Virginia is trying to get broadband to 162,000 locations. Old utility poles may get in the way.

Delays in making hundreds of thousands of utility poles ready for high-speed fiber could threaten funding

January 2024

by Tad Dickens, Cardinal News

Hundreds of thousands of utility poles, hundreds of millions in funding and increasingly tight deadlines are part of Virginia’s quest to bring broadband to far-flung rural locations.

The commonwealth has been among the nation’s leaders in deploying internet, state leaders and observers say. But the goal of bringing universal high-speed access — with lots of federal and state money in play — is facing delays.

The latest delays center on stringing broadband fiber across electric utility poles, some of which are so out-of-date that they need to be replaced. Issues between internet service providers and pole owners include how much the work will cost and who will pay for it.

While the state supplies the money, funneling about $750 million to broadband in 2022 alone, it has no legal standing to play referee between the internet service providers (ISPs) and the pole owners. Here’s the dichotomy: The ISPs’ primary task is to get the lines to the people, but electric utilities say their key focus is on providing safe and reliable power.

That difference is causing slowdowns with installing aerial wire, in particular. Throw the logistics of pole updates and workforce shortages into the mix, and Virginia officials are worried about whether they’ll get broadband fiber to all of the estimated 162,000 still-unserved locations before the end of 2026, when federal COVID-19 relief funding will expire. Unspent money would go back to the federal government.

Those millions created a remarkable demand to add attachments to poles or replace them outright. The state’s largest electricity providers, Appalachian Power and Dominion Energy, received orders related to about 300,000 poles after the 2022 funding windfall. Smaller electric utilities were hit with relatively huge demands for poles, too.

Del. Scott Wyatt, R-Mechanicsville, told the state’s Broadband Advisory Council on Dec. 9 that he was concerned that legislators can’t force the power companies and ISPs to “play together” at the moment. Many are making progress, while others are “at a standstill,” he said. The cost of adding lines to poles is increasing, he added.

“I’m having heartburn when original negotiations and contracts were $30,000 a mile, and now those prices have changed to $90,000 a mile,” Wyatt, a House Appropriations Committee member, told the council in a recorded meeting. “I … hope that my peers will consider legislation to regulate these folks and force them to come together and work with the ISPs.”

Wyatt was not the only one calling for legislative intervention late last year. House Appropriations Chair Barry Knight boiled it down at the end of a November meeting in Richmond.

“Everyone here recognizes it’s going to take some legislation to make it happen,” Knight, R-Virginia Beach, said in a video recording of the Nov. 14 joint Appropriations and Finance meeting. “If the federal government is going to give us some money, we don’t want to give it back.”

It would be the second law the General Assembly has passed in two consecutive years to speed broadband access.

A bill that Gov. Glenn Youngkin signed into law in March centered on getting broadband cables across railroad lines. The House and Senate had each voted unanimously to streamline the approval process to 35 days and to reduce the often five-figure costs that railroads were charging the electric cooperatives to do the work. Three months later, an industry trade group representing Norfolk Southern, CSX and others filed a federal suit to stop the law from taking effect.

Six months later, no hearings have been set in that case, and the Virginia solicitor general has filed a motion to dismiss.

Meanwhile, legislators, ISPs and other utilities are facing another speed bump in the race to give rural areas at least the minimum standard — 100 megabit per second download and 20 Mbps upload. Poles, not tracks, are the focus.

Sen. David Marsden, D-Fairfax, is in the early stages of writing a bill that he said he’ll bring to the General Assembly this year. Marsden recalled the difficulty that many rural residents had getting internet access during the pandemic shutdowns, when schools went online and remote work accelerated.

“I can hardly think of anything more important than getting Virginia 100% broadband,” he said in a recent phone conversation.

The money

State and federal governments have been investing in internet access for years, but the post-pandemic era brought a windfall via the $1.9 trillion American Rescue Plan Act of 2021, ARPA for short. Virginia received about $4.3 billion.

In the 2022 fiscal year, state leaders directed $750 million in state and federal funds to the Virginia Telecommunications Initiative, also called VATI, to deploy broadband to those who don’t have it, according to information shared during the Nov. 14 joint appropriations and finance meeting.

For perspective, the state had spent about $100 million on broadband projects in the previous five years combined.

