Market competition pushes down San Jose light pole lease rates

by Steve Blum • , , , ,

The City of San Jose will finalise a light pole lease agreement with AT&T. The San Jose city council approved a set of deal points on a nine to one vote last week. AT&T will pay $1,500 per year each to attach small cell equipment to city-owned light poles, plus pay $1,850,000 toward fees and a permit streamlining program.

That’s less than half of what San Jose was trying to charge.

“We have a fast changing landscape”, San Jose mayor Sam Liccardo said. “I’Il be talking with Verizon tomorrow and that’s one of several companies – we’re having challenges nailing them down on prices that are moving very rapidly, in some cases, the wrong direction”.

San Jose’s rate card had a top rate of $3,500 per year for the smallest of small cell attachments, with higher rates for bigger or more powerful equipment. Besides being too expensive, San Jose couldn’t predictably approve permit applications, which led AT&T to invest elsewhere, Dolan Beckel, San Jose’s director of civic innovation, told the council…

In September of 2016, AT&T submitted 17 small cell permit applications. Over a year later in November of 2017…none of those 17 small cell permits were approved. AT&T could not justify further investment in our small cell infrastructure – we are too expensive, we are too slow and we could not generate any predictability. They are pulling their capital investment in small cells out of the city and directing it to other cities.

Whether AT&T would have walked away from San Jose for good is an open question. Probably not – it can’t afford to concede the biggest city in northern California and Silicon Valley to its rivals. But even AT&T’s capital isn’t infinite. Choices have to be made and, for now at least, investment will follow the path of least resistance.

The lower fees and faster permits – the city will try to get permits processed in two months – will lead to an initial build of 170 small cell sites, with 1,000 or more promised in a later phase, Beckel said.

The deal also gives AT&T direct responsibility for dealing with complaints or objections by residents, on a fast track basis. AT&T would snail mail notices to people who live within 300 feet of proposed small cell sites. Recipients would have 20 calendar days to “contact…AT&T with their concerns and questions”. It would be up to AT&T to resolve problems they can and let the city know about the ones they can’t. What happens after that is still undefined.