San Jose cuts $1,500-plus light pole lease deal with AT&T

by Steve Blum • , , , ,

The City of San Jose and AT&T have a new agreement to put “small cells on city-owned assets in the public right of way”. A formal contract is still to be negotiated, but assuming the San Jose city council signs off on the deal points, AT&T will install “approximately” 170 small cell sites to upgrade mobile broadband coverage on city-owned light poles and other vertical infrastructure.

AT&T will pay the city an annual lease rate of $1,500 per small cell site, plus $1,850,000 to process the immediately necessary paper work and streamline future requests. $850,000 covers permit fees; $1,000,000 goes toward “improved permitting process reliability and speed for any permittee through organisational, process, and technology improvements”.

That’s considerably more than the $250 per year rate that AT&T and others tried to ram through the California legislature last year, but it’s less than San Jose’s current price tag for wireless facility leases. The rate card approved in 2015 was based on the perceived desirability of locations – a small cell installation (30 cubic feet and 20 watts or less) costs $3,500 a year in the high traffic central part of the city, and less – as little as $2,625 per year – in outlying areas. Bigger and/or higher powered facilities cost more.

The summary memo prepared for the city council implies, but doesn’t exactly say, the same size and power limits apply. Presumably, that detail will be fleshed out in the actual contract. AT&T’s “photo simulation” of what it’s saying it’ll install is above.

The memo does point out that the current rate card is too pricey for the market…

While this lease rate structure was appropriate for the nascent small cell market in 2015, three years later, the structure does not reflect current market conditions, the current state of wireless technology nor the City’s Broadband Strategy.

The retail lease rates…combined with the private sector burden of remediating the City’s poles had resulted in the City being unable to secure the necessary private sector investment in our broadband infrastructure. At the time the broadband strategy was approved on November 13, 2017 the City had not approved a single small cell permit nor collected any small cell lease revenue largely due to the existing Usage Fee Structure and a lack of centralized broadband governance.

The San Jose city council is scheduled to review the deal at its meeting tomorrow.