice of Inquiry, 13 RFIs issued  between April 2013 and September 2014, and a September 2014 Public   Through these items, FirstNet has sought comment on various  Notice. technical aspects of the network, devices and applications for public  safety, and its interpretations of the 2012 act’s requirements. FirstNet  received almost 600 comments to these Notices and RFIs. FirstNet  confirmed in February 2015 that it expects to issue a draft RFP and a  second Public Notice by the end of March 2015. FirstNet has also  received technical input from a variety of stakeholders, such as FCC, the  PSAC, the National Public Safety Telecommunications Council (NPSTC),  and the Public Safety Communications Research (PSCR) program.
While many stakeholders we surveyed and interviewed for our ongoing  work noted that FirstNet’s progress has been too slow, some also noted  that they were satisfied with FirstNet’s progress given the complex nature  of FirstNet’s tasks and that it is a government entity subject to federal  rules and regulations. Some also said that FirstNet’s progress has  improved recently, especially as FirstNet has hired more staff. However,  numerous stakeholders we interviewed cited upcoming difficulties. For  example, they noted that deciding the level of network coverage and  security, working out agreements for use of existing infrastructure, and  navigating state regulations will be difficult issues to address moving  forward.
section_title: Consulting Stakeholders
paragraphs: FirstNet has initiated a process to consult with the SPOC in each state  and FirstNet officials have conducted outreach to other stakeholders.  FirstNet began its formal state consultation process in April 2014; as part  of this process, FirstNet plans to hold an initial consultation meeting in  each state. Initial state consultation meetings began in July 2014—when  FirstNet conducted its first consultation with Maryland—and FirstNet  expects these initial meetings to continue through 2015, with additional  rounds to follow. As of February 25, 2015, FirstNet has conducted initial  consultation meetings with 14 states and Puerto Rico. Additionally, from  October 2013 to February 2015, FirstNet officials visited 39 states and  territories while participating in 187 events, such as public safety,  industry, and government (including federal, state, local, and tribal)  conferences. FirstNet also launched a public website in March 2014,  where it regularly posts updates, presentations, board meeting minutes, a  list of upcoming speaking engagements, and other information.
The majority of stakeholders we surveyed for our ongoing work were  generally satisfied with the level of FirstNet’s consultation and outreach,  but others were dissatisfied and said that they would like more new  information. Specifically, in response to our survey, 54 percent of SPOCs  said they were either “moderately” or “very” satisfied with FirstNet’s  overall level of consultation, coordination, and communication with their  state, including the level of input FirstNet has sought from their state, and  22 percent said they were either “moderately” or “very” dissatisfied.  Numerous stakeholders we surveyed and interviewed said that they  would like more new and detailed information and that they would like  FirstNet to focus more on certain aspects of the public safety network  during outreach. However, in response to our survey, many SPOCs also  acknowledged that the level of new and detailed information exchanged  will likely increase once they hold their initial state consultation meeting  with FirstNet.
section_title: FirstNet Has Not Assessed Risk or Established a Complete Control Environment
paragraphs: Internal controls are the plans, methods, policies, and procedures that an  entity uses to fulfill its mission, strategic plan, goals and objectives. An  effective internal control system increases the likelihood that an entity will  achieve its objectives. For our ongoing review, we assessed FirstNet’s  policies and practices against two components of an effective federal   For  internal control system: Risk Assessment and Control Environment.those two components, we found that FirstNet lacks certain elements that  contribute to the proper implementation of effective internal control  systems. While FirstNet has stated that it is relying on the Department of  Commerce and NTIA’s internal controls where it has not developed its  own, it is important for FirstNet to implement its own controls, as the  Commerce Office of Inspector General (OIG) noted as early as February  2014 in a memo on the management challenges facing FirstNet.
subsections: section_title: Risk Assessment
paragraphs: According to federal internal control standards, management should  assess risks facing the entity as it seeks to achieve its objectives.  Specifically, entities should first clearly define their objectives then identify  and analyze risks from both internal and external sources. Analyzing risks  generally includes estimating the risk’s significance, assessing the  likelihood of its occurrence, and deciding how to respond to it. Risk  assessments inform an entity’s policies, planning, and priorities, and help  entities develop responses to the risks they face, so that they can achieve  their objectives.
