Tag Archives: sb649

Market competition pushes down San Jose light pole lease rates

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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.

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

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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.

Cities get better deals from wireless companies in a free market

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One of the working groups spun off by the Federal Communications Commission’s broadband deployment advisory committee (BDAC) – an industry dominated body – looked at how much it costs telecoms companies to attach wires and wireless gear to poles. The results of that study are here. It was based on information that participants voluntarily submitted – the study kindly describes it as a “convenience sample” – so there’s a limit to its reliability. Even so it paints an interesting picture.

Nationally, fees for attaching wires to utility poles run in the $16 to $18 per year range, on average. That’s a little more than in California, where a cost sharing formula established by the California Public Utilities Commission results in fees typically in the $20 to $25 range. It’s not surprising that costs here tend to be higher than other parts of the U.S.

There’s a greater variance when wireless facilities are involved. That’s mainly because there’s greater variety in the methods used to arrive at those fees. In some cases, for example utility poles in California, the wireline attachment formula is used to calculate a per foot fee. So if a telco is charged $20 per pole per year to attach a cable, which typically occupies a foot of space, a wireless facility that takes up 5 feet of pole space would cost $100.

In other cases, the rate is set by negotiation. One of the problems with the study is that it throws utility poles and street light poles into the same bucket. Those are owned, managed and regulated differently, and aren’t directly comparable. That said, the study shows that there’s a wide variance in wireless facility attachment costs, with a mean rate of $506 but a median of $57.

There’s a brief discussion of streetlight lease fees, which in some cases run from $400 to $15,000 per year when market forces are at play. In other cases, state legislatures have preempted local ownership and set much lower rates. That was tried last year in California, but governor Jerry Brown vetoed a bill – senate bill 649 – that would have capped streetlight (and other municipally owned, non-utility pole) lease rates at $250.

Streetlight gifts to mobile carriers spread to other states

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California is not the only state where lobbyists for mobile carriers and other big, incumbent cable and telephone companies are giving stacks of cash offering somber advice to state legislators and getting huge gifts of public property in return. According to a couple of articles by Timothy Clark in Route Fifty, several other states are preempting local ownership of vertical infrastructure and municipal control of public right of ways.

In some states, the giveaway is even more generous than the California’s gift to telecoms lobbyists last year, senate bill 649. It was vetoed by governor Jerry Brown, who eased the pain by reinforcing AT&T’s and Frontier Communications monopoly in rural California with $300 million and, effectively, an end to similar subsidies for independent broadband projects. SB 649 would have set a blanket $250 a year lease rate for wireless broadband providers to attach cell sites and other equipment to city owned street lights. Depending on how you figure it, that’s something like one-fourth to one-half of the market rate.

In Texas, lawmakers went one better and sliced off a zero, setting the maximum municipal pole lease rate at $20 a year. The City of McAllen, Texas sued, claiming that the preemption violated the Texas constitution. McAllen is no stranger to fighting for municipal broadband rights, by the way. It drafted a “minority report” protest to the Federal Communications Commission over the way that industry lobbyists hijacked the Broadband Deployment Advisory Committee, and convinced San Jose and New York City to sign on.

According to Clark’s story

“In our legal analysis,” [McAllen city attorney Kevin Pagan] said, “the law forces us to give gifts to private parties. It is forcing us to give access to our rights-of-way at far less than market value. What about other companies using the rights of way? They are paying higher rates, and why wouldn’t they say, ‘What about us?’”

The wireless telecom companies, he continued, “want access to the rights of way like public utilities, but they don’t want to be regulated like a public utility.” Pagan noted while the companies promote small-cell as cutting-edge wireless technology, the cells rely on a vast fiber cable network that comprises 90 percent of the system, largely strung on poles in the rights of way.

Georgia lawmakers also passed similar legislation, and a preemption bill is making its way through the Nebraska legislature.

Truth is the first casualty of small cell deployments

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Mobile broadband companies are increasingly getting it when it comes to aesthetics, but pledges made on the front end aren’t always fulfilled by construction and operations staff or backed up by management. Wireless lobbyists and public relations people understand that they need to speak the right words to massage away concerns about how small cell installations will look as they proliferate along urban and suburban streets. But those oh-so-sincere promises, accompanied by beautifully rendered conceptual drawings, don’t always survive the descent into contract language, let alone appear on poles.

The City of Santa Rosa learned this lesson from Verizon – the hard way, according to an article by Christi Warren in the Press Democrate

The equipment — including large metal in-ground utility boxes about 5 feet tall — varies greatly in design from anything the city was previously shown by Verizon, the wireless provider installing the antennas, said Eric McHenry, director of Santa Rosa’s Information Technology Department.

While the city had no role in the equipment design, Santa Rosa officials went through a significant amount of back-and-forth with representatives of the wireless carrier on what the units would look like on city-owned streetlights, McHenry said. Officials took pains to make sure the antennas would be as unobtrusive as possible, he said.

