Jim Lipinski ENP – Accenture Federal Services Joel McCamley ENP – 911 Authority LLP

2. Jim Lipinski ENP – Accenture Federal ServicesJoel McCamley ENP – 911 Authority LLP Designing Relevant Funding ModelsJune 18, 2013

3. Our purpose today • Challenge you to think differently about funding • Explain the importance of alignment • Explore the problems with the models in current use • Illustrate the need to change • Provide guidelines and ideas to address the problem • Start the discussion on alternatives and next steps

4. Funding 9-1-1 has always been a problem When we think we have it right, something new comes up • Advent of wireless • Pre-paid wireless • Raids on 9-1-1 funds • The patchwork quilt of 9-1-1 jurisdictions

5. Now we have the added complexity of dealing with funding NG9-1-1 • The number of potential “users” increases • The complexity of the systems increases • The pressure on the funding models increases Our funding models couldn’t keep before and now it is even more difficult

6. Look at what we have today:Most common current models • Per capita basis • Device purchase or use basis • Point of sale • Bill and keep • Landline • Wireless – local • Wireless – state • Pre-paid • VoIP streams • Others

7. …and what it covers • Systems • CPE • CAD • Mapping • Logging • Furniture • Network/telephony • Operating costs • Personnel • Maintenance agreements • Service contracts • Center operation • Radio, vehicles, MDT, Command Posts etc.

8. Given this complexity, how do we ensure adequate funding for our NG-9-1-1 initiatives? • Adequate to make the switch to NG9-1-1 • Adequate to sustain NG9-1-1 • Adequate to grow NG9-1-1 • Adequate for what comes after NG9-1-1

9. Move away from funding models that don’t align with your environment • Recognize that our current funding models are EOL • Stop tweaking what doesn’t work • Create new funding models that align with the current environment FINISH BY

10. It is EOL because due to today’s trends, it doesn’t capture all the funds that it should • Mobility • Rapid technological transformation • Declining telecommunication costs when adjusted for inflation

11. It fails to capture funds in the face of mobility • We no longer make the majority of our calls at home • We don’t use our phones exclusively where we pay our phone bill • It doesn’t matter which funding variant (POS Prepaid excepted) is used, in the cases show to the left funds go to the billing jurisdiction • However, Service is usually provided by others • 77% of those working in Arlington County, VA live elsewhere • Cape Cod has 215k year round residents but 665k in the summer • Many college dorms do not provide phones • I pay my USF to VT, but live most of the time in DC

12. It doesn’t keep up with change • We have been chasing technology with our funding approach • From the moment new technology comes out until we figure out how to collect on it, we lose that money forever • To keep up, funding needs to be as nimble as technology, or fundamentally changed The iPhone is not even six years old

13. Basic economics work against the many of the current funding models Cost of phone service • Has held steady as a percentage of household income since the early 80s • But now includes Internet, more lines, entertainment, etc. • Choice holds down costs • Skype vs. International calls Cost to run a 9-1-1 system • Costs keep going up • Demands and expectations keep going up If the costs which are taxed hold steady, but the costs that the tax covers rise, the tax rate will need to rise as well. This is not sustainable long term

14. We need to stop tweaking what doesn’t work • Look at all the effort that went into prepaid • What do you do when everyone gets their prepaid phones over the internet? • How will roads be paid for when cars are electric? • When/if the time comes, nothing can be done with a gas tax to adequately fund roads, just as tweaking a hay tax wouldn’t pay for our roads today

15. Tweaking the existing model won’t work because it is fundamentally broken • It dates back to the 60s when every phone was a landline • It assumes point of billing = point of service • It assumes a telco is the only way to get phone service

16. It doesn’t align with Next Generation capabilities Example: collaboration • How will that work with your funding model? • How do you sustain a partnerships if funds don’t follow calls? • Without the partnerships, many of the benefits of NG aren’t attainable • To unlock the value of NG9-1-1 you will probably want to partner • You may rely on other jurisdictions to handle your overflow volume • You may end up collaborating with your day to day operations

17. To create a funding models that align with the current environment, look at the world we live in • If we started from scratch, would we build the same funding model we use today? • What would we come up with if reality guided funding model development

18. To understand what will be successful we need to look at the list of problems • It needs to work with mobility • It needs to work with new technology • It is based on economically sound revenue streams • It needs to support partnerships

19. Let’s add some long-held core principles • It has broad support by all or most stakeholders • The costs should be borne by those who benefit • Service should be consistent regardless of local limitations (basic level of service everywhere) • We don’t want to discourage the legitimate use of 9-1-1 by directly charging for a 9-1-1 call

20. And a few new ones • The funding model is transparent and accountable • It is sustainable • It incentivizes system improvement • It draws attention to what works well

21. An aligned funding model will have the following characteristics; these are our RFP requirements • It provides consistent service • It doesn’t rely on charging for a 9-1-1 call • It is transparent & accountable • It is sustainable • It incentivizes improvement • It rewards what works well • It works with mobility • It works with new technology • It is based on sound economics • It works with partnerships • It works in the face of change • It has broad support • It is supported by those who benefit

