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FCC says small cells will close the digital divide. Most say they won't

When he was appointed chairman of the agency that oversees the nation’s powerful telecommunications companies last year, Ajit Pai made clear that his No. 1 priority is to bring fast internet service to Americans who don’t have it, to close the digital divide.

Pai says one of the keys to making that happen is giving wireless carriers an easier way to deploy so-called small cells, a central component of 5G, the next generation of wireless communication. The cells, which may number in the millions once fully deployed nationwide, are a collection of equipment that include antennas, meters, power boxes and cables that will be attached to streetlights and utility poles throughout neighborhoods and business districts. The small cells promise to make wireless connections faster and support future applications such as driverless cars.

To speed the network’s deployment, Pai says the Federal Communications Commission must pass rules that limit local regulation of small-cell permitting, design, fees and other charges used to access cities’ public rights of way — barriers, Pai says, that are impeding the build-out of the new technology and closing the digital divide.

“If we do our job — if we make the deployment of wireless infrastructure easier, consistent with the public interest — then we can help close the digital divide in this country. This is especially true for low-income and minority communities,” Pai said last year.

But not everyone is buying Pai’s argument. Many local officials, engineers and wireless consultants contend that the changes Pai advocates won’t do anything to close the digital divide. What they will do, these critics charge, is increase profits for the wireless industry, which wants to cash in on a 5G market that is estimated to grow to $250 billion in annual service revenue in seven years.

‘Deeply disingenuous’

At the center for the debate: rules the FCC is considering that would reduce the time cities and counties have to review applications for small cells. The commission is also giving thought to limiting local requirements on designs and capping how much localities can charge wireless carriers for use of public property, all discussed in two FCC dockets approved last year. Wireless companies argue local governments take too long to approve the cells and charge too much to use rights of way. Pai says pre-empting those rules would save carriers money, cash they could use to invest in expanding faster networks to areas with slow or no internet access.

But that’s not how it's playing out in Montgomery County, Maryland, say local officials. The county, just north of Washington, D.C., tracks where wireless carriers and cell-tower builders have proposed to erect small cells. Mobilitie LLC, which says it is the largest privately held wireless infrastructure provider in the United States, submitted to the county late last year an unofficial plan for small-cell sites that it has yet to pursue. Of Mobilitie’s 215 proposed small cells in the plan, only 11 are in areas with fewer than 1,000 people per square mile. More than 94 percent are proposed for areas with higher population densities.

“It is deeply disingenuous to suggest that the need to pre-empt urban areas’ ordinances is so we can bring broadband to rural areas where there is little service,” said Mitsuko Herrera, the county’s technology special projects director. “There is zero evidence to support that premise.”

Mobilitie has not proceeded with its plan because officials are waiting for Montgomery County to approve its new rules for small cells, which the county may vote on this spring. The plan could change.

Still, Mobilitie officials agree that small cells by themselves will not close the digital divide in rural areas. They said small cells may eventually be erected in rural downtowns but won’t be in less populated areas, where the digital divide is most pronounced.

“Small cells are a tool in the toolbox, but alone, are not going to solve the rural divide,” said Jason Caliento, senior vice president for network strategy for Mobilitie.

No wireless carrier has stated in their comments to the FCC that limiting local rules for small cells will result in closing the digital divide. One of the only groups supporting Pai’s agenda that has stated it will is the Competitive Carriers Association, which represents rural carriers.

But the digital divide is mostly a rural issue. Two-thirds of the 34 million people who don’t have access to high-speed internet in the nation live in rural areas, according to the FCC. The rest are in urban areas, where only 4 percent of people don’t have access to broadband.

Easing local rules over small cells is “a critical tool in closing the digital divide” together with other FCC programs such as providing subsidies to low-income families to purchase broadband and freeing up spectrum to provide more wireless capacity, Mark Wigfield, an FCC spokesman, said in an email. “The FCC is committed to finding consensus with state, local and Tribal government to achieve a goal we can all agree on: closing the digital divide.”

