U.S. government watchdog examines oversight of AT&T's emergency broadband contract

WASHINGTON (Reuters) - The U.S. Commerce Department's Inspector General has opened an audit into the federal government's supervision of a multi-billion dollar contract granted to AT&T Inc T.N, the world's largest telecommunications company, to build a long-awaited nationwide broadband network for emergency responders.

FILE PHOTO: An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

Carol Rice, assistant inspector general for audit and evaluation, said in a memo published on May 3 this year that her office was reviewing how well the department’s First Responder Network Authority, also known as FirstNet, was carrying out its mandate to create and run a new national emergency responders network.

The network, which authorities have been considering since the Sept. 11 attacks on New York and Washington, is supposed to provide vast new capacity for communication among emergency officials and crews.

The contract to build and run the network was awarded to AT&T in March 2017, but within communications industry and among emergency responders the contract has generated controversy.

Critics have questioned the need for a large new network and also how well other companies’ networks and AT&T’s new network operate together.

The AT&T project is financed by $7 billion from federal government auctions of broadcast spectrum and another $40 billion from AT&T.

The audit aims to determine whether FirstNet “properly administered” a departmental task order covering the deployment, operation and maintenance of the new emergency network, Rice said in her memo. The audit is expected to take about a year.

Government and AT&T officials involved with the contract said the inspector general’s audit was routine.

Verizon Communications Inc VZ.N, the world's largest wireless telecommunications company and AT&T's main rival, Verizon did not bid on the contract but has said it has already set aside considerable capacity for emergency use.

At a industry conference in March this year, Mike Maiorana, a Verizon senior vice president, said Verizon covers 400,000 more square miles than AT&T. “And we’re already working with our public-safety customers to build the solutions they need,” he said. In comments to Reuters this week, Maiorana reaffirmed his comments about Verizon’s capacity and its public safety customers.

This week government and AT&T officials told Reuters that the new network’s core is already operational in all U.S. states. AT&T’s contract gives it up to five years to construct further infrastructure for the network, including new towers and hanging new equipment on existing towers.

The officials also said this week that one way AT&T will pay for its $40 billion investment is by charging ordinary broadband users for commercial access to the network when it is not being used for emergencies. The new network is designed to rapidly preempt routine traffic to free bandwidth for emergency use, they said.

In an email to Reuters on Thursday AT&T said the new network would be fully interoperable with existing networks.

“FirstNet is being built on open industry standards,” AT&T said. “So that means first responders on FirstNet will be able to seamlessly communicate with customers on commercial core networks from AT&T, Verizon, Sprint or T-Mobile, and vice versa.”

A spokeswoman for FirstNet said: “The FirstNet Core is built on physically separate hardware for a highly secure network. It separates public safety traffic from commercial traffic and provides them an always-on connection with priority and preemption.”

Reporting By Mark Hosenball; editing by Clive McKeef