Lingering Utility Pole Issues Could Raise Costs and Delay BEAD Buildout
Key Takeaways
- BEAD-funded broadband projects will touch an estimated 3,954,030 utility-owned poles across 2,053 electric utility service territories, based on 188,287 planned aerial fiber route-miles.
- About 40% of all BEAD aerial fiber will be deployed across electric cooperative territories, which are disproportionately represented relative to cooperatives’ share of electric customers (13%).
- Pole attachment regulation is scattershot. The FCC has jurisdiction over poles owned by investor-owned electric utilities (IOUs) in 27 states; in the other 23 states, IOU poles are regulated by state public utility commissions. Regulation of poles owned by electric cooperatives and municipal electric utilities differs across all 50 states – some leave these entities entirely unregulated; some regulate one but not the other; and some regulate both.
- Pole-related costs could range from $534M to $4.63B nationwide, depending on make-ready charges and pole replacement rates. Even our base scenario estimates $1.25B in total pole-related costs. Costs that are unexpectedly high could strain deployment budgets, slow deployment, lead to defaults, and deprive communities of broadband.
- Unresolved electric utility pole issues have long impacted broadband deployment. NTIA has sought to address the regulatory patchwork in the BEAD context by extending the reach of the FCC’s rules. The FCC has signaled a willingness to act more quickly in resolving pole disputes. However, it remains to be seen if these approaches will translate to more streamlined and cost-effective access to utility poles, especially given ongoing quarrels involving utilities already subject to the FCC’s rules.
This post summarizes our BEAD Pole Analysis report, which includes state-by-state breakdowns, top utility tables, assumption evidence, and a detailed methodology.
Overview
The BEAD program will fund construction of broadband infrastructure to nearly 4 million unserved and underserved locations across the United States. A significant portion of this build-out will use aerial fiber, which requires attachment to utility poles. Planned aerial deployment totals about 188,287 route-miles, or 41.8% of total BEAD fiber miles.
Utility poles are plentiful. By some estimates there are some 180 million poles across the country. Leveraging poles to deploy fiber is cost-effective – the Fiber Broadband Association estimates that aerial deployments cost half as much as burying fiber – and can speed network construction. However, negotiating access to poles can be fraught as ISPs must navigate a patchwork of regulated and unregulated electric utilities of varying sizes and sophistication. These interactions can quickly become adversarial, delaying projects and raising costs.
This analysis overlays 3,855,167 BEAD-funded locations across 6,265 projects against 2,053 electric utility service territory boundaries to investigate how BEAD deployments will span utility service territories. We focus on electric utility-owned poles, which comprise the vast majority of poles across the country – upwards of 70% according to recent estimates – and because many pole-related disputes between parties involve electric utilities.
We then apply planning assumptions to estimate utility-pole touches and related costs. Our goal is not to duplicate subgrantee cost estimates, which formed the basis for their BEAD applications. Indeed, applicants should have planned for reasonable pole-related costs. However, in practice, recent history is replete with examples of ISPs encountering higher-than-expected pole costs, including instances where pole owners have attempted to unlawfully shift the cost of curing pre-existing violations to new attachers. These actions can cause significant delays and have even made broadband projects uneconomic despite significant grant dollars.
Given these stakes, we present a spread of potential pole-related costs to offer insight into how higher-than-expected pole costs could impact BEAD, and why policy interventions are needed to mitigate project delays or defaults.
BEAD Aerial Miles by Utility Ownership Type
The following table is based on the latest available compiled state BEAD Final Proposal data, which includes a mix of draft, submitted, and approved final proposals from state broadband offices.
