State small cell laws put cities on fast track

by Martha DeGrasse

The small cell agreements that AT&T and Verizon are executing with the City of San Jose will cost each carrier millions of dollars, but the carriers will end up paying less than they would have under their previous agreements with the city.

 

The new agreements, made public last week by FCC Commissioner Jessica Rosenworcel, consolidate permitting fees instead of requiring one-off payments for each site. 

 

AT&T, for example, is expected to deploy 170 new sites, and will make staggered payments to cover permitting fees and completion fees, starting with an initial $850,000 payment due 30 days after the full execution and delivery of the agreement. Within 45 days of the effective date of the agreement, the company will owe another $250,000. Once 85 permits have been issued, AT&T will owe another $250,000 within 30 days. Once 125 permits have been issued, AT&T will owe another $250,000 within 30 days.  The carrier will pay another $250,000 when all 170 permits have been issued. In total, AT&T will have paid $1.85 million.

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In addition, AT&T will pay usage fees for access to the city-owned street lights that will support the small cells. AT&T is agreeing to pay 

$1,500 per year per site for 170 sites for 5 years. Then the usage fee will increase 3% per year. This is a significant decrease from San Jose's previous usage fees for small cells, which were as high as $17,000 per site in some areas.

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Verizon is apparently set to pay the same usage fees, but its permitting payments will be slightly lower as its agreement covers just 140 small cell sites. The agreement calls for Verizon to initially deposit $700,000 with the city, with a pledge to replenish that fund if it falls to 20% of its initial value. The remainder of Verizon's permitting and completion fee agreement is similar to AT&T's: $250,000 due within 45 days of the effective date of the agreement, $250,000 due within 30 days of the issuance of 85 permits, $250,000 due within 30 days of the issuance of 125 permits, and a final $250,000 due within 30 of the issuance of all 140 permits. The total will be $1.7 million.

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The agreements do not release the companies from the responsibility of applying for necessary city permits for each site, nor do they cover usage fees for the individual sites.

 

next after 85 permits, next after 125 payments, final payment after all 170.set to make an initial payment of give the carriers better terms than they had previously in San Jose, but are still too expensive to scale in other communities, according to the carriers. The agreements limit cell sites to four antennas, 360 watts of output, and 125 cubic feet in size. 

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The city has the right to require the copanies to move the cell sites, with 180 days notice.

Companies commit to avoid all interference with public safety transmissios.

first agreement was September 9, 2016

One of the carriers, which has been working with San Jose since 2016, has an agreement to pay $1,500 per year per site for 170 sites for 5 years. Then it will increase 3% per year

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Usage fees and permitting fees

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San Jose is shifting to hybrid model -- tipping point

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Usage fee: $1,500 per year per site for 170 sites for 5 years. Permitting fees will be paid through a fund the company deposits with the city so that the city can bill work against it. Initial deposit of $850,000 followed by staggered payments of $250,000 each. First payment 45 days after effective date of agreement, next after 85 permits, next after 125 payments, final payment after all 170.

City will bill its costs against this account and will bill any consultant fees at cost with no markup. Any funds not used by the city for work associated with the agreement shall be refunded to the company

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City promised not to adopt more favorable rates for any other company.

City or company may terminate after 85 small cell locations are issued by providing 20 days written notice. 

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The lease rate used to be muh higher - as much as $17,000 per site

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At the old rates the city was not able to generate private investment or recognize any revenue from small cell leases. Now it expects, at peak 3,000,000 to 7,500,000 per year

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95,000 San Jose residents have no broadband access

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The City's current non-exclusive installation and property use agreement for small cells was adopted in 2015.

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The agreement calls for small cells in underserved communities and potential use of general fund small cell lease revenue to support digital inclusion.

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Any ANTENNA FACILITY installed and operated in any LICENSED AREA licensed to COMPANY pursuant to this MASTER AGREEMENT shall be in an aesthetic design as approved by the CITY.

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COMPANY shall have the right to terminate any SLA upon ninety (90) days’ prior written notice to CITY.

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After two years of negotiations, AT&T reached an agreement with San Jose that would allow it to deploy about 2,000 small cells at rates and on timelines substantially better than previous city requirements, but still at rates and on terms that cannot be economically exported to other cities and towns throughout the country. For example, AT&T has proposed cost-based recurring fees to place small cells on city structures at less than $50. The rate structure in the San Jose agreement runs up to $2,500 per site. If conservative industry projections accurately estimate small cell deployments at 800,000 by 2026, San Jose’s rate structure when applied to cities nationwide would cost approximately $2 billion incrementally, leading by necessity to less expansive small cell deployment in communities across the nation

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There is another agreement for 140 small cells. Again permitting fee payment in lieu of individual permits. It is $700,000 and when the fund is down to 20% of that the city can ask the co. for more.

 

Additional Payments. COMPANY shall make additional payments to CITY in an amount not to exceed One Million and No/100 Dollars ($1,000,000.00) (“SMALL CELL SCOPE Completion Fee Payment”) as set forth below: (a) within forty five (45) days of the EFFECTIVE DATE, an amount of $250,000.00; (b) within thirty (30) days after issuance of a total of 85 permits, an additional $250,000.00, (c) within thirty (30) days after issuance of a total 125 permits, an additional, $250,000.00, and (d) within thirty (30) days after the issuance of all remaining permits in the DOCUMENT F RD:EK 6/13/2018 3 T-31995.001/ 1532326 Council Agenda: 6/26/18 Item No.: 3.3b DRAFT—Contact the Office of the City Clerk at (408) 535-1260 or CityClerk@sanjoseca.gov for final document. SMALL CELL SCOPE in excess of the 125 permits, an additional $250,000.00 payment.

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In accordance with CITY’s small cell guidelines, where COMPANY is required to replace an existing CITY streetlight pole because such streetlight pole is structurally insufficient for the installation of small cell equipment, COMPANY must also install an LED luminaire and complete electrical remediation, pursuant to CITY specifications for LED luminaires and any applicable electrical requirements, if an LED luminaire was not previously installed on that streetlight pole.

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Either COMPANY or CITY may terminate this AGREEMENT after 70 SLAs and permits are issued by delivering to the other party twenty (20) calendar days’ advance written notice of election to terminate. COMPANY’s obligations to reimburse CITY for any outstanding amounts due, however, shall survive, and remain enforceable after, the termination or expiration of this AGREEMENT. In the event of termination or expiration of this AGREEMENT, CITY shall refund to COMPANY a pro rata portion of the Permitting Fee Payment pursuant to Section 1.5 (Refunds) above.

the first agreement was dated September 27, 2016; this was for 140 small cells but no small eells have been permitted. This agreement references street light poles

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The city is hiring three new people, two in the public works dept and one in the Department of Transportation

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