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Sonim CEO: New devices likely to be 'very heavily subsidized' for FirstNet
subscribers

Donny Jackson

March 16, 2018

ORLANDO--Expected subsidization from AT&T could mean that FirstNet
subscribers will pay little or no upfront money to purchase new Sonim
Technologies devices--a development that is just part of the economics "sea
change" happening within the industry, Sonim Technologies CEO Bob Plaschke
said last week during IWCE 2018.

Just days before IWCE 2018, AT&T--FirstNet's nationwide
contractor--announced that the new Sonim Technologies XP8 and XP5s rugged
LTE devices would be on the carrier's list of approved devices for FirstNet
users. Designed for first-responder use, the XP8 is expected to cost around
$600 retail for an individual device, according to Plaschke.

However, the upfront costs could be very different to public-safety
agencies that subscribe to FirstNet, Plaschke said.

"When you get [an XP8] from AT&T, it's not going to be $600," Plaschke said
during an event hosted by Sonim Technologies. "When you get it from AT&T,
it's going to be free or very heavily subsidized--that's the way the
carrier market works.

"This is the biggest challenge to [traditional LMR vendors] Motorola and
Harris. The LEX L11 at $1,000 is not competing with an XP8 at $600; it's
competing with an XP8 at $49 [or other carrier-subsidized price]. The
business market is different, because they [LMR manufacturers] have a group
of reseller agencies that they have to support, and they support them
through hardware sales."

Both the XP8 and the XP5s provide users with the option of adding a module
to the device to support additional functionality, such as a fingerprint
reader, a driver's license scanner or direct-mode push-to-talk
communications.

"Any of these combinations are all sub-$1,000," Plaschke said. "Compared to
what they spend today, [public-safety agencies] find it incredibly
affordable."

Indeed, the latest P25 portable radios that include all software can have a
list price of $11,000 per device, although volume discounts to agencies
typically reduce the per-device price to the $6,000 or $8,000 range. Still,
the ability to transform a potential capital expense for LMR devices into
an operational cost for an LTE-based device that provides greater technical
versatility at a much lower cost promises to impact the
public-safety-communications market, Plaschke said.

"It's a sea change in the way that public safety thinks about how it does
its business," Plaschke said. "For the first time, they're basically being
exposed to a broad range of broadband technologies, applications and
capabilities.

"We [Sonim Technologies] certainly won't survive, if this world becomes
proprietary--we're too small, too fragile. I think we have to, as a
collective group, band together to begin to educate and to populate the
public-safety environment with open-source specifications that basically
lets them help manage themselves."

Last month, Samsung announced that its new Galaxy S9 device would support
operation on Band 14--the 700 MHz spectrum licensed to FirstNet--but the
Sonim Technologies announcement is indicative of the type of choice that
AT&T want to provide to FirstNet subscribers, according to Chris Sambar,
AT&T's senior vice for FirstNet.

"We have a very close partnership with Bob [Plaschke] and the Sonim team.
It's important to us and to the program--the FirstNet authority and
AT&T--that we don't just have the major manufacturers with Band 14 for
first responders," Sambar said. "[We also want to] have the niche
manufacturers that make devices that cater to the public-safety community,
and that's exactly what this device is.

"This thing is purpose-built for first responders. As we go out, there's a
lot of them [public-safety personnel] that already know about it, and
there's a lot of them that we're educating and showing it to them, but
they're saying, 'Wow, that device looks really familiar to me.' It's
rugged, it does all of the things I'm used to a device doing and a whole
lot more."

Sonim CEO: New devices likely to be 'very heavily subsidized' for FirstNet
subscribers

While the Sonim device may have some similar characteristics to a
public-safety LMR radio--for example, a hardened casing, an emergency
button and a dedicated push-to-talk button--the LTE device is reflective of
the open-standards vision, scale and functionality associated with LTE
technology, Plaschke said.

In fact, FirstNet's promise to embrace an open-standards ecosystem is a key
reason why Sonim Technologies decided to pursue the public-safety market,
Plaschke said.

"I would have never taken our company into public safety absent of a
FirstNet construction, absent of an open environment," Plaschke said. "I
just wouldn't have done it. It would have just been suicide."

For public-safety agencies, there has long been a desire to have greater
choice by embracing standards-based solutions, such as P25. However,
vendors often have introduced proprietary features and pricing into
standards-based offerings that effectively have limited public-safety
agencies' choice.

Maggie Goodrich, CIO for the Los Angeles Police Department, said even the
best-intentioned policy choice to seek open-standards solutions is
difficult to realize for an agency that does not have the prerequisite
technical capability to ensure that the open-standards vision is
implemented properly.

"You'll see agencies require open standards in an RFP [request for
proposals], but they don't know how to test against that open standard to
tell if the vendor is telling the truth or not," Goodrich said. "They don't
know if they're really being locked into something [proprietary] or not.

"I think the market really needs assistance from the vendor community in
driving how you prove that product or solution meets the open standard, so
that an agency knows what they are getting."

Sambar said that FirstNet subscribers will benefit from the fact that
AT&T's deal with FirstNet calls for the implementation of open standards
and that FirstNet has the technical staff and facilities to ensure that
AT&T accomplishes this goal.

"Everything we're doing for the FirstNet program is being watched and
certified by the FirstNet authority," Sambar said. "When you hear others in
the industry on the commercial side saying that they're doing the same
thing, no one's checking their work. The FirstNet authority is checking all
of our work.

"So, before the Sonim device is on the FirstNet network, operating on the
core, on Band 14, the FirstNet authority is going to check that device in
their lab in Boulder, Colo., and make sure that it all works."

Doug Clark, AT&T's assistant vice president for FirstNet state outreach and
consultation, echoed this sentiment, noting that the FirstNet vision is all
certified components within the ecosystem--from the dedicated FirstNet core
to end-user devices and applications--are compatible and will execute
first-responder tasks.

"The experience that you have to have is .... when you use that device,
it's critical that it works--that every single piece of that works," Clark
said. "AT&T is committed to delivering that."

Derek Prall contributed to this report.