By October, VATI had spent $112.1 million in ARPA funds and $115.7 million in matching funds from local governments and broadband providers. And by December, VATI projects had provided broadband access to 61,725 of the 285,138 locations awarded in fiscal year 2022, according to the Virginia Department of Housing and Community Development’s Office of Broadband.

“The federal expenditure deadline for these funds is by December 31, 2026,” broadband office spokeswoman Alexis Carey wrote in an email last week. “Per federal guidance issued by the U.S. Department of Treasury, recipients must return to the U.S. Department of Treasury any grant funds that are not used by the end of the period of performance on December 31, 2026.”

Making ready

That massive cash infusion sparked an unprecedented work scope, a state analyst told participants in the late 2023 meetings. Utilities received more than 375,000 requests to review poles for their readiness to host broadband lines, said Kimberly McKay, the House Appropriations Committee’s legislative fiscal analyst. Of those requests, about 110,000 have been completed.

Dominion, for example, reviewed about 10,000 poles per year before the large VATI grant of 2022. Since then, the company has received about 100,000 requests per year, McKay said. (A Dominion spokesman said that no one would be available to comment on the matter until after the new year, beyond the deadline for this story.)

[Disclosure: Dominion is one of Cardinal News’ donors, but donors have no say in news decisions; see Cardinal News’ policy.]

Some companies are running cable underground. Others are using existing poles or requesting replacement poles, or even additional ones, in rural areas.

McKay told participants in the November and December meetings that her analysis showed important issues had arisen. The “large majority” of delayed projects relate to aerial fiber strung on a pole. The pole owners have 60 days under federal law to review permit applications (one permit covers 50 poles) and 105 days to complete what is called make-ready work — as in making a pole ready for new lines — before a broadband provider can deploy its fiber.

Cost is a large part of the make-ready process and is typically the ISP’s responsibility. If a pole is outdated and must be replaced according to the National Electric Safety Code, that could ultimately be a utility’s responsibility, and a fair amount of that is going on in rural areas, Marsden said. But there is a lot of room for gray in determining who is responsible and who has to pay, and that can slow the make-ready work as ISPs and owners negotiate, McKay said.

The commonwealth has no mechanism to speed the process or deal with the financial end, as all VATI projects are a contract between the utilities and the ISPs.

“We have no contractual obligation with any pole owner,” McKay said at the joint meeting. “That is a private-to-private connection, so that makes it difficult when you’re an investor in a project, to be able to navigate challenges when you have no contractual obligation to be part of the process where your bottleneck is. You can’t really do anything about it.”

Another issue: labor shortages and the need for workforce development in this arena. McKay said her office suggests looking at training incentives, using existing workforce programs, short-term training and financial aid to “train people to put fiber in the ground and put fiber in the sky.”

The ISPs

Bedford County includes a cross-section of broadband deployment — underground and aerial, and a mix of three ISPs and three electric companies working with VATI-related contracts. The three projects listed on the county’s Broadband Initiative website are among 87 underway statewide.

Moneta-based ZiTel, which was awarded $8.5 million in 2022, is laying cable mostly underground for approximately 4,100 locations in Bedford County’s southwest quadrant, according to information on the county’s website. Its progress is “scooting right along,” said the county’s broadband manager, John Putney. RiverStreet Networks, in Gretna, has underground work pending in the county’s southeast.

National concern Verizon is working to deploy broadband for about 400 customers in Bedford County, but it has its own poles already up, and a March deadline that the company estimates will be done a month sooner, Putney said.

Shenandoah Valley-based Shentel, which is responsible for about 4,700 high-speed customers in the central, north and eastern parts of Bedford County, is doing its work mostly above ground. In July 2022, VATI awarded Shentel about $9.2 million to complete the work by September 2024, according to the county’s website. The company started construction last May. Its project is among at least a dozen statewide that could receive a contract extension to finish the job, with extensions already granted in some cases.

“If these companies have been going underground, they’ve been able to make progress,” Putney said. “If they’re going up on poles, they’re waiting.”

Shentel is working with Bedford’s municipal electric department, Alta Vista-based Southside Electric Cooperative and AEP. In the county’s outer reaches, poles are much farther apart. They tend to be shorter and haven’t had a variety of attachments, like poles do in urban areas, said Bryan Byrd, a Shentel spokesman.