Our preliminary results indicate that, although FirstNet has set objectives  and taken some steps to assess risks it has not yet fully assessed risks it  may face in accomplishing its objectives. Specifically, FirstNet has set  three key objectives and has further delineated how it will accomplish  these objectives in a “roadmap” that identifies additional long-term and  short-term objectives and milestones. To support its development of this  roadmap, FirstNet created a “risk register” that identifies some risks  related to its financial sustainability as well as possible counter- measures.they had not yet fully assessed risks because they were in the process of  defining risk factors and, again in December 2014, because they were in  the process of conducting a legal compliance risk assessment of certain  key risk areas. In December 2014, FirstNet officials also said that they  intend to perform periodic risk assessments in various areas to manage  risks on an iterative basis. However, as of February 2015, FirstNet has  not yet completed these risk assessment activities; therefore, we were  unable to evaluate them and it remains unclear how effective FirstNet’s  efforts will be in helping it to identify and respond to obstacles to fulfilling  its responsibilities.
However, FirstNet officials told us in November 2014 that  As FirstNet performs these assessments, we believe that it will be  important for FirstNet to incorporate all of the elements of risk  assessment detailed in the federal internal control standards. An internal  control system that is not based on complete risk assessments (that is,  assessments that incorporate these elements) could lead to FirstNet  responding to risks in a reactive manner and could hinder FirstNet’s  ability to achieve its objectives while maximizing use of its available  resources. We are concerned that the complexity of FirstNet’s objectives,  makeup of its board, and challenges it will face becoming self-funding  illustrate the multitude of potential risks FirstNet faces. For example, as  we point out later in this statement, various factors could hinder whether  public safety entities adopt the public safety network—and thus how  much user fee revenue FirstNet can collect—which could pose risks to  FirstNet’s ability to become self-funding.
section_title: Control Environment
paragraphs: The control environment is the foundation for an internal control system  and provides the basic structure that helps an entity achieve its  objectives. To help set this environment, according to federal internal  control standards, an entity should, among other things, demonstrate a  commitment to integrity and ethical values, such as by setting a positive  “tone at the top,” providing and evaluating adherence to ethical and  behavioral guidance, and removing temptations for unethical behavior.
Our preliminary results indicate that, although FirstNet has taken a  number of steps to establish an effective control environment, it has not  yet finished doing so. FirstNet has held ethics briefings, counseling, and  training; distributed ethics documents; and instituted a Board Member  Vendor Interaction Policy to establish processes for interacting with  vendors with a potential interest in FirstNet’s procurement. However, as  of February 2015, FirstNet had not yet developed Standards of Conduct,  which is an important form of ethical and behavioral guidance. According  to FirstNet officials, FirstNet intends to develop Standards of Conduct but  has not yet done so because, as a “startup” entity, building up the  organization while making progress meeting statutory responsibilities is a  balancing act affected by FirstNet’s priorities and resources.
Nonetheless, absent Standards of Conduct, we are concerned that  FirstNet may not be able to address deviations in conduct and  performance and take corrective actions in a timely manner. Indeed,  FirstNet itself established a special committee in May 2013 to review  ethical concerns raised by one of its Board Members. Similarly, in a  December 2014 report, the Department of Commerce OIG identified  concerns with FirstNet’s financial disclosure reporting and contracting  practices, among other things. The report highlighted that the FirstNet  Board, out of necessity, includes members with significant ties to the  telecommunications industry that make strategic decisions regarding  FirstNet’s operations and, thus, are at increased risk of encountering  conflicts of interests. We believe that establishing and evaluating  adherence to Standards of Conduct may help FirstNet ensure that all its  personnel are held accountable for their actions and that stakeholders  maintain trust in its ability to be a good steward of public funds.