“We frankly as a city were also surprised by what these first ones looked like,” he said, referring to the units Verizon is installing on utility poles. “They look nothing like what we had discussed with Verizon for our city streetlights or even the pictures that we shared with the council (of the installations) on wooden poles.”

The mobile companies have figured out that talking a good aesthetics game is tactically wise, but it’s a position that changes rapidly as rhetorical fights cool down. And once burned, city governments are very reluctant to make the same mistake twice.

That means there’s very little trust between cities and mobile companies, with good reason: the truth can be in short supply. The people tasked with making the case for wireless facilities might just be repeating what the boss said to say. City staff and policy makers can’t assume that companies will ultimately keep those promises because, as Santa Rosa found out, they often don’t.

Internet, telecoms legislation introduced in Sacramento, but not all cards are on the table

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A handful of substantive telecoms and Internet services bills and a stack of placeholders were introduced in the California legislature by last Friday. That was deadline for new bills, although it’s largely a formality – any of the placeholders (or the substantive bills) can get gutted, amended and turned into anything at all, right up to the end of the session in August.

Assemblyman Ed Chau (D – Monterey Park) is taking another run at Internet privacy, although in a more limited way than last year. Assembly bill 2511 would tighten privacy requirements for websites – social media, particularly – that serve minors, and AB 2935 would do the same for health monitoring services. Broader legislation could come later, though.

Social media gets a call out in two other bills. AB 1950 by assemblyman Marc Levine (D – Marin County) would prohibit bot-driven advertising or clicks, and AB 3169 by assemblyman James Gallagher (R – Butte County) would ban censorship by social media platforms or search engines “on the basis of on the basis of the political affiliation or political viewpoint of that content”, or “removing or manipulating content” from search results.

AB 1906, by assemblywoman Jacqui Irwin (D – Ventura County), would require an Internet–connected device to have password protection – in other words, you’d have to authorise your Alexa device before it could start eavesdropping on you.

Lifeline telecoms programs – which can include broadband service – would be less restricted under AB 3111, authored by assemblyman Eduardo Garcia (D – Imperial County). Right now, only one person per household can receive lifeline subsidies, which is a problem if the service is delivered via a mobile phone, rather than a wireline connection that can be shared by everyone. AB 3111 would allow different people living at the same address to receive lifeline service, although the one account per family restriction would stay in place. How that distinction would be policed by the California Public Utilities Commission isn’t clear, though.

So far, there’s been no move to introduce a new version of senate bill 649, which would have opened up city and county property to wireless operators, at nominal, below-market-value rental rates. It was vetoed by governor Jerry Brown because it went a bit too far. You can expect to see similar language slipped into a bill by wireless lobbyists in the coming months. Stay tuned.

Cash for 2018 campaigns drives broadband decisions in Sacramento

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California lawmakers will tackle broadband issues in the coming year, but not ones that directly address the needs of businesses and consumers, or economic development goals of unserved communities. The hottest items will be reboots of two failed bills near and dear to the hearts of big telecoms companies.

Senate bill 649 was vetoed by governor Jerry Brown last October. It would have given mobile carriers, as well as telephone and cable companies, unlimited access to city and county-owned light poles, traffic signals and other vertical infrastructure at a token rental rate, far below market value. Brown said he liked the idea, but SB 649 went a bit too far. Talks are already underway between mobile interests and local agency representatives to see if there’s any common ground. If there isn’t, expect to see a nearly identical bill that’s trimmed just enough to pass muster with Brown.

Assembly bill 2395 was AT&T’s unsuccessful 2016 attempt to get permission to rip out rural copper networks and replace them with low cost and, often, federally subsidised wireless systems. AT&T’s wireless local loop technology can’t match the service provided by even mid-grade DSL, let alone the upgraded copper and fiber systems it installs in affluent neighborhoods, but that’s less of a problem now. Telco and cable lobbyists convinced lawmakers to pass AB 1665 and lower California’s minimum broadband speed standard last year, paving the way for rural broadband downgrades in 2018. AB 2395 will be back.

Don’t expect California to fill the regulatory chasm created by the Federal Communications Commission when it killed network neutrality rules last year. Any kind of broadband-specific consumer protection bill has little chance of making it through the California legislature next year. An Internet privacy bill – assembly bill 375 – died in a leadership committee this year, despite widespread and oh-so-sincere expressions of support from lawmakers.

Cable and telephone lobbyists killed AB 375, while moving SB 649 and AB 1665 through the California assembly and senate in 2017. This year, legislators will listen to them even more attentively: 2018 will be an expensive election year for candidates, and party leaders will be even less willing to upset big money donors.

Verizon’s Sacramento 5G deal is about R&D and politics now, mobile service later

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The City of Sacramento’s 5G deployment deal with Verizon will expand the broadband service choices consumers have by a little bit, and pave the way for faster mobile service in the future.

The deal allows Verizon to use city assets to install what will initially be an experimental 5G network that’ll provide fixed service, presumably into homes and businesses, in competition with AT&T and Comcast. But it’s immediate value is as a development project, with technical and political benefits.

