Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – May 12, 2014
CEOCFO: Mr. Ganley, what is the idea behind Rivada Networks?
Mr. Ganley: The idea is to commoditize bandwidth. What do we mean by that? That means to open up radio spectrum bandwidth to more competition, to greater and broader uses and applications and to allow the dynamics of supply and demand to be applied to broadband radio spectrum. The fact is that, as all of your readers will know, the demand for bandwidth is growing exponentially. That is projected only to increase even further over the course of these next few short years. They are not making any more radio spectrum. It is a natural resource. It needs to be used more efficiently. We developed and invented a technology that we call dynamic spectrum arbitrage and tiered priority access to be able to allow the marketplace, any users, to access and use bandwidth on a much more contested basis. That is going to be good for the industry. It is going to be great for consumers and it is going to be good for the overall economy.
CEOCFO: Would you explain the technology?
Mr. Ganley: We build our system as a standard LTE or 4G cellular system, or it can be applied to existing ones. What it does is, it makes allocations of wireless bandwidth on that network available for auction to wholesale buyers. These allocations can be as granular as an individual cell on an individual cell site. Let us say that in New York, you have a cell site that is covering Gramercy Park in New York. At different times of the day, the demand for bandwidth at that site may vary widely. For certain times in the day, maybe from seven thirty in the morning up until two o’clock in the afternoon, you may find that a number of the traditional cellular carriers will want to purchase wholesale bandwidth so that they can make it available to their customers at that time. However, maybe at three fifteen am in the morning, the buildings around Gramercy Park or the whole of Midtown right down to lower Manhattan could have wireless electricity meters. It could be possible for an electrical utility to be the only bidder at that hour, to pay a very low price for bandwidth across most of New York, to read electricity meters, perhaps in a five minute window in the wee hours of the morning when no one else wants to use that bandwidth. Then when we have the growth in machine-to-machine communications or what is now called the internet of things, you will have these cloud devices that are going to need to be able to get up there to communicate with each other and the marketplace. They will be able to source lower-priced bandwidth at off-peak hours at their location. For example, let us say that there is a video game that someone wants to download and there is a ton of data that has got to be transferred. You could perhaps select an offer from the video game provider that says it will download it at a time when it costs you some very small amount of money. That may be between midnight and six am and it happens only when that bandwidth can be most efficiently purchased. DSATPA and this commoditization of radio station bandwidth is really going to dramatically change this whole industry and the way that things have been done traditionally. It is a game changer. That is because when you commoditize anything, whether it was oil or grain or soybeans, the rules of the game change. It opens up the marketplace to new sources of investment, to new users, to new applications and shakes things up in a positive way.
CEOCFO: Has the concept been tried in the past?
Mr. Ganley: No, it has not. The idea of having bandwidth that could be traded or the logic of “If you could make bandwidth tradable;” that has been talked about in the past, but never brought to realization. That is because the supply side had not been dealt with. Until the technology existed to be able to carve out a very specific block of bandwidth in a very specific, small geographic area for a very specific segment of time and make that available to competitive wholesale bidders and provide the bidding platform to do that, you could not commoditize bandwidth. You needed to be able to have something that was packageable, if you will, and that could be sold in the marketplace. Therefore, the idea that it would be a good idea to be able to commoditize bandwidth; that thought had been out there, but no one had technically cracked how you commoditize radio spectrum bandwidth. That is what Rivada Networks did.
CEOCFO: Is it that there are new technologies that you are able to utilize to put it together or is it that you or your people have figured out a way to do so or maybe both?
