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San José Paves New Path to 5G With the Wireless Industry

San José, California earlier this week became the first U.S. city to earmark broadband infrastructure lease revenues for digital inclusion projects.

Part of an agreement with AT&T to deploy 170 small cells on streetlight poles, the Digital Inclusion Fund will receive an estimated $5 million during the maximum 15-year contract lifespan.

The funds will be spent streamlining San José staff’s “permitting, inspections, and oversight of broadband deployment,” according to a memo authored by Mayor Sam Liccardo and three other council members. Money will also be dedicated to closing the “digital divide” for low-income residents by building additional networks, providing devices and holding coding camps.

“We hope this is a model we will see in other cities in the future because it works well for both sides,” Shireen Santosham, San José chief innovation officer, told Route Fiftyby phone. “We fundamentally believe that there’s common ground here, and we can get to good deals for both sides without circumventing local authority.”

“One of the criticisms offered by the industry is that cities are essentially extracting bounties from the companies and using the funds for any purpose other than the business of broadband.”

In October, California Gov. Jerry Brown vetoed a bill, backed by the wireless industry, that would have capped how much cities could charge cellphone companies for right-of-way leases at $250 per pole a year. San José negotiated the rate at $1,500 per pole, substantially more than Sacramento’s $200-per-pole deal with Verizon to bring fifth-generation wireless infrastructure to town.

While 5G isn’t yet a reality, San José fully expects AT&T and other providers to be piloting the technology in the city by year’s end, Santosham said.

The wireless industry’s efforts to bypass burdensome local permitting requirements at the state and Federal Communication Commission levels are prompting cities to cut their own deals, Liccardo going so far as to resign from the agency’s Broadband Deployment Advisory Committee.

“What we did with this deal is consistent with our messaging all along,” Santosham said.

Rather than San José subsidizing a wireless buildout, California’s third-largest city secured $850,000 in up-front permitting revenue from AT&T for public works staffing and an additional $1 million to improve its process. In return, San José gets better wireless coverage and quality for startups, other businesses and residents on the same network FirstNet emergency responder communications with operate until new spectrum is made available.

Last year, the city commissioned a study with Stanford University that found 45 percent of low-income families, making less than $35,000 a year, lacked home broadband access, despite 70 percent of public school teachers requiring homework be done online.

While more small cells will be deployed in high-density areas to start, Santosham said, “there will be small cells in every district across the city.”

San José will work to fill gaps across carriers in subsequent “waves,” she added.

City Council voted 9 to 1 with 1 outstanding Tuesday to approve the AT&T contract, with the caveat from council member Dev Davis that the company be asked to convert remaining sodium lights to LEDs where they install small cells. Liccardo was adamant the deal move forward should AT&T decline, and the ask would be included in future negotiations.

Council member Donald Rocha, the lone no vote, opposed earmarking funds outside the budget process for digital inclusion over more pressing issues like public safety, homeless services and housing.

“We’re talking about all of these dollars going into one fund for digital inclusion—no discussion around partial, matching, leveraging,” Rocha said. “We’re just going to put them all here because kids gotta do their homework, and that’s the end of the conversation. I can’t support this.”

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