section_title: FirstNet Faces Difficult Decisions in Determining How to Pay for a Nationwide Public Safety Network Estimated to Cost Billions Cost of a Public Safety Network Estimated to Be at Least $12 Billion over the First 10 Years
paragraphs: Various entities have estimated the cost to construct and operate a  nationwide network for public safety from a low of $12 billion to a high of  between $34 and $47 billion, over the first 10 years. As shown in table 1,  a variety of entities have developed cost estimates for a public-safety  broadband network, although they have used different assumptions about  the network’s scope. Key assumptions influencing these estimates  include whether the network is constructed, operated, or financed in  partnership with commercial entities, and the number of sites needed to  provide the network’s coverage. Our ongoing work has found that  differences among these estimates are difficult to identify since some of  the estimates do not explicitly state all of their assumptions.
subsections: section_title: Various Factors Will Influence Cost of FirstNet’s Public Safety Network
paragraphs: Our preliminary analysis indicates that cost estimates notwithstanding,  various factors will influence the cost of constructing and operating  FirstNet’s public safety network, including (1) the business model used,  especially the extent of commercial partnerships; (2) use of existing  infrastructure; (3) efforts to ensure network reliability; and (4) network  coverage.
subsections: section_title: Extent of Commercial Partnerships
paragraphs: FirstNet’s business model, especially the extent to which it partners with  commercial carriers or other private enterprises, will influence the cost to  construct and operate the public safety network. The 2012 act gives  FirstNet the authority to engage in a variety of commercial partnerships.  In a partnership, public safety and commercial users could share the  network’s infrastructure and spectrum, with public safety given priority to  all network capacity during emergencies. Some public safety  stakeholders we spoke with maintained the need for FirstNet to work with  commercial partners in building and operating the network for it to be  financially sustainable. One study also calculated that the value of serving  both commercial and public safety users is greater than the additional  costs to serve commercial users.
section_title: Use of Existing Infrastructure
paragraphs: The use of existing infrastructure will influence the cost to construct and  operate FirstNet’s public safety network. Under agreements to share  existing wireless-network infrastructure, FirstNet may be able to make  use of, for example, cell towers, antennae, cabling, radio-processing  equipment, backup power facilities, and the links between towers and the  nearest communications hub, to the extent economically desirable to do  so. According to FCC estimates, capital costs would be 2.5 times greater  without this form of sharing. However, the use of existing infrastructure  can have limitations. For instance, negotiating access to existing  infrastructure can be a time-consuming process—especially with  government-owned or controlled facilities and where multiple owners  must be contracted with—ultimately slowing down network deployment.  For our ongoing work, we spoke with Swedish officials about the public- safety communications network in their country, and they told us that they  sought to use existing infrastructure to save costs when constructing their  network, but faced problems in their largest cities convincing tower  owners to allow the government to rent the towers. Furthermore, there may be a risk when public safety relies on infrastructure owned by  commercial operators, particularly if it has to rely on a single provider in  any given location that can then charge high fees.
section_title: Efforts to Ensure Network Reliability
paragraphs: FirstNet’s approach to ensure the public safety network is safe, secure,  and resilient (that is, the overall reliability of the network) will also  influence the cost to construct the network. FirstNet is required by the  2012 act to “ensure the safety, security, and resiliency of the network,”  and NPSTC has provided guidance to FirstNet as it constructs and  implements the network. If FirstNet implements all of NPSTC’s best  practices, it will significantly add to the cost of building the network. For  example, transmission sites, such as cell towers, should have back-up  power sources when used for public safety communications, according to  NPSTC. Existing commercial sites, however, generally do not have such  backup, primarily to reduce costs in extremely competitive markets.