Until the 2022 broadband push, there was little need to replace decades-old poles that no longer meet safety requirements, much less add more poles to the system, Byrd said. Each pole might carry multiple electric lines, a transformer, a line to customers — and below all of those, phone, cable and, more recently, broadband lines — and the lines need space between them, to keep them from touching in icy or windy conditions. Rural poles often carry a smaller variety of lines than urban ones. In lightly populated areas where poles are farther apart, they might sag too much.

“This process has run a certain way for decades,” Byrd said. “And there’s been a level of workflow that I think the utilities are used to … probably a little bit increasing but a fairly steady cadence for a long time.

“Just because of the dramatic increase in work … timelines just started to creep up in terms of just taking longer for a lot of this. Now the good news is that this is pretty widely recognized as a choke point, and there’s a lot of people — state, local, ISPs, industry, government — a pretty broad coalition that recognizes that, hey, we want to get this done, we want to figure out collaborative solutions. And I say that there’s been a lot of success and momentum. … We’ve had really good, productive conversations as of late in particular that I think are hopefully going to keep pushing things forward and get the momentum where it needs to be.”

Under federal law, utilities must allow ISPs to access poles. The rates charged and the terms and conditions must be “just and reasonable,” All Points Broadband CEO Jimmy Carr said in an Aug. 28 Broadband Advisory Committee presentation.

But “just and reasonable” are “vague terms,” Carr said.

Byrd said that where using the poles is untenable, Shentel will run underground cable instead. Going below ground typically costs twice as much as going aerial, Carr said at the August meeting.

“Attaching them is so important for stretching VATI funds as far as possible,” said the Richmond-based Carr, whose company is working on such projects in multiple localities including Pulaski County.

Three out of four poles in each rural county have to go through the make-ready process, he said. “That is just orders and orders and orders of magnitude more than what people are used to.”

After the pole inspections and engineering analyses, it should take no more than 165 days before workers can string the fiber, according to FCC rules. Carr told the advisory committee that in Northumberland County, Dominion is taking an average 234 days to process applications, due to factors including a lack of engineering labor resources and supply chain issues on such items as transformers.

“And it is not a coincidence that our construction is about two months behind schedule in Northumberland. … I’m not throwing anybody under the bus,” he told the advisory committee. “It’s just the reality of what is happening in rural Virginia … with a large, investor-owned utility [that] really wants to help.”

In other cases, All Points has encountered some pole owners taking the position that the broadband provider should pay the full cost of fixing an unsafe electric condition that it had not caused, he said in a phone interview last month.

Putney said that he has seen “renewed energy and commitment” from all sides in Bedford County.

“The better they do, the faster our citizens get connected,” he said.

The pole owners

Appalachian Power is facing an “unprecedented workload,” spokeswoman Teresa Hall said in a Dec. 20 email exchange.

“In Virginia, we have projects and requests in every county we serve,” she wrote. “Indeed, right now, we have a backlog of poles that need to be inspected and engineered.”

Every company under the American Electric Power umbrella, as well as other utility pole owners in Virginia, are feeling the “crunch,” she added. The challenges include time, materials and employees to do the work.

Appalachian has received about 153,000 attachment requests statewide since the 2022 money infusion, and that number continues to grow, Hall wrote. About 40,000 poles have made it through the make-ready process of inspection, engineering and construction.

Among the steps necessary to make ready:

• An employee or contractor in the field walks an area to locate and analyze the poles to ensure that they can handle the added weight and have the needed height.
• If a pole has to be replaced, the utility must get the materials and schedule the work, while an employee must engineer the attachment’s design and coordinate the work.
• Both electric providers and ISPs are relying largely on contractors to do the work.

“We will be ramping up the number of contractors in January to make a dent in the backlog,” Hall wrote. “While this is welcome news, it is winter. When there is inclement weather and outages, or our crews are needed in other areas for mutual assistance, providing electric service is the priority. As all of this is swirling, we are focused on maintaining our distribution, generation and transmission facilities — we have to do this to provide safe, reliable power.”

In Bedford County, the town’s electric utility typically deals with about 100 requests per year for pole permits, said the department’s director, John Wagner. But Shentel has quoted a need for about 2,000, he said. Wagner said he expects he would have to replace about 200 of them. Replacing a transmission pole — which carries higher voltage over a longer distance — costs about $20,000, whereas the cost is about $5,000 to replace a shorter-distance, lower-voltage distribution pole.

