WASHINGTON, July 9, 2024 – A new inspector general report found that the Commerce Department’s FirstNet Authority made multiple changes to its contract with AT&T to help the company meet milestones needed to receive payment.

The report by the Inspector General of the Department of Commercewas released on May 30. The office also found that the contract with AT&T was modified even though AT&T had failed to meet each state's original coverage metrics and device connection requirements.

In its response to the Inspector General's report, FirstNet justified the contract changes by saying they “take into account technological developments and align deployment requirements with the construction timelines that support them.”

The report is newly relevant due to the increasing attention being given to the FCC's consideration of a proposal to provide FirstNet with an additional 50 megahertz of mid-band spectrum, valued at over $14 billion.

Regarding the inspector general's report, FirstNet said it “made careful and calculated decisions in modifying the contract.” The agency also noted that “the Office of the Inspector General's fieldwork for the audit report did not include the actual end results of the initial 5-year buildout.”

In a statement to Broadband Breakfast, AT&T said it “understands[s] and welcome[s] this oversight,” but noted that no other wireless network is subject to such rigorous scrutiny and accountability.

The company also said it had “met and exceeded contractual obligations regarding service area and device connections” and that FirstNet now has more than six million connections and 28,000 subscribers from government agencies and public safety organizations.

What the report found

The goal of the inspector general's investigation was to determine whether the FirstNet Authority – a U.S. Department of Commerce wireless broadband network created through a partnership between the government and AT&T – had ensured that AT&T met its goals for device connectivity and network coverage across the country.

The IG is a government function within federal agencies tasked with auditing, investigating, and evaluating activities and operations within other government agencies. Its primary goals are to ensure efficiency, effectiveness, and compliance with laws and regulations.

The report raised numerous significant questions about the FirstNet Authority's contract management and its impact on public safety communications, and sparked debate over the decision to allow AT&T to meet nationwide coverage metrics rather than individual state requirements.

AT&T signed a contract in 2017 to build a cellular network for public safety agencies and emergency responders. The original contract required AT&T to meet six different state-level milestones and coverage metrics. The goal was to build out at least 50 percent of the device connectivity goals for each state and territory within five years of the contract signing.

In January 2022, AT&T notified the FirstNet Authority in writing that it was at risk of not meeting device connection targets for several states within the required timeframe, IG said.

AT&T not on track to meet targets, report says

The report found that AT&T was not on track to meet its goals based on the company's reporting. As a result, the FirstNet Authority asked the company to stop publishing reports because it was too early in the buildout process to expect AT&T to meet its goals.

Although the reports contained details of the contract changes, the dollar amounts were redacted.

To make it easier for AT&T to meet its milestones and receive payment for early coverage completion, the FirstNet Authority amended the contract to change the connection target requirements from a state-by-state basis to nationwide coverage metrics as proposed by AT&T. Due to AT&T's failure to meet its targets, it also delayed and reduced the coverage and connection target requirements.

The inspector general expressed concerns about allowing AT&T to dictate how the company should achieve coverage milestones, including how and when to provide service. This approach using nationwide coverage metrics, he noted, might have left states underserved because AT&T could meet coverage milestone requirements regardless of progress in building out each state. In contrast, the original state-by-state coverage metrics would have ensured coverage in all states and territories.

“When we reviewed the device connection targets reported by AT&T, we determined that without the change, AT&T would not have met the original contracted requirements for 34 states and one territory,” the inspector general's report said. They also suggested that the company would have already met its device connection target requirements if it had changed the target to a number that AT&T had met once in the past.

In addition, the report noted that FirstNet Authority was able to waive approximately $38.4 million in penalties to AT&T due to a contract modification.

Further concerns about FirstNet

Other ISPs expressed similar concerns. primarily with regard to FirstNet's contractual relationship with AT&Tuse of the network for non-emergency purposes and potential cybersecurity risks. These concerns arose when the Federal Communications Commission renewed the FirstNet Authority's license to operate with AT&T in the 700 MHz public safety band in 2023.

The initial rollout of the network was completed in December 2023, connecting more than 27,000 public safety agencies. According to the report, this figure shows that AT&T is lagging behind in meeting its device connectivity buildout goals.

CEO of Verizon Hans Vestberg met with FCC Chair Jessica Rosenworcel on 28 June to lobby against the allocation of FirstNet spectrum, arguing that it would “result in a significant windfall, particularly at a time when the Commission and other policymakers are working to develop a pipeline for mid-band spectrum.”

AT&T added that major public safety groups, including the Fraternal Order of Police, the International Association of Fire Fighters and the International Association of Chiefs of Police, supported the FCC's public safety efforts.

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