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San Jose-AT&T Small Cell Pact Important to Closing City's Digital Divide

San Jose's recent agreement with AT&T on small cell deployments could bridge the city's digital divide and enhance the provider's FirstNet rollout, while serving as a signpost for other municipalities.

San Jose, Calif.'s recent pact with AT&T to deploy small cells to upgrade its broadband connectivity is meant to lay the foundation for 5G as well as the forthcoming public safety network FirstNet. But the city also thinks it could serve as a landmark for other municipalities weighing similar decisions.

The five-year agreement, which AT&T can extend for two additional periods of five years at applicable rates, was announced by San Jose on April 23. It will allow AT&T to install roughly 170 small cells around the city to supplant and improve upon coverage from its existing “macrocell” sites.

This will yield improvements in existing LTE coverage “over which 70 percent to 80 percent of Internet of Things data traffic will occur,” officials said in an April 19 memorandum to the City Council.

It will also help bridge a digital divide; that is, the city has 95,000 residents without broadband or Internet access, according to Chief Innovation Officer Shireen Santosham, one of Government Technology's Top 25 Doers, Dreamers & Drivers of 2018. Many of them are low-income.

AT&T will pay about $5 million in lease revenue over the contract’s maximum 15-year life plus $850,000 in up-front permitting revenue — aimed at increasing the speed of small cell permitting. The company will pay an additional $1 million targeting “organizational, process and technology improvements” at the city, according to the memorandum.

The connectivity enabled by small cells is key to supporting the city's quality of living, to realizing its Smart City Vision and to maintaining its brand image as the “Capital of Silicon Valley,” officials said in the memo. And while scrutinizing the city’s Broadband and Digital Inclusion Strategy over the past two years or so, officials discovered San Jose had “only about 3 percent high-quality fiber in the ground,” Santosham said.

The agreement is the result of negotiations that identified shared goals including economic development, equitable deployment and digital inclusion. What makes it unique, from San Jose’s perspective, is that part of AT&T’s investment will be dedicated to improving the city’s capacity to manage broadband and speed deployments, Santosham said. And remaining monies from the provider’s investment will go into a digital inclusion fund still being organized.

“We fundamentally believe there’s common ground to be had here. And these kinds of agreements, I think, can show other cities and the industry where that common ground is. We want broadband investment in our cities and we need the companies to bring the capital and expertise to do that. There really shouldn’t be as much contention as there has been,” Santosham said.

Jason Porter, vice president, technology planning at AT&T, said the agreement brings a lot of benefits to his company as well, as it enables its rising need “to be able to connect things at higher speed and lower latency, to be able to deliver the services that our customers are trying to deliver.”

“With the move to 5G, as we deploy more and more 5G edge capabilities, we’re able to reduce the latency significantly, which unlocks entirely new use cases that we’re very excited about. We also, with our FirstNet offering, we’ve got a huge need and desire as a company to provide the best service we can for our first responders,” Porter said.

AT&T is the service provider for the First Responder Network Authority of the United States, otherwise known as FirstNet, which 56 states and territories joined late last year. The company offered priority service and pre-emption capabilities ahead of a controlled core network introduction that began on March 27.

“We have an obligation as a company, it may not be contractual, but we feel this motivation to provide the best services for our first responders. We likely have a need or an opportunity that we can pair nicely with that city’s need and it can likely lift all those boats,” Porter said.

Eric McHenry, Santa Rosa's chief information officer, said the city council will hold a study session June 5 on small cells. The municipality has what he described as “fundamentally” poor cellphone coverage across all carriers, a condition highlighted by last year’s historic Tubbs Fire — one of a series of North Bay blazes — which burned nearly 37,000 acres and consumed more than 5,500 buildings. Santa Rosa was the worst hit by that fire.

“It’s been in the news quite a bit recently that a lot of people wanted to get alerted by their cellphones but they couldn’t get coverage. Couple that with FirstNet and Verizon’s public cloud, we really want to get small cells in our city also,” McHenry said.

Verizon began installations and permit applications about six months ago for around 70 small cells in Santa Rosa, with around 40 on Pacific Gas & Electric poles and around 30 on city light standards. But after hearing from residents concerned about the devices’ aesthetics, and from activists worried about radiofrequency radiation, the city in March paused approval of installations on poles it owns. RF radiation is already regulated by the Federal Communications Commission.

McHenry said San Jose’s agreement with AT&T appears to have yielded favorable results for the city — and will likely be part of the Santa Rosa City Council’s discussion — but he pointed out that the market is different in San Jose, where the number of people utilizing each small cell would likely be lower, resulting in lower pole attachment fees for the agency. Santa Rosa, he said, has also set a precedent in existing contracts with Verizon and provider Mobilitie, which is seeking to add around 50 small cells on city standards.

Given its current coverage, digital equity is “not as much front of mind up here,” McHenry said. “I think fundamentally for me, my concern is, I want to get better cellphone coverage in Santa Rosa.”

Theo Douglas is news editor for Government Technology. He was previously assistant managing editor for Industry Insider — California. His reporting experience includes covering municipal, county and state governments, business and breaking news.