The market for U.S. public safety network for first responders and civil protection services is gradually becoming intensely competitive. Recently, U.S. telecom behemoth Verizon Communications Inc.VZ announced plans of dedicating network capacity to emergency services providers.
Notably, in March 2017, U.S. telecom giant AT&T Inc. T was selected by the First Responder Network Authority (FirstNet) to build and manage the first nationwide broadband network dedicated to America's police, firefighters and emergency medical services. The network will cover all 50 states, five U.S. territories and the District of Columbia, including rural communities and tribal lands in those states and territories.
As part of the 25-year contract, FirstNet will provide AT&T with a swath of 20 MHz of spectrum in the 700 MHz frequency band for the entire duration. AT&T will also be given success-based payments of $6.5 billion over the next five years to design and build the network. The company is expected to spend around $40 billion over the life of the contract to build, deploy, operate and maintain the network. AT&T has projected that this contract will create more than 10,000 jobs in the next two years.
AT&T's consortium to deploy FirstNet includes Motorola Solutions Inc. MSI , General Dynamics Corp. GD , Sapient Consulting and Inmarsat Government. Importantly, AT&T will connect FirstNet users to the company's telecommunications network assets, valued at more than $180 billion. This contract can be considered a necessary boost to the company's profile.
In order to take on the FirstNet-AT&T nationwide public safety network, Verizon stated that it will enhance its 4G LTE network to allow first responders priority access nationwide. In an apparent bid to ensure dedicated capacity for first responders, Verizon has decided to separate public-safety network from its commercial networks. The priority access and pre-emption services will be available to public safety when necessary and at no extra cost.
Moreover, Verizon will make Band 14 devices available and ensure full interoperability with any Band 14 radio access networks (RANs) deployed by FirstNet. Band 14 is the 700MHz LTE band allocated for the public-safety network. Public authorities can use FirstNet, in addition to Verizon's public-safety services without federal funding. The company will also offer devices compatible both with FirstNet spectrum and its own wireless public-safety network.
Price performance of Verizon
Year-to-date, the stock price of Verizon has witnessed a decline of 10.28% compared with the industry's growth of 3.44%. Nevertheless, the company has a very powerful diversified business model. On the wireless front, it will start initial deployment of the upcoming 5G network in 2018. Meanwhile, it is aggressively expanding its fiber-based footprint on the wireline front. In the digital media front, Verizon has emerged a major contender for the lucrative online advertisement business. We believe that these are the primary reasons behind the stock currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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