In January, Pai proposed an order that would, if passed, provide more than $500 million to small carriers to build out broadband in rural areas.

‘Calling foul’

The FCC’s claim doesn’t convince officials in Lincoln, Nebraska, which experienced the same reluctance as Montgomery County did by wireless companies willing to deploy small cells to rural areas, said David Young, manager of fiber infrastructure and rights of way for the city. In 2015, when Lincoln officials were negotiating with Verizon Communications Inc. over how much the city would charge the company to attach small cells to municipal property, the city said it would charge the carrier an annual $95 fee — if the carriers would commit to deploying broadband in rural areas in Nebraska. Over the next two years, Lincoln offered the same deal to other carriers and builders.

Young said the companies said they couldn’t commit to anything. So, Lincoln went ahead with an agreement that have the companies paying $1,995 a year to attach small cells to city poles, more than 20 times as much.

If Pai is serious about 5G closing the digital divide, Young said, “then I’ll make that deal: You cannot deploy any small cells in an urban environment until all the rural markets are covered. Until we can make that deal, I'm calling foul” on the assertion 5G will help close the digital divide.

Ken Schmidt, president of Steel in the Air Inc., which represents property owners and cities in negotiations over cell-tower lease fees with telecommunications companies, said wireless carriers want to receive lower annual charges for attachments to public property similar to what utilities receive but without the obligation to provide universal service that cities typically require of utilities.

If wireless carriers want low fees like utilities receive, “then great, act like a utility, and build out to the poor areas, provide subsidized coverage to poor constituents,” Schmidt said.

Last month, San Jose, California, Mayor Sam Liccardo, a Democrat, resigned from an advisory committee that Pai set up last year to develop model codes that state and local governments can adopt to speed the permitting of small cells and reduce costs to telecoms. Drafts of recommendations, which may be submitted to the FCC by the spring, run the gamut, from calling on cities and the wireless industry to work together to controversial recommendations such as capping what cities charge to attach to public property.

Liccardo said he resigned because the committee, whose representatives mostly come from the wireless industry, “has sought to create a set of rules that will provide it with easy access to publicly-funded infrastructure at taxpayer-subsidized rates, without any obligation to provide broadband access to underserved residents.”

Pai said in a statement that the committee has “brought together 101 participants from a range of perspectives” and he looks forward to working with the committee and others “to remove regulatory barriers to broadband deployment and to extend digital opportunity to all Americans.”

It’s unlikely wireless carriers will deploy small cells to rural areas where internet access is slow or non-existent because the costs are too high and the projected returns too low, according to a report released last year by Vantage Point Solutions, a broadband engineering and consulting firm. The high frequencies small cells use don’t travel far, meaning they must be placed close together. But that makes them ineffective in covering large expanses in rural areas, the report concluded. Small cells need to be placed 500 to 600 feet apart on average to make the network work.

“The digital divide is most common in rural America, and there it requires the most effort to overcome,” according to the report. “It becomes clear that 5G wireless will not be viable [there] on a widespread basis.”

Rural areas will eventually get some form of 5G technology, but likely much later because wireless companies are focusing on cities that can yield a quicker return, said Jonathan Adelstein, president of the Wireless Infrastructure Association, whose members include AT&T, Verizon and Crown Castle International Corp., which is among the largest tower operators nationwide. Rural areas will eventually get 5G using lower band signals that are being used now, he said.

But that will mean an inferior wireless network for rural areas, said Vantage Point CEO Larry Thompson, co-author of the company’s report. 5G communications in rural areas will be “noticeably” slower and not have the capacity that urban areas will have, said Thompson, who sits on the FCC committee that Liccardo resigned from last month.

That leaves local officials such as Young in Lincoln stymied as how to convince the wireless carriers to bring robust 5G service to rural areas.

“I do understand the carriers' frustration with cities that don’t want this — I get it, I do,” Young said. “But they are also not proposing to build to rural America, not proposing to close the digital divide with this technology. So that's frustrating too.”

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