Coverage: AT&T gets $6.5 billion government contract

The Department of Commerce on Thursday awarded AT&T a $6.5 billion contract to build a nationwide broadband service for first responders.

Harper Neidig of The Hill had the news:

The program, called FirstNet, was first proposed after the Sept. 11, 2001, terrorist attacks as a way to make it easier and more efficient for first responders to communicate, but it has struggled to get off the ground.

“Today is a landmark day for public safety across the Nation and shows the incredible progress we can make through public-private partnerships,” Commerce Secretary Wilbur Ross said in a statement.

“FirstNet is a critical infrastructure project that will give our first responders the communications tools they need to keep America safe and secure. This public-private partnership will also spur innovation and create over ten thousand new jobs in this cutting-edge sector.”

AT&T is planning to spend $40 billion to build and maintain the network over 25 years.

“We are honored to work with FirstNet to build a network for America’s police, firefighters and [emergency medical services] that is second to none,” AT&T CEO Randall Stephenson said. “This is an unprecedented public-private investment in infrastructure that makes America a leader and public safety a national priority.”

Danielle Abril of D Magazine reported that the network is not in response to problems recently with 911 systems:

The network, the brainchild of the independent entity First Responder Network Authority, is expected to streamline communications between first responders during public safety crises. The development will allow emergency personnel not only to better communicate, but also use connected technology like wearable devices and drones. The public-private network, which will cover 50 states, five U.S. territories, and the District of Columbia, is expected to create 10,000 U.S. jobs over the next two years. It will begin development later this year.

AT&T told D CEO the new network was not related to recent issues that have plagued emergency dispatchers, either due to municipal staffing problems, like those that have occurred in Dallas, or network issues (some AT&T customers were unable to reach 911 earlier this month due to an outage). AT&T and FirstNet will work with each state to determine how to deliver coverage to their first responders.

AT&T’s investment will cover the 25-year span of its contract with FirstNet. Meanwhile, FirstNet will provide 20 MHz of spectrum and payments of $6.5 billion over the next five years depending on the success of the project. FirstNet’s funding came from previous Federal Communications Commission Auctions.

AT&T was selected by FirstNet, which was established by Congress in 2012 to create the network, to help build and maintain the infrastructure. FirstNet was Congress’s answer to gaps in emergency communications that were identified after the 9/11 terrorist attacks.

Melissa Repko of the Dallas Morning News reported that AT&T can use the lines for its customers as well:

The project is a win for AT&T, which will gain more spectrum for all of its customers and a new revenue stream from first responders who sign up for the service, said Matthew Kanterman, a tech and telecom analyst for Bloomberg Intelligence. When police, fire and emergency medical services personnel aren’t using the spectrum, AT&T can use it for everyone, he said.

The contract also gives the second largest wireless provider a more stable base of customers, as it’s stuck in a price war with Verizon, T-Mobile and other carriers. Businesses and government agencies tend to be less price-sensitive than retail customers, Kanterman said.

For the telecom giant, however, the $40 billion investment is tiny, he said. It’s a sliver of AT&T’s annual operating budget. And it’s a blip compared to the company’s acquisition of DirecTV last year or its proposed $108.7 billion merger with Time Warner, he said.

“In the scope of everything that’s going on, it’s definitely positive but it’s incrementally positive,” he said.

While the public safety network is under construction, Stephens said AT&T is working on technology that gives priority to first responders during an emergency. That will be ready by the end of 2017, he said.