“We always order poles in advance and we do have some in inventory,” Wagner said. “But it’s very difficult to keep taking them out of inventory. You don’t know if you’re going to have a storm coming. You’re going to need those poles and material.”

The ISP and the utility have developed what Wagner called “a very good working relationship,” but he said that he wishes Shentel had approached his office sooner. They have only been working together for the past few months, he said.

“It was like, why didn’t you tell us, brief us a year ago?” he said. “Why did you wait so long to get us involved? You know, the biggest problem I think that I’ve seen is that there’s been a lack of coordinating between the requesters and county, who is funding this through grant money, and the utilities. We needed to have set up a working relationship much sooner than we did. And these folks would be further along if that was the case.”

The parties are in “constant contact” these days, Wagner said. “And we’re doing everything we can to expedite their requests and get their attachments made, in some cases” when Shentel hasn’t decided to put lines underground.

When it comes to pole replacement, though, he expects that Shentel would cover the majority of that cost.

“Well, you know, we’re a small entity,” he said. “We’re not like [Appalachian Power] or Dominion, you know. We don’t have a billion-dollar budget here.”

Wagner said he hopes that any state legislation on the matter would protect the smaller utilities from bearing pole replacement costs.

“It’s not fair for our customers to have to upgrade infrastructure for a third party like Shentel,” he said. “It’s not fair to ask our customers to pay for that, since our system is running to meet our needs currently. So our position is that if we have to make any significant investments to accommodate these folks, we should not have to ask our customers to pay for that.”

Crafting a law

Marsden, who has begun work on a Senate bill that would smooth the make-ready process, said in a Dec. 22 phone interview that he was weeks away from anything solid. He was still learning and bringing in multiple perspectives. The legislation is likely to include funds for poles that need to be replaced and for new poles that need to be added, he said.

“The overarching goal here is federal money that will … pay for broadband expansion in Virginia to folks who now don’t have it,” he said. “It’s good for rural Virginia. It’s a lot of money being spent with local folks who are working on these crews, and it’s a good thing for the commonwealth.”

Marsden said he expected to have the legislation ready for the Senate during the 2024 session, which is scheduled to adjourn March 9.

Officials with Southside Electric Cooperative, which is working with Shentel in Bedford County, say its member-owned nonprofit takes seriously its responsibility to ensure projects that could raise its rates are essential and directly related to its own mission. The company assumes responsibility for any pole that is inspected and found in need of replacement outside the scope of another company’s attachment, spokeswoman Sheena Lankford wrote in an email exchange.

Southside was unaware last week of any federal money that a new law could tie to pole replacement, Lankford wrote.

“Therefore, legislation that would shift the cost burden of broadband-related make-ready work from an ISP onto [Southside], and without due consideration for the complexity of the project, is something we have to evaluate and educate legislators on the potential financial implications for our rural members,” she wrote.

Next up: BEAD

There is much more money on the way, from the $42.5 billion federal Broadband Equity, Access and Deployment Program, or BEAD.

Virginia is set to receive $1.48 billion to further advance its universal broadband quest. The state’s total includes a recently added $250 million, the result of the Department of Housing and Community Development and Virginia Tech’s Center for Geospatial Information Technology teaming to identify broadband-deficient locations.

Infrastructure will be part of the outlay, but the money will also address access affordability, workforce shortages and other issues.

BEAD money projects should be done by 2028, which would keep Virginia on track to be the first large state to achieve universal broadband status, Chandler Vaughan, senior policy analyst for the housing department, said at the Dec. 9 Broadband Advisory Council meeting. Housing and Community Development expects to announce awards between late summer and early fall.

McKay, the House Appropriations Committee’s legislative fiscal analyst, said that it was important to resolve the current issues “before we get BEAD off the ground. Otherwise we’ll exacerbate problems when we add $1.4 billion to $750 million.”

Del. Terry Austin, R-Botetourt County, is the House Appropriations Committee vice chair. He was among those who encouraged legislation for the make-ready issue.

“I’ve watched this VATI program evolve over time,” he said at the November meeting. “First COVID was a problem, and then supply chains were a problem, and the railroads were a problem, and now the attachments are a problem. … I think the federal dollars are great, but we have to have cooperation among everyone to make it happen.”

 

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This article comes from Cardinal News, an online nonprofit news agency based in Southwest Virginia.