More than 21 million Americans lack a broadband internet connection. Some large, for-profit communications companies claim part of the reason is fees charged by electric cooperatives to attach network infrastructure to power poles.
A new white paper by NRECA finds that is simply not the case. In fact, offers by co-ops to drop pole attachment fees in exchange for broadband access in their service territories have been ignored by internet providers.
Brian O’Hara, NRECA’s senior regulatory issues director, discussed the paper’s findings on pole attachment fees and how focusing on real issues can help bridge the digital divide.
What is the history of electric co-ops and communications equipment being attached to their poles?
O’Hara: Electric co-ops own and maintain a 2.6-million-mile distribution network of power poles, lines and rights of way to deliver safe, affordable and reliable electricity to even their most remote consumer-members. Co-ops have allowed communications companies to use their poles to carry infrastructure that provides cable television, telecommunications, internet access and other communications services to their communities. The co-ops see these services as essential to their consumer-members, like electricity.
In return, co-ops charge an annual cost-based pole attachment rental fee that helps them recover a small part of the significant expenditure to build and maintain their distribution network. These rental rates represent major savings to telecom companies compared to building and maintaining their own infrastructure.
This relationship co-ops have had with communications companies has been beneficial on both sides. But some telecoms are claiming co-op pole attachment fees are too high for them to deploy rural broadband.
This white paper found otherwise. Research shows telecoms actually save hundreds of thousands of dollars through co-ops’ pole attachment fees rather than building and maintaining their own poles.
Would it help get rural broadband built if co-ops reduced pole attachment rates to encourage internet providers to come into their service territories?
O’Hara: The short answer is no. We are not aware of a single report finding that pole attachment fees are an actual barrier to rural deployment. Pole attachment rental rates are de minimus in relation to the overall cost of deploying broadband.
The white paper explores where electric co-ops have offered free or reduced pole attachment rates to communications companies if they agree to serve their entire service territory. No telecommunications or cable provider has ever taken a cooperative up on such an offer.
In Virginia, state regulators weighed in on the negative side of co-ops’ reducing already low pole attachment fees. In arbitrating a pole attachment dispute between NOVEC [Northern Virginia Electric Cooperative] and Comcast, the State Corporation Commission found no credible link between lower pole attachment rates and increased rural broadband deployment. In fact, the state commission concluded that any reduction to pole attachment fees would likely require an increase in the co-op’s electric rates.
Finally, if pole attachment rates were the determining factor in rural deployment, as claimed by large telecom and cable companies, one would expect broadband to be much more readily available in rural areas served by investor-owned utilities, whose rates are subject to the Federal Communications Commission. Yet NRECA analysis confirmed previous government findings that broadband connectivity remains lacking in rural IOU service areas.
The argument by for-profit telecom and cable companies that pole attachment rates are a barrier to rural broadband deployment is a red herring.
If pole attachment rates charged by electric co-ops to for-profit internet providers are not hampering rural broadband, what is?
O’Hara: The primary barriers to rural broadband are low population density in rural areas and the large capital expenditures required to connect those areas. Low density means a broadband network often cannot pay for itself.
The return on investment required for large, for-profit providers to deploy to these high-cost and low-density areas is just not there. Their goal is to make money, to meet profit goals and Wall Street targets. The same economics are what kept large, for-profit utilities from electrifying rural America nearly 80 years ago.
Where there are few people per square mile, more poles and wires are required per customer. More poles and wires per customer mean higher per-customer network costs. That does not fit the for-profit business model. Reducing pole attachment rates or even erasing them will not resolve the low-density issue.
Is that why we are seeing more electric cooperatives entering the broadband space?
O’Hara: Many rural communities are losing population as employers move to more suburban areas where broadband is more readily available. Access to broadband is essential. Without broadband access, communities are denied opportunity for growth and other benefits, such as distance learning, telehealth, precision agriculture and job creation, which results from robust broadband service.
Cooperatives are committed to serve every member in their territory, regardless of how remote. They are built by and belong to their consumer-members and are very responsive to the specific needs of their community, and increasingly that includes broadband.
Where a for-profit company may have to see a positive return on their network investment in two or three years, co-ops can take a much longer-term view. Clearly, electric co-ops can be part of the solution to expand rural broadband.
If the answer to connecting rural America does not lie with low pole attachment rates, what can policymakers do to close the digital divide?
O’Hara: That is the million-dollar question. Or should I say the $80 billion question?
The FCC estimated a few years ago that it would cost $40 billion to expand internet access to cover 98% of Americans and another $40 billion to deliver broadband to the remaining 2% of the U.S. population.
Policymakers who want to bring broadband to every rural community should not focus on pole attachment rental rates. Their time and energy are best spent identifying the real need and solutions for rural broadband. The white paper offers three recommendations:
- Improve the accuracy and veracity of broadband data to better identify and understand service gaps.
- Prioritize broadband funding, especially government grants, for projects in areas with the lowest population densities, since that is the greatest barrier to deployment.
- Provide adequate funding to build broadband networks that will meet the growing speed and data needs, not today’s minimum definition of broadband.