Special Report—A look at where AT&T and FirstNet are now in the public-safety market

When Hurricane Michael, the fourth-most powerful storm on record to the hit the United States, devastated regions of the Florida panhandle, Georgia and the Carolinas earlier this month, AT&T’s network was operating at 90% or better than normal performance, according to John Donovan, CEO at AT&T Communications.

The worst storm to make landfall in the country in almost 50 years was an important test for AT&T and FirstNet, a nationwide broadband network dedicated to public safety. The carrier last year was awarded a $6.5 billion contract from the federal government to build out the network during the next five years, and AT&T is expected to spend upwards of $40 billion over the 25-year contract to deploy, operate and maintain the network.

In the immediate aftermath of Hurricane Michael, one unnamed first responder said: “When everything else was down, FirstNet was working,” Donovan said during AT&T’s latest earnings call. “That’s high praise, and we’re humbled that we can play a part in helping a community recover from such a devastating storm. That’s what FirstNet is all about.”

FirstNet hits early milestones

AT&T’s Donovan called the first-responder community a “great sales opportunity” that has been “underpenetrated in the past,” and he said the carrier is making headway in the market. FirstNet now has more than 250,000 subscribers from more than 3,600 agencies across the country, according to AT&T. While the FirstNet deployment is ongoing, AT&T has already hit some early milestones, most notably introducing priority and pre-emption capabilities for first responders and a dedicated and physically separate network core for FirstNet.

The FirstNet contract awarded AT&T 20 MHz of 700 MHz Band 14 spectrum, and the build-out of that spectrum has presented the carrier with an opportunity to increase coverage and performance on its network overall. “Thanks in part to our FirstNet build, our fallow spectrum is being put into service at a rapid rate. We’re on track to increase the amount of spectrum deployed by nearly 50%,” Donovan said.

“We’re also months ahead of schedule in our Band 14 coverage,” said Chris Sambar, AT&T’s senior vice president for FirstNet, told FierceWireless, adding that AT&T is “putting Band 14 on tens of thousands of new and existing sites nationwide.” AT&T has also created a fleet of 72 deployable network assets stationed across the country in the event of emergencies, and has also introduced new FirstNet-capable devices from the likes of Apple and Samsung, according to Sambar.

Where does this leave Verizon?

Of course, despite the vote of confidence that AT&T secured through a federal contract, first responders have options when considering wireless carriers for coverage, and Verizon has a long and strong presence in the market. The FirstNet contract lends credence to AT&T’s offering and positions the carrier for a more competitive battle with Verizon for public-safety customers. As a result, many industry observers are watching closely to see how much market share Verizon may lose to AT&T.

Verizon CFO Matt Ellis addressed this concern during a call with analysts earlier this month, and suggested that outcomes will be primarily determined by service execution. “We will be continuing to focus on that sector” he said of public safety, adding that “I think we have been very effective in defending the market share that we have.”

Ken Rehbehn, an analyst at Critical Communications Insights, suspects that AT&T is “picking at low-hanging fruit right now.” In other words, the carrier is targeting “areas that meet the characteristics of good AT&T coverage and areas where perhaps AT&T was already the supplier of the service,” he said. “But AT&T is in the position where it needs to wrest away satisfied Verizon customers and they need to wrest them away with a differentiated offer. It’s unclear right now that their offer is sufficiently differentiated to trigger contract changes or a contract churn.”

Points of differentiation for FirstNet

Indeed, from the outset coverage is a basic differentiator. “No coverage, no churn,” Rehbehn said. “Beyond that, assuming all things are equal on coverage and pricing… it’s got to be more than an emotional or patriotic purchase.” Mechanisms that could encourage public-safety agencies to switch from Verizon to AT&T, for example, include network security, the FirstNet core and a suite of applications that work better in that network core, according to Rehbehn, who also serves as a firefighter and EMT.

“FirstNet needs to tell the story about what the core is bringing to the agencies,” he said. “It’s a challenge for non-technical folks to understand why would that be a compelling story, and Verizon will likely match any claim.” From Rehbehn’s perspective, priority and pre-emption, or ensuring that mission critical users’ traffic flows when the network is overloaded, is of paramount importance to FirstNet and any other network that serves first responders. While FirstNet gives local agencies visibility into network congestion and tools to control priority access, Verizon is providing more of a “generalized priority as opposed to surgical person-by-person, unit-by-unit, group-by-group” controls, he said.