| Ownership Type | Aerial Fiber Miles In Territory | Total Fiber Miles In Territory | % of Aerial Fiber Miles | BEAD Funding | Locations |
|---|---|---|---|---|---|
| INVESTOR OWNED | 83,962 | 179,784 | 44.6% | $6,469M | 1,307,737 |
| COOPERATIVE | 76,036 | 192,817 | 40.4% | $8,313M | 1,645,905 |
| NOT AVAILABLE | 16,616 | 53,886 | 8.8% | $2,396M | 458,038 |
| POLITICAL SUBDIVISION | 6,130 | 10,522 | 3.3% | $685M | 145,419 |
| MUNICIPAL | 4,460 | 9,989 | 2.4% | $370M | 92,450 |
| FEDERAL | 585 | 1,003 | 0.3% | $78M | 24,568 |
| STATE | 253 | 1,000 | 0.1% | $341M | 53,261 |
| MUNICIPAL MKTG AUTHORITY | 127 | 792 | 0.1% | $13M | 2,310 |
| COMMUNITY CHOICE AGGREGATOR | 117 | 257 | 0.1% | $29M | 10,457 |
| WHOLESALE POWER MARKETER | 0 | 618 | 0.0% | $10M | 2,827 |
| Total | 188,287 | 450,668 | 100.0% | $18,704M | 3,742,972 |
Most notably, a disproportionately large share of BEAD deployments will take place across electric cooperatives’ service territories, as compared to their share of total utility customers. In other words, about 40% of all aerial BEAD fiber deployment may involve poles owned by cooperatives, who, collectively, serve 13% of all electric customers in the U.S.
Why Utility Ownership Type Matters: FCC oversight extends only to private investor-owned electric utilities (IOUs) in 27 states; public utility commissions in the other 23 states regulate IOU poles. Municipal electric utilities and electric cooperatives are exempt from FCC oversight, and many states do not regulate these entities.
Under this framework, FCC oversight would extend to about 10% of the utility poles that BEAD will touch.
| Total Utility Poles Touched | FCC Regulated Utility Poles Touched | % of Utility Poles Regulated by FCC |
|---|---|---|
| 3,954,030 | 411,384 | 10.4% |
BEAD will touch millions of poles that are not regulated by the FCC, where there are fewer guardrails in place to provide predictability and consistency in how pole-related costs are set. For example, one study found that the attachment rates for pole owners subject to regulation (IOUs and private companies) were significantly lower than those exempt from regulation, such as municipalities, cooperatives, and public utilities. BEAD recipients may encounter higher-than-expected pole fees from these entities, which could drive up costs and trigger delays or defaults.
To address this patchwork, NTIA requires that “poles owned within the [state’s] jurisdiction that are not currently subject to state or FCC pole attachment regulation will be governed by FCC rules through the federal interest period.” Its stated goal is to “reduce the regulatory burden on BEAD participants.” How these rules are applied and enforced, though, remains to be seen. Cooperative advocates have expressed their displeasure at this federal encroachment into the state-by-state regulatory approach that has evolved for these entities over the last few decades. Moreover, recent disputes involving ISPs and electric utilities underscore the myriad possibilities for the latter to attempt to circumvent seemingly clear rules governing pole access. It is notable that some of these parties are back before the FCC with new complaints about pole practices (see below for further discussion).
Given this continued uncertainty, even after commendable steps taken by the FCC and NTIA to address these barriers, it remains likely that ISPs will encounter unexpectedly high pole-related costs in some instances.
Pole Touches and Cost Exposure
The following section uses planning assumptions to estimate utility-owned poles touched and cost exposure from BEAD aerial route-miles. These are intended to illustrate the magnitude of potential costs and are not exact engineering estimates. The “low” and “high” scenarios represent the cumulative result of picking all low and high assumptions, respectively, and are intended to act as lower and upper bounds.
Assumptions
- Poles per mile: 30 (about one pole every 176 feet)
- Utility pole ownership share: 70%
- Cost per touched pole: $75 (low) / $175 (base) / $450 (high)
- Replacement rate: 3% (low) / 4% (base) / 8% (high)
- Replacement cost per replaced pole: $2,000 (low) / $3,500 (base) / $9,000 (high)
Estimated Poles Touched
| Total Poles Touched | Utility Ownership Share | Utility Poles Touched |
|---|---|---|
| 5,648,614 | 70.0% | 3,954,030 |
Estimated Cost per Touched Pole
The cost-per-touched-pole captures non-replacement costs, including make-ready, attachment, and other associated charges. Replacement costs are estimated separately below.