It’s no coincidence that the company chose California’s capital city. Verizon was one of the main backers of senate bill 649, which was approved by legislators but was vetoed by governor Jerry Brown. In his veto message, he said he was looking for “a more balanced solution”, which guarantees it’ll be back next year. SB 649 would have given mobile carriers at-will access to city and county-owned property, such as light poles and traffic signals, at below market rates. During legislative hearings, Verizon offered lawmakers rides around Sacramento in its 5G demo van, and generally made its presence known. The deal reached with Sacramento mayor Darrell Steinberg, a termed-out but formerly high profile state senator, will help keep Verizon top of mind at the capitol.

Leading off with fixed service allows Verizon to test 5G technology while it is still in the development stage. It can deploy a limited amount of network equipment based on the recently finalised initial set of 5G specifications without having to worry about full mobile coverage. Same with customer premise equipment. It’ll be a while before 5G mobile phones are widely available to consumers, but Verizon will have no problem sourcing and installing early and limited versions of gear that’ll support fixed service.

The deal puts Sacramento first in line for true, mobile 5G service, as it launches on a full commercial basis over the next few years. When and where that build out happens will depend to a great degree on both the political and technical results.

California muni broadband battle continues, with or without federal advice

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Even if it’s adopted as is – and it’s as likely to get worse as it is to get better – a wish list of muni-stomping broadband policy drafted by a Federal Communications Commission advisory group, and echoed by the FCC majority, probably won’t have much impact in California.

That’s not necessarily good news for Californian cities and counties, though. One of the recommendations – grant cable franchises on a statewide basis with an impossibly light and delicate regulatory touch – has been law here for more than ten years. Cable companies pushed through the Digital Infrastructure and Video Competition Act (DIVCA) in 2006 and now answer to no one.

Local control over permits for wireless facilities – on private property or in the public right of way – has been steadily eroding and mobile carriers, as well as telephone and cable companies, continue to keep the pressure on in Sacramento. They’ll be back next year looking for on-demand access to city and county owned assets, such as light poles or land, at below market rental rates. Senate bill 649, which was passed by the legislature this year but was vetoed by governor Brown, would have done all that. Brown wasn’t fundamentally opposed to the idea, he just thought the bill went a bit too far. That’s an open invitation to try again, with some of the rough edges sanded off.

The third major recommendation was to kill muni broadband systems, and give away muni fiber to incumbents so they wouldn’t suffer the horrible pain of competition. That would be difficult in California. The California constitution gives cities, particularly charter cities, a considerable degree of autonomy. Even though full service muni broadband systems are relatively rare here, they do exist. And the number of muni dark fiber systems is growing. Trying to claw back that authority would be difficult, legally and politically.

But that doesn’t mean they won’t try.

U.S. senate looks at stomping local wireless property rights and permits

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A draft bill bouncing around the U.S senate would preempt state and local ownership of public property when wireless companies want to use it, and would put tight limits on state and local authority to issue permits for wireless facilities on private property. It’s a bipartisan effort, led by senators John Thune (R – South Dakota) and Brian Schatz (D – Hawaii), both of whom are major congressional broadband policy players.

In a lot of ways, it resembles senate bill 649, which was approved by the California legislature this year then vetoed by governor Jerry Brown, who wanted a “more balanced solution”. This bill ain’t it. As drafted, the bill

  • Requires state and local government to make the public right of way, and poles and any “other facility owned by the state or local government” available “to support equipment for use by providers of wireless services”.
  • Says compensation for use of poles, right of way and other property must be “based on actual and direct costs”. Utility poles – as opposed to, say, street light poles – are exempted, in a double-reverse sort of way. Rates for attachments to utility poles are governed by existing state and federal laws, and are similarly restricted to actual costs. The formulas used to determine those rates will be the presumptive method for figuring out the actual and direct cost of attaching wireless transmitters and antennas to street lights and other publicly owned assets. In California, that rate is around $25 per year, give or take a few bucks, per foot of pole used. That’s even less than SB 649, which allowed actual cost plus $250 a year.
  • Creates a shot clock of 60 days to “act on” collocation permit applications and 90 days for any other request to “to place, construct, or modify wireless service facilities”. Current federal shot clock rules are more complicated, and range from 60 days to 150 days.
  • Provides that if the shot clock expires without a decision, the permit application would be automatically “deemed granted”. California already has a similar “deemed approved” law, that’s tied to the various 60 to 150 day shot clocks.
  • Extends all the related courtesies and privileges of telcos to cable companies, without any of the associated regulatory obligations.

So far, the bill hasn’t been formally introduced. That’s not such a big deal in the federal congress, where final bill language regarding any topic can materialise at the last moment and be tacked on to completely unrelated legislation. This draft reads like it was written by wireless and cable lobbyists, who wouldn’t be at all interested in giving it a fair and open hearing. As the year winds down, anything could happen.