Municipalities Take Notice: Verizon, AT&T withdraw from smart city efforts
Verizon and AT&T no longer have high-profile executives dedicated to smart city operations. And both have largely folded their smart city efforts into other business units.
Specifically, Verizon's VP of Smart Communities, Mrinalini (Lani) Ingram, left the company in September, and Verizon's smart city efforts have been moved under Maggie Hallbach, head of Verizon's Public Sector State Local and Education business. Similarly, AT&T's Mike Zeto, founder and general manager of AT&T's Smart Cities and emerging IoT solutions unit, recently left the operator to take a job at Boingo. AT&T said his duties will fall under the purview of Chris Penrose, the longtime chief of AT&T's IoT business and Zeto's former boss.
To be clear, both operators – using almost the exact same language – stated that smart cities will "continue to be a key focus area."
So why are AT&T and Verizon retreating from smart cities? It's because they're both already getting access to city infrastructure for small cells thanks to new FCC rules that went into effect last year. The rules require cities to move quickly on small cell installation requests, and prevent them from charging "excessive" fees for small cell installations. Just last month, a group of cities banded together to sue the FCC over the rules.
Nevertheless, as a result of the rules, Verizon and AT&T no longer need to ink smart city partnerships in order to get access to city-owned street lights and other infrastructure to house their small cells for 4G and 5G. Instead, they can simply leverage the FCC's new rules to quickly install the small cells they need, and they don't need to engage in any smart city agreements to do so.
Basically, they don't need to buy the cow anymore, because the milk is free.
"Carriers are not charities," explained longtime wireless industry analyst Roger Entner, founder of Recon Analytics. "Money never flowed from the city to the carrier" under any smart city agreements.
Instead, he explained, the operators' smart city efforts were mainly designed to provide services like connected streetlights or free public Wi-Fi in return for access to city infrastructure for small cells.
Indeed, that's exactly the kind of agreement AT&T and Verizon inked with San Jose, California, prior to the implementation of the FCC's small cell rules.
Since the FCC's small cell rules came out, neither AT&T nor Verizon has made much noise about smart cities. Instead, the carriers and their vendors have begun suing some cities they believe are not moving fast enough to implement the FCC's new small cell deployment guidelines. Small cells are critical to most operators' long-term 5G and network densification plans.
Entner pointed out that the whole smart city situation boils down to local politics. "I want to have a dumb working city first before a smart working city, as a citizen," he said, explaining that most cities are struggling with basic issues like filling potholes and repairing aging bridges and don't have any extra money to finance fancy smart-city installations like water monitoring services or traffic management systems.
"If the citizens want to have a smart city, they should vote for a tax increase" to pay for it, Entner said.
And considering American voters often reject spending proposals for schools, parks and roadways, there's little chance they'll approve a proposal that would divert taxpayer money to a smart city offering from AT&T or Verizon.