Mr. Ganley: It is actually both. We invented this technology and Rivada been awarded multiple patents from the US patent office for dynamic spectrum arbitrage-tiered priority access, which is really dynamic bandwidth allocation. That is a very specific way of managing the radio resource at the edge of the cellular network so that it can be allocated dynamically in this way, on a real-time basis. Then it can make those blocks of bandwidth available to a marketplace for competing bidders in real time. Our primary focus and the inspiration for this idea came from our public safety and emergency services communications business, which is what we started off doing with Rivada Networks. We deployed for Hurricane Katrina and during Hurricanes Katrina and Rita, we had developed and were deploying these emergency deployable cells sites that had some unique capabilities that were really valued by emergency services. However, one of the lessons that we learned from those deployments was that it would be very useful to be able to prioritize access to a scarce resource, so that you could have everything from, if you like, a platinum level of guaranteed service, all the way down to a standby level of service. Once you did that, and you did that in an individual cell, it became very apparent to me very quickly that the marketplace would value such a thing. The first block of spectrum that was allocated in the United States or in the world where this became possible was actually the D Block, which all in all adds up to twenty megahertz of radio spectrum that has been allocated to public safety in the US. That was done in the President’s Jobs Act, in February of 2012. At the time, one of the little noticed features of that Jobs Act, which had full by partisan support by the way, was that it allocated this bandwidth to public safety and it allowed for sub-priority commercial access to that bandwidth. It said that any profits generated from that would be plowed back into the public safety network. It was a very farsighted piece of legislation. I think in time, maybe in a decade from now, people will look back at this and say, “This was one of the best things to come out of all of that legislation,” because it has opened up a piece of the radio spectrum for highly innovative use and yet gave public safety something that had been recommended in the 9/11 Commission report and took a long time to get, which was dedicated spectrum that they had absolute, ruthless pre-emption on. That means that within milliseconds they would get the resource. Therefore, in a millisecond they could get access to the network and to their own network and to their bandwidth. However, any time that they were not using it and when it was fallow it would be available to be dynamically used by the commercial marketplace.
CEOCFO: Rivada was awarded a US patent for your telecom commodity exchange earlier this month. What is the plan? Now that that is in place, what will be happening at Rivada?
Mr. Ganley: The telecom commodity exchanged patent is layered on top of the dynamic spectrum arbitrage patent. Therefore, we invented and developed a technology, which by the way, is compliant with open standards, what is called in the industry 3GPP standards. Therefore, the 4G LTE networks that have been deployed all follow these open standards and our dynamic spectrum arbitrage technology is a feature set that follows those open 3GPP standards. As our DSA technology that we invented commoditizes radio spectrum bandwidth, the telecom commodity exchange sits atop that and gives us a platform and a marketplace, where it will be possible to trade this bandwidth with all of the sundry benefits that you would expect to go along with that. It also means that it will open up the marketplace to new sources of financing and new ways to structure financing, to build and maintain these sorts of networks. For example, this whole approach allows Rivada Networks to go in and fully, privately fund the rollouts of the public safety broadband network on a statewide basis because of the value in that spectrum when it is commoditized and made available via dynamic spectrum arbitrage to the marketplace.
CEOCFO: Will there be additional commercialization?
Mr. Ganley: The business that we have been in for many years now has been deployable emergency communications. We have contracted with various government agencies and public safety agencies to provide those services. Now that the legislation has been passed and the structures have been put in place by the federal government and are being put in place at state level, we are now engaged with multiple states across the US and with the various federal entities that have been put in place to oversee this, such as FirstNet. We are engaged with them with the objective of participating on a fully competitive basis in making proposals in competitions to build out statewide public safety networks that are broadband, but that are enabled with DSATPA technology, allowing for that bandwidth to be commoditized when public safety is not using it and to be able to do that on a millisecond basis. That is really essential because they have to have ruthless preemption. Secondly, we are in dialog with broadcasters and other owners of radio spectrum. We have been approached by them because they are very interested in looking at the possibility of deploying DSATPA technology throughout their radio spectrum or parts of their radio spectrum. That is so that that they can commoditize their bandwidth, carry on doing the same things that they are doing, maybe with some slight alterations and having absolute ruthless preemption to their own radio spectrum or bandwidth. However, for the big amounts of time when they are not using it themselves efficiently, they can make it available to the marketplace and it could be made available for others users to use and innovate with. Interestingly, the other thing that you are going to see take place around this or adjacent to this is a change in the traditional way in which we have regulated radio spectrum. Therefore, it is a challenge to regulators but it has been very interesting to watch the FCC, over the course of the last several months, doing some very innovative things around dynamic spectrum allocation. They have publicly said that they are now looking at new and alternative ways of using the radio spectrum more efficiently, introducing more competition and making sure that consumers get a better deal. The old, traditional way of auctioning monopolies over vast swathes of spectrum, for decades at a time, I strongly expect that those days will not be over immediately, but that approach will be unsettled over the next few years. We will see a move across the world into a new area of regulation that will leverage off the advantages of commoditized radio spectrum.