“Now, the question is just how important is it to have fine grain local control,” Rehbehn said. “It’s a great talking point, but it might end up being a challenge to utilize during the heat of battle… You’re not going to have time to think about that. You’re dealing with much bigger problems.”

Verizon reinforces commitment to public safety

Verizon, for its part, remains committed to the public safety market and is continuing to invest in services for first responders. “Because more public-safety agencies have chosen Verizon over the last decade-plus and continue to choose Verizon, we wanted to make sure we stood by the public-safety agencies that have chosen us for their future services,” said Nicholas Nilan, director of public sector product development for Verizon.

In March, Verizon launched nationwide availability of its public safety core, which Nilan described as “essentially a virtualized segmentation of our network that is specifically designed for the public-safety community so their data is treated differently and segmented from all of our consumer and commercial data.” Priority and pre-emption services were also made available at that time for all public-safety responders on Verizon, he said.

“The base is built and now we’re layering on services like the deployable network units, like the digital experience,” Nilan said. Verizon is targeting more advancements in 2019 including mission-critical push-to-talk and local control services. Nilan declined to share details about how many first responders Verizon serves today, but he said the carrier is confident about its position and the strength of its network going forward.

“The big differentiator between Verizon and many of our competitors is we hold a 450,000 square mile coverage advantage over our nearest competitor,” he said. “If the network doesn’t work where [first responders] work and where the mission takes them, then nothing else that we talk about really matters.”

Public-safety users debate the FirstNet option

For many public-safety officials, the choice essentially comes down to AT&T or Verizon. And some public-safety officials may eventually decide to stick with Verizon if they're already happy with the carrier's service.

Timothy Proffer, a fire IT engineer at the Mesa Fire and Medical Department in Arizona, is more hopeful about FirstNet’s prospects, but he adds that “reliability is always the first and foremost” concern. While private networks from other carriers like Verizon are a genuine option for public safety, the mandates and guidelines specified by the federal government for FirstNet lend real credibility and oversight to AT&T’s offering, he said. “The other providers could in theory do what they see fit without any accountability, whether it be throttling or selling service to commercial entities.”

That’s clearly an issue considering Verizon suffered a public relations black eye earlier this year when reports indicated the carrier had inadvertently throttled the speeds of firefighters fighting a wildfire in California.

FirstNet underlines competitive dynamic between AT&T and Verizon

AT&T’s Sambar also underlined this point: “When we make commitments on the FirstNet program, the federal government is validating those commitments and our performance, so first responders can be confident about the trust they put in the FirstNet solution,” he said. “With other carriers, committed deadlines are missed. And with other carriers, first responders are getting a virtual core versus the physically separate, dedicated core public safety asked for.”

Jeff Bratcher, CTO and COO at FirstNet, said the organization is especially proud of the voice public safety has in how FirstNet is being built and developed going forward. “We’ve brought a focus to a pretty small market,” he said. “If you count primary and extended primary public-safety responders, it’s in the order of 10-15 million users.”

Moreover, because there’s no mandate or legislation requiring public-safety agencies to subscribe to FirstNet; AT&T still has to compete with Verizon and other carriers to provide the best service and value for first responders, according to Bratcher.

“There’s a competitive dynamic here that goes beyond FirstNet,” said Rehbehn, the analyst at Critical Communications Insights. “AT&T and Verizon are the two heavy hitters that are duking it out and they’re looking at the prospect of T-Mobile and Sprint coming together with combined assets that will be formidable. So, this is an amazing opportunity for AT&T to execute on its FirstNet commitments and strengthen its network offer.”

For that reason and others, he believes the FirstNet contract is a “strategic coup for AT&T and an existential threat to Verizon.”

“It’s a coup for AT&T because it provides a valuable set of spectrum in lower bands with a nationwide license to operate, and funding to accelerate the build-out using that lower-band spectrum,” Rehbehn said. “And the reason why I point to this as an existential threat to Verizon is that FirstNet could conceivably evolve into the primary voice communications platform for public safety through mission critical push-to-talk. The repercussion of that evolution is the potential mandating of FirstNet coverage inside building structures, the same way we mandate in new building construction today that our public safety radio systems are supported. Now when that happens that brings AT&T spectrum into all new large buildings. How does Verizon match that? Five years from now as a result of the FirstNet commitment, the AT&T network may be head and shoulders above Verizon in terms of coverage and quality.”

Article updated Oct. 30 to remove comments from a paid Verizon consultant.