section_title: Network Coverage
paragraphs: The public safety network’s coverage will also influence the cost to  construct and operate it. The 2012 act requires FirstNet to establish a  “nationwide” network, but does not define the level of coverage that  constitutes “nationwide.” Generally speaking, increasing the area  covered by the network, as well as the extent to which coverage  penetrates buildings, increases the amount of infrastructure needed, and  thus the cost of the network. It may be relatively affordable, for example,  to cover large segments of the population concentrated in relatively small  areas. Providing coverage outside dense metropolitan areas can be  particularly expensive. One study has shown that a nationwide public- safety broadband network could generate much more revenue than the  network costs in urban areas, but less revenue than costs in rural areas.
section_title: FirstNet Faces Difficult Decisions about User Fees and Commercial Partnerships in Determining How to Become Self-Funding
paragraphs: Our preliminary analysis suggests that, although FirstNet has various  revenue options that it is authorized to use to become self-funding, it is  unclear how FirstNet will use those authorities. As the cost estimates  above illustrate, FirstNet’s network will likely cost tens of billions of dollars  to construct and initially operate. To meet the costs of building and  maintaining the network, the 2012 act authorizes FirstNet to generate  revenue through user fees and commercial partnerships, the latter of  which can involve secondary use of the network for non-public safety  services.
subsections: section_title: User Fees
paragraphs: FirstNet can generate revenue by charging public safety entities a user  fee to gain access to the network. According to stakeholders we spoke  with and surveyed for our ongoing work, demand for FirstNet’s public   but the following factors could hinder  safety network is significant,adoption of the network and thus FirstNet’s ability to collect user fee  revenue:
Fee size. If FirstNet’s user fee is too high, it could hinder public safety  adoption, and if it is too low, it could bring in too little revenue.  Numerous stakeholders we spoke with noted that FirstNet’s cost  would play a role in whether they adopt the public safety network and  that user fees must be competitive with existing commercial services.  While low user fees would be attractive to public safety entities and  therefore may increase adoption, they would also bring in a relatively  smaller amount of revenue per user. As a FirstNet Senior Program  Manager reported in December 2014, there is a trade-off with low  user fees between adoption and the network’s financial sustainability.  Some stakeholders also noted that the cost of equipment and devices  needed to access the network could limit adoption, especially since  public safety entities are continuing to invest in their LMR networks.
User base. While a large user base can potentially bring in significant  user fee revenue, it could be challenging to manage. The 2012 act  established that FirstNet’s primary customers will be entities that  provide “public safety services.” How FirstNet interprets “public  safety services,” as established in the 2012 act, will expand or  contract the potential sources of revenue. As one public safety  official we spoke with noted, the network has more value to public  safety entities when there are more users on it, because entities will  all be able to communicate with each other. A large user base,  however, can require priority and preemption rules, if certain users are  to have privileged access to the network. According to some public  safety officials we spoke with, such rules can be difficult to establish  among public safety entities.
Coverage. Widespread network coverage can attract more users, and  thus user fee revenue, but is expensive to construct and maintain.  Some of the public safety entities we spoke with said that the  network’s coverage would play a role in whether they adopt the public  safety network, noting in particular that the coverage should be at  least as good as existing commercial services. One public safety  entity we spoke with said that existing commercial coverage is  inadequate, while two other entities said that commercial service can  become unusable during large events because of the number of users  on the network. However, as noted above, providing extensive  coverage can be very costly. Indeed, a few SPOCs noted in survey  responses that providing rural coverage in their states will be  challenging, with one commenting that “it is inconceivable that  FirstNet will be able to deploy a terrestrial network in the vast areas  that are unpopulated or sparsely populated.”
