Regulators Stifle Broadband Expansion With Exorbitant Pole Attachment Fees
As government officials discuss the affordability of broadband, some regulators are helping contribute to the problem by implementing sky-high pole attachment fees, the cost of which tend to be passed onto the end consumer.
What are pole attachment fees? When an internet provider wants to access a pole owned by someone else – such as AT&T wanting to put its equipment on a pole owned by the local power provider – it has to pay a fee to gain that access. This has been standard operating procedure for many years.
A recent piece in the New Yorker discussing how the Biden administration can expand rural broadband noted the woes of Slic Network Solutions, a small broadband provider in New York State. Two years ago, shortly after that company received a $32 million grant from the state to service 9,200 residences in Adirondack Pack and surrounding areas, the state changed a rule on usage of utility poles. Suddenly, Slic had to pay a contractor to survey the poles and then was forced to replace older ones at a cost of $6,000 to $18,000 a pole – even though the utility companies would continue to own them. On top of that, a new property tax was implemented, requiring Slic and other providers to pay property tax on every pole – again, poles they do not actually own.
That’s not all – New York state required Slic to pay taxes on the full $32 million award, not just its contribution to the project. Slic’s CEO, Bradley Pattelli, told the New Yorker that the company’s taxes tripled overnight and the cost of infrastructure development increased exponentially from about $4,000 per mile to more than $30,000.
“We’re scrambling right now to meet our obligations, to build the communities we said we would build,” Pattelli said. “We’re fighting this multifront war, just so we can find enough bandwidth in our day to actually do the job of delivering these networks to the people that need it.”
Compare the situation in New York to Georgia, where utility regulators limited how much electric cooperatives can charge providers to access their poles in areas unserved by broadband.
The Georgia Public Service Commission unanimously adopted a resolution in December to require cooperatives to charge telecom providers $1 per year over the next six years for new pole attachments to expand access to areas with no high-speed internet.
“With today’s vote, the Georgia PSC is giving broadband providers access to utility infrastructure at a cost of next-to-nothing in the locations where Georgia needs broadband the most,” said Dennis Chastain, president and CEO of Georgia EMC, a trade association for the cooperatives.
But even in the Peach State, regulators are still stymieing providers and blocking competition because pole attachment fees will increase in areas that already have service.
Providers will now pay $27.71 annually per pole for attachments in areas with existing service, up from an average of $20 per pole previously. It could have been worse, though. Commissioner Tim Echols initially proposed a fee of $34.72 per pole.
Regulators claim those costs are necessary to compensate the cooperatives for the maintenance of the poles, but the Georgia Cable Association said increasing the cost goes against the spirit of the bill passed in the Georgia Legislature charging the PSC with setting rates to boost rural broadband expansion.
“Failing to set reasonable pole attachment rates, terms and conditions will increase the overall cost of broadband deployment, and discourage tens of millions of dollars in private investment,” the written statement said. “That’s a disappointment for every Georgia community that needs access to broadband.”
During his presidential campaign, Joe Biden’s “Plan for Rural America” called for $20 billion to build rural broadband infrastructure, and a big boost to the funding that the U.S. Department of Agriculture supplies to various local governments and organizations through its Community Connect program.
Jeffrey Westling, resident fellow in technology and innovation at R Street Institute, told the Taxpayers Protection Alliance that providers have begun to call for cost-sharing when they must replace older poles to support the infrastructure they seek to deploy. The thought is that is fairer since the pole owner wholly benefits from the value of the improvements.
“As we consider subsidization programs, it is critical that regulatory barriers and excessive fees for things like pole attachments don’t add additional barriers,” he said. “Limiting these costs will minimize the need for subsidies and maximize the value of subsidies when they are required for a given community.”
Johnny Kampis is a senior fellow and investigative reporter for the Taxpayers Protection Alliance.