American Cities Are Fighting Big Business Over Wireless Internet, and They’re Losing
(Bloomberg) -- Big business is quietly trouncing cities in the fight over the future of the internet. The results of an obscure, bureaucratic battle inside the U.S. communications regulator could decide not only which Americans get ultra-fast internet but how much it’ll cost and even what city streetlights will look like.
On Wednesday, a committee created by the Federal Communications Commission will meet to frame the future of 5G, a technology that will make downloads dramatically faster on phones and perhaps replace home broadband for some. The group, with representatives of the business world outnumbering government officials four-to-one, may push for a vote on guidelines that have been under debate for more than a year.
It will be the first summit since Shireen Santosham and her boss quit in dismay. The city of San Jose, where Santosham works as chief innovation officer, resigned in late January from the wonky-sounding board, called the Broadband Deployment Advisory Committee. New York City later followed. The process came to embody a nationwide effort by telecommunications companies, like AT&T Inc. and Sprint Corp., to establish business-friendly rules for their industry, Santosham and other city officials allege.
The FCC, with guidance from the committee, could make rules that will influence how 5G mobile internet is priced, how quickly it spreads around the country and whether local governments must subsidize the cost. The 5G system is meant to replace today’s mobile wireless technology, making it easier to stream high-definition video anywhere and enable new kinds of apps. The cellular networks will use frequencies that carry a lot of information but don’t travel very far. That means antennas need to be close together and will number in the hundreds of thousands, perhaps millions. They’ll be closer to shops and homes than today’s arrays atop cell towers.
The influence of Big Telecom inside the FCC has already spread into state capitols. More than a dozen states, mostly in Republican strongholds, have passed laws borrowing similar language from the 5G committee. U.S. lawmakers are drafting legislation along similar lines. “This is the biggest movement in broadband that we’ve seen in recent history,” Santosham said.
Santosham, a former McKinsey consultant, has been one of the most vocal agitators against the country’s telecom giants over the past year. Her office led committee work on behalf of San Jose Mayor Sam Liccardo, a Democrat selected to join a year ago. She served as his official proxy. The initiative was billed as a way to bring cities, states, companies and interest groups together to devise guidelines for updating telecom infrastructure, a move that paves the way for self-driving cars and a world where every device connects to the internet.
An hour before the FCC introduced the group to the public in April 2017, Santosham said she learned San Jose would be the only city represented. Eventually, the agency added officials from Lincoln, Nebraska, and Lenexa, Kansas, but they have always been outnumbered by corporate suits.
Elizabeth Bowles, president of an internet provider in rural areas of Central Arkansas, was appointed chairman in July after the resignation of her predecessor, another telecom executive who was later arrested on an unrelated fraud charge. A few months into Bowles’s tenure, the group was deadlocked on most major issues. Cities and corporate representatives couldn’t agree on prices for installing 5G beacons on government property such as streetlights. An even bigger point of contention: Companies and the FCC have expressed desire for “shot clocks,” a basketball metaphor that would automatically give carriers permission to install beacons if negotiations with cities aren’t resolved in a timely manner.
“The problem with the debate is everyone is entrenched into their sides,” Bowles said. “Every single member of the committee will have something in those documents that they don’t like. That’s what a compromise is. If AT&T is thrilled with it, then we didn’t do our job.”
Too often, officials say, AT&T got its way. As committee members were returning from New Year’s festivities, they got an email from Douglas Dimitroff, a telecom attorney and chairman of one of the group’s city-focused subcommittees. “We have made substantial changes to the last version,” he wrote in an email obtained by Bloomberg through a public records request. Then he thanked Chris Nurse, a senior executive at AT&T who proposed hundreds of revisions, according to a copy of the draft.
Santosham protested. Sam Cooper, a senior technology adviser to New York City Mayor Bill de Blasio, wrote: “Shotclocks. Object.” Even a telecom consultant said the revisions were unfair, tilted in favor of wireless companies like AT&T at the expense of cable providers like Comcast Corp. “AT&T has generally driven the bus,” said Angela Stacy, a committee member who’s vice president at a software company for cities called Connected Nation Exchange.
“The criticism speaks for itself — it’s baseless,” Republican FCC Chairman Ajit Pai said Wednesday in an interview. “I’m not going any further.” FCC Commissioner Michael O’Rielly has accused some officials of trying to “impose their will or extract bounties from providers” and suggested San Jose was seeking “high rents and fees.” AT&T said in an emailed statement that the city-focused working group had unanimously consented to a plan that will be presented to the full committee on Wednesday.
But that group now excludes San Jose and New York. Amid the fracas, Santosham asked San Jose’s mayor to write a letter to the FCC. Together, they attended the committee hearing in late January, and he resigned soon after. A cadre of state officials voiced their opposition to the process in a letter on April 6. “The ideas being generated are overwhelmingly lopsided” and create a “windfall for companies,” wrote John Betkoski, president of NARUC, a national association representing state commissions.
New York withdrew this month and embraced a popular conservative talking point to convey their frustrations: federalism. “It’s really the whole package of trying to preempt local governments from managing public-owned lands,” said Cooper, the adviser to New York’s Democratic mayor. “We couldn’t say in good conscience that these recommendations would be good for cities or localities to adopt.”
Committee work was unglamorous, but Santosham said it could be stimulating. Members would talk on the phone for hours at a time and exchange emails, debating the anodyne decisions that make up much of local telecom regulation. The relationship was usually friendly, Santosham said.
But as corporate interests took over, officials who stuck around could be seen as endorsing the results. Cities can have more sway over technology deployment than many people realize. For instance, they pushed carriers to offer access to fast internet in low-income neighborhoods, said Gerard Lederer, a lobbyist on behalf of cities. “The reason that the vast majority of Americans today have access to high-speed broadband is not because of FCC policies and not because of things at the state level. It’s because of local governments,” he said.
Withdrawing from the process, however, means ceding some of the most influential internet policy work in years. The results will likely serve as something the FCC will “refer to as they make decisions for the next year, five years, ten years,” said Brent Skorup, a member of free-market think-tank The Mercatus Center who sits on the committee.
At Wednesday’s meeting, the committee is expected to discuss proposals for city and state code, including shot clocks. There remain fundamental disagreements, which may take time to reconcile, said Bowles, the chairman. The committee will meet again in July. Bowles dismissed concerns over departures. “I don’t have a whole lot of sympathy with the fact that you’re outnumbered, you should take your ball and go home,” she said.
For San Jose, the march toward 5G continues without the FCC. On Monday, the city struck an agreement with AT&T to install about 200 small-cell devices for 5G on light poles in exchange for $5 million in lease revenue over 15 years. Perhaps the worst part of the whole process, said San Jose Mayor Liccardo, is that most Americans aren’t paying attention: “When you’re talking about complex issues of technology and regulation, it’s often lost on the public just how badly they’re being screwed.”
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