| Scenario | Utility Poles Touched | Cost per Touched Pole | Cost Component |
|---|---|---|---|
| LOW | 3,954,030 | $75 | $296.6M |
| BASE | 3,954,030 | $175 | $692.0M |
| HIGH | 3,954,030 | $450 | $1,779.3M |
Estimated Replacement Costs
Replacement costs are a function of both the average replacement rate (what share of poles must be replaced) and the average replacement cost.
| Scenario | Utility Poles Touched | Replacement Rate | Replacement Cost per Pole | Replacement Poles | Cost Component |
|---|---|---|---|---|---|
| LOW | 3,954,030 | 3.0% | $2,000 | 118,621 | $237.2M |
| BASE | 3,954,030 | 4.0% | $3,500 | 158,161 | $553.6M |
| HIGH | 3,954,030 | 8.0% | $9,000 | 316,322 | $2,846.9M |
Methodology
Methodological details and sources for our model estimates are available in the full report.
Takeaways & Recommendations
From a policy perspective, utility poles remain an area that is long overdue for reform. Continuing forward with the status quo may delay BEAD projects and could result in project defaults if ISPs encounter substantially higher-than-expected costs.
How could this happen? BEAD subgrantees were required to estimate, to the best of their ability, pole-related costs in their applications. Those estimates informed the final proposed cost for the project. In practice, the Benefit of the Bargain round implemented by the Trump NTIA operated largely as a reverse-auction, with lowest bids winning in most instances. This left little room for buffers or contingency funds to address higher-than-expected costs of key inputs, from the materials needed to build a network to the costs associated with gaining access to poles, ROW, and easements.
The preceding analysis highlights the wide variability and significant unpredictability in the costs associated with accessing, placing attachments on, and replacing electric utility poles. These costs vary widely from utility to utility, and from state to state. This reflects the highly fragmented nature of oversight of pole disputes involving ISPs and electric utilities, which creates numerous opportunities for these entities to attempt to shift the costs of maintaining their poles to ISPs.
Electric utilities are natural monopolies that, in the absence of regulation, will seek to maximize profits. This is why private IOUs are subject to exacting public utility regulation. Nearly every action taken by an IOU must be scrutinized and approved by a regulatory body, and even then, regulators generally defer to utilities, yielding ever-higher electric rates in most states across the country (in the robustly competitive broadband sector, by contrast, prices have barely budged in a decade).
Municipal utilities and cooperatives, on the other hand, have been left to mostly govern themselves. Indeed, the primary accountability mechanism for these entities is the electorate. This creates an incentive for these entities to keep electric rates low lest officials be voted out of office or kicked off the co-op board. This dynamic also creates incentives to shift costs to third parties to make up for revenue shortfalls resulting from maintaining low rates. A version of this dynamic is evident in the dozens of municipal electric and cooperative systems governed by the Tennessee Valley Authority, a federal entity that is required by statute to keep electric rates as low as possible. TVA has accomplished this goal in part by devising pole formulas that allow for greater cost-shifting to ISPs than the FCC allows, all in the name of keeping electric rates “as low as feasible.”
The possibility of pole disputes is not theoretical. Rather, disputes happen all the time, and many are becoming more contentious given the high stakes and costs associated with rural broadband deployment. A recent dispute involving Comcast and Appalachian Power Company, a major IOU in Virginia, illustrates how these conflicts tend to unfold.
Comcast must negotiate access to Appalachian’s poles to support buildout in parts of the state. As part of that process, Appalachian estimated the costs to prepare its poles for Comcast’s equipment. Those costs were critical to the applications Comcast submitted for BEAD funding, so accuracy and fairness were of paramount importance. However, Comcast noticed that Appalachian sought to charge it to replace poles with pre-existing safety violations. Since Comcast did not cause those violations, it filed a complaint with the FCC and argued that having to shoulder the costs was unreasonable. The FCC sided with Comcast and found that Appalachian’s attempted cost-shifting violated its rules. The FCC reaffirmed that costs should be shared based on who caused them, meaning providers can only be charged for the additional improvements needed to attach their equipment, not for correcting old violations they did not create.