Reliability. Although FirstNet is required to construct a resilient  network, practices to ensure this can be costly. Some public safety  officials we spoke with said that the network’s reliability would play a  role in whether they adopt the public safety network. A few officials  specifically said that if the network did not reliably work when first  utilized by public safety, adoption would suffer, since public safety has  a low tolerance for unreliable technology. However, as noted above,  ensuring reliability requires significant capital expenses.
section_title: Commercial Partnerships
paragraphs: Our ongoing work also found that FirstNet can generate revenue through  commercial partnerships, but the extent of commercial interest in these  partnerships, and thus the value of this authority for FirstNet, is  unknown. Under the 2012 act, FirstNet can receive payment for the use  of the public safety network’s capacity by non-public safety users as well  as use of the network’s infrastructure. The value of secondary access to  the network’s capacity depends in part on the availability of the spectrum,  which itself will be determined by the capacity available given the  network’s design. According to one major carrier we spoke with, no  business is likely to enter into a partnership with FirstNet because its  public-safety user base has not been defined, and thus the network  capacity available to secondary (commercial) users is unknown.  According to this carrier, the risk would be too high for a commercial  entity to enter into an agreement without knowing exactly how the entity  will be able to use FirstNet’s network. If public safety preempts all  commercial traffic, then the commercial entity will struggle to generate  income from this venture and may lose favor with its customers. However,  another major carrier we spoke with maintained that FirstNet will have to  partner with at least one commercial carrier to be financially sustainable  and that given the significant investments in Long Term Evolution (LTE)  infrastructure made by commercial carriers, FirstNet would do well to  utilize some of this infrastructure through commercial partnerships.  Although the historic Advanced Wireless Services spectrum auction FCC  concluded in late January 2015 could indicate significant demand for  spectrum capacity among commercial carriers, the extent of carriers’  interest in partnering with FirstNet is not fully known. While there may be  some benefits in partnering with FirstNet, companies may also prefer to  compete directly with FirstNet with their own public safety products.
section_title: Although Early Builder Projects Are Providing Lessons, FirstNet Has Not Developed a Plan to Evaluate Them
subsections: section_title: Early Builder Projects Have Learned Lessons As They Develop Public Safety Networks
subsections: section_title: Governance
paragraphs: Early builder project officials described governance challenges that  FirstNet may face as the governing entity for the nationwide network. For  example, officials from one project told us some public safety entities may  not have a clear understanding of FirstNet’s goals and plans. The officials  told us localities are willing to participate in the public safety network, but  FirstNet will face difficulty in establishing timely technical decisions and  effective policies that keep pace with local enthusiasm to participate. The  officials said FirstNet can address this challenge by setting expectations  about what the network will provide, including the specific intent, purpose,  and planned capabilities.
section_title: Financing the Network
paragraphs: Officials from the early builder projects also learned lessons related to  financing a new public safety network that could be applicable to FirstNet.  For example, officials from one project told us they will face sustainability  challenges due to the limited number of users that will be able to utilize  their network. According to the officials, their project will not be able to  charge their users enough to make the operations sustainable without  pricing the users out of the services. The officials told us a possible way  to address this challenge would be to expand the service to public safety  entities in neighboring metropolitan areas and airport service areas that  have established broadband infrastructure.
section_title: Conducting Outreach
paragraphs: Early builder project officials cited lessons they learned for conducting  outreach while developing their public safety networks. According to  officials working with one of the projects, network coverage will be a  challenging outreach topic and FirstNet must be prepared to explain the  coverage strategy for each state. The officials said most public safety  officials in their state are aware that network coverage is typically  provided through a myriad of approaches such as permanent  infrastructure, mobile “deployables,” and satellites. However, the  officials noted, until FirstNet sets clear expectations on those approaches,  state stakeholders for the public safety network may face difficulties  holding constructive conversations about which coverage solutions are  the most feasible.
