The business case of a network that serves both public safety and commercial subscribers

  • Authors:

  • Ryan Hallahan;Jon M. Peha

  • Affiliations:

  • Carnegie Mellon University, Department of Engineering and Public Policy, 5000 Forbes Ave, Pittsburgh, PA 15213, USA;Carnegie Mellon University, Department of Engineering and Public Policy, 5000 Forbes Ave, Pittsburgh, PA 15213, USA and Carnegie Mellon University, Department of Electrical and Computer Engineerin ...

  • Venue:
  • Telecommunications Policy
  • Year:
  • 2011

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Abstract

Deploying a single nationwide broadband wireless network to serve all public safety users would have great advantages over the existing fragmented public safety systems. A nationwide system could be created to serve both public safety and commercial subscribers, which would allow a provider to exploit important economies but force it to meet the more costly requirements of public safety. This paper analyzes the viability of a public-private partnership that serves public safety and commercial subscribers from a for-profit provider's perspective. A model is presented that estimates the net present value (NPV) of a wireless network by calculating costs based on the number of cell sites required and revenue based on the projected number of subscribers acquired. The model is applied to both a network that serves only commercial subscribers on 10MHz of 700MHz spectrum and a public-private partnership that serves commercial subscribers and public safety personnel on 20MHz of 700MHz spectrum. It is found that NPV is greater for the public-private partnership than for the commercial-only network for any population density, which shows that the value of 10MHz of spectrum exceeds the cost of meeting public safety requirements. Furthermore, the paper demonstrates that NPV/cell increases with population density, so urban areas are profitable and rural areas are unprofitable. The paper demonstrates that a partnership covering 94% of the US population breaks even because the most urban 56% of population subsidizes coverage for the next 38%. If initial deployment is subsidized, a financially sustainable public-private partnership can serve much more than 94%. Additionally, it is shown that allowing urban municipalities to opt-out of the partnership can significantly increase the subsidies required.