O’Brien’s pdvWireless Submits FirstNet Bid, Anticipates 900 MHz Notice of Inquiry
Tuesday, June 14, 2016 | Comments
pdvWireless, a private wireless push-to-talk (PTT) carrier that holds 900 MHz spectrum, submitted a bid to the First Responder Network Authority (FirstNet).

In its fourth fiscal quarter and year-end financial results for the period ended March 31, the company — led by former Nextel Chairman Morgan O’Brien — announced it assembled a consortium of companies with expertise in the critical areas needed to build and operate a public-safety broadband network and submitted a response to the FirstNet request for proposals (RFP) by the May 31 deadline.

O’Brien declined to name the consortium members because of nondisclosure agreements and the RFP’s “confidentiality and competitive factors.”

“We have the pleasure of announcing we assembled a consortium of companies to operate a public-safety broadband network and filed a response to the RFP by the May 31 deadline,” said O’Brien, vice chairman of pdvWireless. “We understand that a number of bidder groups are competing for the FirstNet opportunity, and we felt pursuing this was in our shareholders’ best interests. There are synergies between the nationwide public-safety broadband network and our 900 MHz network.”

Those synergies include potential coordination between first responders and critical infrastructure industry (CII) entities for the 900 MHz network, shared capital and operating costs, shared business intelligence, and access to skilled personnel and other resources involved in pursuing a nationwide network, he said.

In November 2014, pdvWireless and the Enterprise Wireless Alliance (EWA) filed a joint petition asking the FCC to reconfigure the 10 megahertz of the 896 – 901 MHz paired with 935 – 940 MHz to allow a 3-megahertz contiguous block for private wireless broadband. The remaining 2 megahertz of spectrum could be used for narrowband PTT services by the band’s many CII users, the proposal said. pdvWireless acquired all of Sprint’s 900 MHz licensees a few months before filing the FCC petition. The company’s plan for the 900 MHz band can be seen in the spectrum diagram above.

The FCC requested comment last year but has not reached a decision on the joint petition for rulemaking. pdvWireless executives said they believe it is likely that the FCC will issue a notice of inquiry (NOI) as the next step in the proceeding rather than a notice of proposed rulemaking (NPRM).

“We have a strong preference for an NPRM …” said O’Brien during an investor call. “When they put out an NOI, it could be quite broad. If the FCC chooses to look more broadly, all of us have an opportunity to comment.”

Most 900 MHz incumbents that filed comments opposed the 900 MHz realignment petition. Most recently, executives from three large CII firms met with the FCC last month to discuss concerns about the petition, including interference concerns.

“On the strategy and regulatory front, we continued to pursue initiatives to maximize the value of our spectrum, including our joint petition for rulemaking seeking realignment of the 900 MHz band to allow our deployment of broadband technologies,” said John C. Pescatore, president and CEO of pdvWireless. “We continue to believe this proposed realignment is consistent with the FCC's past policies and practices, including its mandate to promote more efficient use of limited spectrum resources, and we will continue to work with all interested parties to achieve our objective.”

The company also offers a PTT $30 per month per user service based on digital two-way radio MOTOTRBO technology from Motorola Solutions. Following its commercial launch of DispatchPlus in Houston in June 2015, the company launched commercial service in six additional market areas, including Dallas, Atlanta, Philadelphia, Chicago, the greater New York area and Baltimore/Washington.

“Since we purchased our nationwide 900 MHz spectrum licenses in September of 2014, we have made considerable progress on our key business initiatives,” Pescatore said. “During fiscal 2016, we launched our state-of-the-art, wide-area PTT networks in seven major markets in the United States. We now are focused on developing sales and marketing programs for our DispatchPlus service to both generate revenues and create a template of best practices to use throughout all of our markets.”

The company completed network buildouts within previously announced capital and operating expense expectations, a statement said. During the past year, pdvWireless developed, trained and supported a network of about 60 dealers across market areas and began expanding the customer base across numerous verticals.

pdvWireless is prepared for potential future market launches in more than 13 additional markets by completing initial network designs and, in some markets, pursuing site development efforts, including site selection and lease negotiation.

Pescatore said about 50 percent of the DispatchPlus accounts come from cellular users and the rest from two-way radio companies. Churn is minimal. Sales of the service have been slower than originally expected because of the performance of the in-direct sales channel, coverage gaps because of delays with some sites and a slow sales cycle. He said dealers have been slow to ramp up sales because of the focus on private systems. pdvWireless is encouraging sales reps dedicated to the DispatchPlus service. In the previous quarter, the company had 750 units in service, and it currently has 1,750 units in service.

Revenue for the quarter ended March 31 was $951,000 compared with $815,000 for the quarter ended March 31, 2015. For the fourth quarter, the company reported a net loss of $6.8 million compared with a net loss of $5.6 million the previous year. Revenue for the fiscal year ended March 31 was $3.5 million compared with $3.2 million for the year ended March 31, 2015. For the fiscal year, the company reported a net loss of $21.8 million compared with a net loss of $14.7 million the previous year.

Because it only recently commercially launched its DispatchPlus service, the company's revenues for the fiscal year 2016 principally represent its historical software as-a-service (SaaS) business. The operating results, however, also include costs and expenses related to developing its broadband spectrum strategies, implementing and deploying the company's digital dispatch networks, and the costs of raising funds.

Executives said the company has a strong cash position, with $153.5 million in available cash as of March 31. In the fiscal year ended March 31, the company spent about $9.1 million for the acquisition of equipment, design and buildout of its digital dispatch networks.

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