section_title: Planning for Network Deployment
paragraphs: Officials from the early builder projects as well as the canceled public  safety projects also described lessons they learned about planning their  network’s deployment that could benefit FirstNet. An official from one of  the canceled projects said his team faced several challenges including  local zoning conditions that impacted project schedule and cost, a newly- passed city code that required towers to withstand higher wind loads  which increased costs, and commercial competitors lowering their  subscription rates to compete with the planned public safety network.  Officials from an ongoing project told us their project initially identified  network build-out sites but learned that environmental assessments  would need to be completed for each site, which would threaten the  project’s planned schedule. To address the challenge, the project  narrowed its build-out site pool to exclude marsh lands and other areas  with obstructive tree lines and include publicly-owned sites such as police  and fire stations. With the publicly-owned sites identified, project officials  worked with their state’s legislature to pass an exemption to state  environmental reviews. The official from the project told us that an  important lesson learned is to thoroughly understand all of the process  steps and risks prior to plan execution.
section_title: FirstNet Has Processes in Place to Identify Early Builder Project Lessons but Has Not Developed a Written Evaluation Plan
paragraphs: Our preliminary results indicate that FirstNet has taken steps to collect  and evaluate information and lessons learned from the early builder  projects, but could do more to ensure that the information and lessons are  properly evaluated. Specifically, FirstNet has taken steps to identify the  data and information it will collect from the early builder projects. As noted  above, FirstNet entered into agreements with the projects that permit their  use of FirstNet’s spectrum. Under these agreements, in exchange for  spectrum use, the early builders agree to conduct specific activities on  their networks, also known as key learning conditions; develop a Key  Learning Conditions Plan with FirstNet; and provide FirstNet with  quarterly reporting on their project’s use of FirstNet’s spectrum, progress  achieving project milestones, and in some cases, the experiences of their  network users. In October 2014, FirstNet provided the projects with  quarterly report templates, instructions, and timing for completing the  reports. Additionally, FirstNet intends to gain knowledge from the projects  through contractors who have been assigned to each project to collect  and log formal and informal lessons, and through weekly meetings  FirstNet officials told us they hold. Finally, in April 2014 FirstNet  authorized the PSAC to establish an Early Builder Working Group.
Although FirstNet has taken these steps, we are concerned that it lacks a  detailed data-analysis plan to track the performance and results of the  early builder projects. For the early builder projects, their performance  and results are captured in the observations and lessons learned reported  to FirstNet and identified by consultants. We have previously found that a  well-developed evaluation plan for projects like the early builder projects  can help ensure that agencies obtain the information necessary to make  effective program and policy decisions. Such a plan should include,  among other things, a detailed data-analysis plan to track performance  and evaluate the project’s final results. Even though FirstNet staff and  contractors remain in close contact with the projects, without a plan to  track those projects, it is unclear how FirstNet intends to evaluate the  projects’ observations and lessons and determine whether or how the  lessons are addressed. As a result, we believe that FirstNet could miss  opportunities to leverage key lessons related to governance, finance,  outreach, and network deployment. Given that the early builder projects  are doing on a regional and local level what FirstNet must eventually do  on a national level, a complete evaluation plan that includes a detailed  data-analysis plan could play a key role in FirstNet’s strategic planning  and program management, providing feedback on both program design  and execution. Furthermore, such a plan could provide FirstNet officials  the opportunity to make informed midcourse changes as it plans for the  public safety network, and facilitate transparency and accountability for  FirstNet’s decision-making.
Chairman Thune, Ranking Member Nelson, and Members of the  Committee, this concludes my prepared remarks. I am happy to respond  to any questions that you or other Members may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff have any questions about this testimony, please  contact Mark L. Goldstein, Director, Physical Infrastructure Issues at  (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. GAO staff who made key contributions to this statement  include Sally Moino (Assistant Director), Susan Baker, Melissa Bodeau,  Kyle Browning, David Hooper, Kristen Kociolek, Josh Ormond, Nalylee  Padilla, Kelly Rubin, Grant Simmons, Andrew Stavisky, and Michael  Sweet.
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