CEOCFO: It seems a no brainer that states would want to be able to cut their costs. What is the challenge when you are talking with them? Where would there be or why would there be hesitancy? How do you overcome the fear of something new?
Mr. Ganley: That fear has been around forever. There is always the fear of the something new and a fear of innovation. However, America is a great country. It is a great place to bring out new things, because America is a great place, precisely because it almost always embraces these sorts of opportunities. The thing is that you have a supply and demand crunch. The fact is that there is not a great deal of radio spectrum in comparison to the amount of the demand that there is for it. That problem is going to be solved. In point of fact, I could argue that you have to commoditize the bandwidth because any other solution is going to be less efficient. You have to turn it into a commodity. You have to make it available to a competitive marketplace because otherwise you are trying to pick winners and figure out who is going to use it the best, when you can never be in possession of all of those facts. That is going to hit the taxpayer. That is because, if you look at public safety networks in the past, we have spent billions upon billions of dollars building out dedicated networks that were quite often not interoperable with each other or if they were interoperable with each other they were not interoperable with other modes of communication. They were extraordinarily expensive. Therefore, you were talking about hundreds of millions and billions of dollars to build up even one space with some of this technology and it cost tens of millions of dollars a year or more to maintain those networks even after they would be built. Therefore you have massive cost being incurred by the taxpayer for systems that were good and did their job in their time; they did they job they were supposed to do very well, and in fairness to them, they did. They did walkie-talkie, push to talk stuff extremely well. However, we are in another century now. That was all well and good on D-Day and for a while afterwards, but now we are in another century and that model is going to be as dead as the Dodo in another few years. Those who keep advocating it and keep expecting the system to keep delivering them billions of dollars of taxpayers’ money; they really need to examine their consciences as well as their bank accounts because that model cannot and will not continue. Why? Because the radio spectrum that those systems use up is so valuable, that not only will it pay to build those networks and save the taxpayers the problem of having to write the checks for them, it will become a net revenue generator for US public safety. For example, we have been very open and public about this. We did a webinar on this recently. We will and are proposing in certain instances to completely privately fund network rollout, which after a couple of years will become revenue positive for those jurisdictions. That is to say, instead of them writing us a check for anything, we will be writing them a check generated from the revenue, the surpluses that will be earned, by making commoditized bandwidth available on a sub-priority bandwidth basis from these networks. That is the future. That is the future, I think, for all radio spectrum over time. Those that own radio spectrum now will employ new technology that is available now to use it more efficiently and will commoditize their bandwidth. We are going to see the type of explosion in innovation and growth in this sector and a complete upending, in some cases, of existing business models, which is going to be great for the economy. It is going be done to fuel innovation. It is going to create all sorts of new players and bring them into the marketplace. It is going to allow some existing incumbents to restructure their business models so that they can focus better on providing consumer service and applications to their sometimes tens and hundreds of millions of end users in a way that makes more sense to those end users and provides more value. That is what those kinds of company’s shareholders are going to be looking for them to do
Declan J. Ganley
CEO & Founder
Declan J. Ganley is an Irish Entrepreneur and founder, Chairman and CEO of Rivada Networks, which focuses on designing and deploying broadband public safety communications networks for state and local government customers.
“Those that own radio spectrum now will employ new technology that is available now to use it more efficiently and will commoditize their bandwidth. We are going to see the type of explosion in innovation and growth in this sector and a complete upending, in some cases, of existing business models, which is going to be great for the economy.” – Declan J. Ganley