This was a major ruling that underscored the willingness of the FCC to act promptly in the application of established pole attachment rules. In theory, such prompt, direct application would seem to provide stability and predictability, especially with NTIA extending the reach of the FCC’s pole approach more broadly in the BEAD context. However, Comcast and Appalachian Power are back before the FCC, with the ISP having brought another complaint about how the utility is pricing access to its poles.
If this dynamic is not addressed and uncertainty remains, it is likely that ISPs will encounter higher-than-expected pole costs. Per the analysis above, using the base case as a reasonable proxy for what pole-related costs are expected to be by subgrantees, then costs could increase severalfold as they approach the “high” threshold estimate. This could prove ruinous to many projects.
So what can be done?
With billions of dollars poised to be injected into the economy in support of broadband expansion, now is the time for policymakers at every level to finally begin addressing the red tape and self-interest that threaten to slow network construction.
Ideally, Congress would update federal law to empower the FCC to implement national guidelines for poles. But with Congress in gridlock, such action is unlikely.
We applaud NTIA’s decision to require cooperatives and municipal utilities that participate in the BEAD program as subgrantees to comply with FCC pole attachment rules as a condition of accepting BEAD funding. These rules, among other things, cap the rates and charges pole owners may impose on eligible attachers, establish timelines for processing pole attachment applications, and permit attachers in certain circumstances to use qualified contractors to perform surveys, engineering, and make-ready work. Importantly, this requirement applies across the subgrantee’s entire pole footprint, not just to poles used in BEAD-funded broadband deployments. NTIA also requires reporting on broadband deployment progress including delays attributed to noncompliance with the FCC’s pole rules.
The mere existence of this condition, though, does not guarantee smooth sailing. In a February letter to Secretary Lutnick, NRECA, the national association for electric cooperatives, argued that state broadband offices lack the legal authority to require their members to comply, so legal challenges are possible.
More importantly, rules are only effective if they are followed and if there is strong and swift enforcement when they are broken. It remains to be seen if the FCC’s renewed sense of urgency around enforcing its pole rules will change electric utility behavior. The latest iteration of the Comcast-Appalachian pole dispute signals that this might not be the case. If this dynamic proliferates and expands to other utilities drawn into the FCC’s regulatory orbit by NTIA’s BEAD condition, then the Commission could be inundated with complaints by aggrieved ISPs seeking fast-tracked dispute resolution.
One way to avoid some of these potential harms is for NTIA to allow states to use some of the remaining $21 billion in BEAD funds to offset unexpected pole-related costs. The ACLP has advocated for this in the past. A well-designed pole program, modeled on successful efforts in states like Texas and North Carolina, could help stakeholders avoid disputes.
State policymakers should not sit idly by. Instead, they should seize the opportunity to provide more clarity and consistency around poles by either opting into the FCC’s framework if they haven’t already done so or committing to aligning their rules with it. They should also rationalize different pole regulatory regimes for IOUs, cooperatives, and municipal utilities to provide more consistency for ISPs and other stakeholders going forward.
If state policymakers choose to act on these issues, they should also address related permitting, ROW, and easement issues, all of which are implicated during broadband deployment. Necessary actions here include adopting consistent statewide rules that localities must abide; allowing batch permitting at the local level; helping overburdened municipalities process permits more quickly; letting ISPs benefit from existing easements between private property owners and electric utilities; and bolstering transparency across all these processes to enhance accountability and provide ISPs and the public with insight into where obstacles might remain.
In sum, with BEAD projects finally getting underway, many policy issues remain unresolved. This is unfortunate given the amount of time that NTIA and the states had to plan for every aspect of the grant program. Nevertheless, there remain many opportunities for federal and state policymakers to address lingering issues. Utility poles must be at the top of the list. Addressing those in the ways discussed here will help to hasten deployment and finally bring broadband to the millions who remain without it.