22. What has been done so far? There have been several studies that looked at funding • 2007 – Next Gen Partners • 2007 – iCERT • 2012 – Vermont Legislature All reached the conclusion that we need to redo funding and there were many common recommendations

23. NENA Next Gen Partners Funding Report 2007 • Completed in 2007 - Major Findings • NG9-1-1 envisions a system with shared costs amongst all participants in the NG9-1-1 system • Relying on the current patchwork 9-1-1 funding model is not sufficient to maintain the current 9-1-1 system, let alone provide for the essential evolution to NG9-1-1 • Maintaining the status quo, for the 9-1-1 system architecture or the methods that fund it, is simply not an option

24. NENA Next Gen Partners Funding Report Cont… • 7 Principles for Funding • Funds collected must be used for their intended purpose - No raiding for non-9-1-1/emergency communications purposes • Funding from all access methods – Any communications device in which the public has an expectation to receive emergency services • Technology and competitively neutral • Equitable allocation of revenues • Constantly evolving system focused on improving level of service • Efficient, accountable operations • Coordination, cooperation and collaboration amongst all industry players and government entities

25. NENA Next Gen Partners Funding Report Cont… • 6 Models Identified • Fixed amount surcharge on all calling services • Surcharge on access infrastructure provider (AIP) • Universal Statewide Communications Surcharge (ex. VA) • Universal Federal Communications Surcharge • User (incident) fee • General Fund Tax Revenue (federal, state and local)

26. iCERT Report on the Health of the 911 System • Completed in 2007 - Major Findings • 9-1-1 is a Public Good and Innovation Should Be Promoted • Citizens expect uniform and reliable 9-1-1 service across jurisdictional boundaries, across communication devices, and across different communication services • Incumbent 9-1-1 service providers (“9-1-1 SPs”) are unlikely to champion an upgrade absent regulatory change

27. iCERT Report on the Health of the 911 System

28. iCERT Report on the Health of the 911 System • Five Policy Recommendations for 9-1-1 Funding • 9-1-1 Services Must Be Better Aligned With the Expectations and Demands of Consumers and Citizens • Responsible Policymakers Must Have a Viable Funding Strategy for Achieving Next Generation 9-1-1 • The Public Good Nature of 9-1-1 Today Suggests That 9-1-1 Funding Models Should Be Augmented by Financing That Facilitate Capital Expenditures • Greater Oversight Should Be Used to Monitor Fund Collection, Deter 9-1-1 Funding Raids and Ensure that 9-1-1 Purchases Reflect Sound Judgment • 9-1-1 Surcharges Should Be Assessed in a Principled Manner That Promotes Competition

29. An innovative model was presented in a report to the Vermont Legislature, but has not been implemented • 9-1-1 agencies publish a per call rate • Carriers are charged for delivering calls to 9-1-1 • Carriers recover the charges by spreading them across their subscriber base • Funds follow the call • Carriers are compensated for their service http://www.leg.state.vt.us/reports/2012ExternalReports/274190.pdf

30. Our purpose is not to push a specific model, rather illustrate the urgency to develop a new approach • Everything points to continuing difficulties if funding models are not aligned with the current environment • We’re not going to fix this problem in this room today • It is time to turn up the heat on this conversation • We need to put everything on the table • Leadership is needed

31. The way forward: • Begin the conversation at your level • NENA/NASNA Committee on funding models • Involve all stakeholders • Especially the carriers • Develop model legislation • Create a legislation agenda

32. References for the 9-1-1 Funding Discussion • Federal Communications Commission, Communications Security, Reliability and Interoperability Council, Working Group 4B. (2011, March). Transition to Next Generation 9-­1-­1 Final Report. Washington, DC: Author. http://transition.fcc.gov/pshs/docs/csric/CSRIC-­WG4B-­Final-­Report.pdf • NENA NG Partner Program. (2010, March). Next Generation 9-­1-­1Transition Policy Implementation Handbook. Arlington, VA: National Emergency Number Association. http://www.nena.org/?NGPPPolicyTransHndbk • NENA NG Partner Program. (2007, March). Funding 9-­1-­1 Into the Next Generation: An Overview of NG9-­1-­1 Funding Model Options for Consideration. Arlington, VA: National Emergency Number Association. http://www.nena.org/?NGPP_911FundingRpt • 9-­1-­1 Office. (2009, February). NG9-­1-­1 Transition Plan. Washington, DC: Department of Transportation. http://www.its.dot.gov/ng911/pdf/NG911_Transition_PlanFinal.pdf • Weiser, P., Hatfield, D., & Bernthal, B. (2008). “The Future of 9-­1-­1: New Technologies and the Need for Reform” Journal of Telecommunications and High Technology Law. Vol. 6, No 2, pp. 213-­292. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1146803

33. Questions/Discussion

34. Thank you James.r.lipinski@accenturefederal.com Joel@911authority.com