Press Release

IHS Markit Breaks Down AT&T and Motorola Strategies for U.S. Public-Safety Network, FirstNet


LONDON (May 15, 2017) – What business model will AT&T propose? Where will revenues come from? How are legacy licensed mobile radio (LMR) suppliers preparing for FirstNet, the United States-wide public-safety broadband network?

Following the announcement that AT&T won a 25-year contract to build, maintain and operate FirstNet in the U.S., attention now turns to how the initiative and the wider market will develop.

IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, expects AT&T to take a business-model approach to bringing FirstNet to first responders in the U.S. Specifically, AT&T is likely to propose an incentive-based partnership model to all U.S. states and territories. Under this model, AT&T would build most of the public safety broadband sites or upgrade them, taking advantage of commercial infrastructure the firm already owns, adding new sites where needed to provide sufficient coverage. As opposed to a stand-alone broadband network build-out model, this approach would result in cost reductions and operating efficiencies. Broadband user fees (multiple agencies in a state) would fund the ongoing costs of the network and the network evolution.

Where Will AT&T Invest?

FirstNet is expected to invest substantial capital in infrastructure during the first three years of the build out. The initial build out will leverage the $7 billion in funding allocated toward network deployment. Major global telecommunications suppliers, such as Ericsson and Nokia, are likely to work with AT&T to equip and enhance sites. Some of the equipment supplied by these companies would include tower equipment (e.g. MIMO antennas) and base station equipment (e.g. eNodeBs).

CAPEX also would need to be allocated toward hardening these sites (according to EIA/TIA-222 standards) and deploying microwave systems where needed (especially in highly rural areas). Finally, AT&T also would have to provide a fleet of public-safety deployable cells for on-demand situations (next-generation COWS, COLTS and the like).

Long-Term Revenues

Revenues will come in the form of subscriptions and services. In the network’s early years, the main goal will be to provide reliable, high performance and cost effective data and video via IP transport, transitioning toward interoperable mission-critical voice, data and video IP networks and applications.

Once characterized by high upfront costs (e.g. terminals, base stations and excessively high maintenance costs), the industry is slowly becoming more a service-oriented, which is where FirstNet’s technology supplier base could generate further revenues.

An Interoperable Voice Mission-Critical Network

There are still questions about what an interoperable network means; there are two different answers in our opinion.

FirstNet defines interoperability as “the ability of all authorized local, state and federal public safety entities and users to operate on the NPSBN.”

However, the term also is used when referring to the network-to-network wireline IP interface that bridges PTT users over LTE networks with those on LMR systems.

Motorola’s Strategic Moves

In May 2017, Motorola Solutions announced an agreement to purchase Kodiak Networks, AT&T’s push-to-talk-over-cellular provider partner. This news generated some uncertainty in the LMR industry. Kodiak Networks is one of the market leaders in North America with regard to network-to-network wireline IP interfaces. Again, a network-to-network wireline IP interface connects PTT users over LTE networks with those on LMR systems.

So, will Kodiak’s solution be available to all public safety agencies that want LMR to LTE interoperability?

Later this year we will be releasing our National Broadband Networks report, which will address issues stated above and estimate infrastructure revenues for FirstNet.

For more information, please contact me at jesus.gonzalez-medina@ihsmarkit.com

More detailed analysis and data is available in IHS Markit 2017 Critical Communications Broadband Intelligence Service.

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About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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