T AT&T Inc

By Ryan Knutson, John D. McKinnon and Drew FitzGerald 

Sixteen years after communications breakdowns on 9/11 hobbled police and firefighters at Ground Zero, the U.S. government awarded $6.5 billion and valuable airwaves to AT&T Inc. to start building a nationwide broadband network for first responders.

The idea was born out of the 9/11 Commission, and it is the only of the bipartisan report's recommendations yet to be implemented. Congress set aside federal funds for the project, called FirstNet, but it has been dogged by delays and false starts.

Executives at AT&T, the nation's second-largest wireless provider by subscribers, said they would spend about $40 billion over the 25-year contract to build and maintain the network, which AT&T says will create 10,000 jobs.

The decision is a major step forward for FirstNet, though there are still questions about whether it will get built as envisioned. Several states are debating whether to join the federal project or build their own public safety networks.

A politically connected startup that lost out on the contract is encouraging them to opt out. Its board members include former Govs. Jeb Bush and Martin O'Malley. Experts worry that the entire project could be harmed if too many large states opt out because populous areas subsidize more rural ones.

At a Washington, D.C., press conference Thursday, Commerce Secretary Wilbur Ross said the project "will change an untenable status quo by providing first responders with the tools they need to keep us safe." He called it "a prime example of the incredible progress we can make through public-private partnerships."

Currently, first responders share wireless networks with regular consumers, meaning communication between police officers regarding an active shooter, for example, can be hampered by the same network congestion a smartphone user sometimes encounters when streaming a YouTube video.

"It will be a great thing for us," said Neil Miller, the sheriff of Buffalo County in Kearney, Neb. Mr. Miller's department currently pays Verizon Communications Inc. for wireless service, which supports remote command posts, patrol cars and officers' devices. Like regular customers, Mr. Miller's staff has faced slower connections when people pour into town for a regional car show.

"Public safety has no priority right now," Mr. Miller said. "We are just another user. We look the same in the network as everybody else."

The 2012 congressional legislation that created FirstNet allows for states to build their own alternative systems. Already, some states, including Colorado, New Hampshire, Alabama, Arizona and Michigan, have been exploring the possibility of opting out.

Ryan Burchnell, executive director of the Alabama Law Enforcement Agency, said Alabama is just doing due diligence. "If you don't look at the alternatives, I don't know how you make an informed decision," he said.

Rivada Mercury LLC, the upstart that lost the competition for the federal contract, has said it would make a concerted effort to win state contracts to run independent networks. The company, which is run by former wireless industry executives, has joined with other vendors such as equipment makers Ericsson AB and Nokia Corp.

"Do you want to be line item 1? Or line item 4,363? And that's where public safety is for the budgets of these carriers," Declan Ganley, Rivada's chief, said, referring to AT&T's involvement. "This is not a rejection of FirstNet. It's just a different way of fulfilling the mission."

Rivada sued in November to block the federal government from awarding the contract to AT&T, but the case was struck down this month by the U.S. Court of Federal Claims.

The Fraternal Order of Police has criticized the process. The group worries the procurement process has been opaque and that AT&T may not be willing to spend to build connections in extremely rural areas where there is little usage.

"It would be an understatement to say we were disappointed" with the government's handling of the project, Jim Pasco, a senior adviser to the Fraternal Order of Police, said in a recent interview. "AT&T is a reputable company. But they're a reputable company doing what reputable companies do: They're trying to make a profit."

AT&T Chief Executive Randall Stephenson said Thursday the new network "is going to be second to none," adding, "our first responders, we believe, deserve the very best technology."

FirstNet Chief Executive Michael Poth said the review process has been rigorous and included endorsements from other public safety groups. Mr. Poth said he is confident states will choose FirstNet rather than opt out and build on their own.

There are many challenges in building a nationwide public safety service. Unlike the existing networks that are built around population centers, FirstNet is intended to offer more complete coverage in less populated areas where it doesn't make financial sense for the carriers to spend.

Cost estimates for the FirstNet project vary widely, from $12 billion to $47 billion over 10 years, according to the Government Accountability Office. There aren't enough police and fire departments in the nation to support the cost of construction and operation.

The current project seeks to develop a self-funding network that earns revenue from subscription fees from first responders and will be subsidized by allowing AT&T to resell excess capacity to commercial customers. The $6.5 billion comes from a 2015 government airwaves auction.

"We'll add new radios, new antennas, we'll add new towers and distribution. We'll add to our network for backhaul," AT&T finance chief John Stephens said in an interview, adding the new network will also "leverage off these 50,000-plus towers we already have in service."

Mr. Stephens said where the infrastructure dollars go will depend on how many states take up the offer, and he expects to know where each state stand by the end of this year. The company's previous financial forecasts for 2017 didn't include this project.

This is the third attempt at getting a network built. In 2008, the Federal Communications Commission tried auctioning wireless airwaves to cellphone carriers with the condition that the winning carrier had to give first responders priority network access, but no company bid high enough to win.

Then, the Commerce Department doled out grants for local governments to build their own networks. By 2012, more than 20 counties, cities and states signed up and more $300 million was distributed. But officials feared each area would use different technologies and be unable to integrate into a unified system. The federal government put those projects on hold.

Thomas Gryta contributed to this article.

Write to Ryan Knutson at ryan.knutson@wsj.com, John D. McKinnon at john.mckinnon@wsj.com and Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

March 30, 2017 18:20 ET (22:20 GMT)

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