Google Fiber's rise is changing the utility pole access regime
Google Fiber's (NASDAQ: GOOG) plans to sell 1 Gbps service for $70 clearly has forced incumbent telcos and cable operators like AT&T (NYSE: T) and Comcast (NASDAQ: CMCSA) to rethink their broadband service strategies.
But driving change in broadband pricing is only one part of Google Fiber's broadband story. Like other competitive providers, Google Fiber wants to string fiber on utility poles since it is less disruptive than digging up streets to lay conduit.
Getting access to utility poles is a challenge particularly for new competitors since these facilities are owned by three entities -- the local power company, the telco, or the municipality itself. Competitors that want access to this infrastructure are often faced with onerous fees, delays, or owners blocking access.
A key point of contention between broadband competitors, utilities and incumbent providers is the make-ready process. While the make-ready process differs by utility, common issues include inspections, engineering, construction and other work to ensure compliance with the National Electrical Safety Code. The make-ready process requires not only coordination between the utility that owns the pole and a prospective broadband provider, but also gaining the cooperation of other existing telco and cable operators that already attached their wires to the pole.
Google Fiber is vying for pole access in two cities -- Louisville, Ky. and San Francisco.
Louisville, Ky. has been a four-part contentious battle between the city leadership, AT&T, Comcast and Google Fiber.
The city leaders passed the "One Touch Make Ready" ordinance, which is designed to streamline the city's utility pole attachment process. The ordinance allows emerging service providers like Google Fiber to install new equipment and wires on existing utility poles owned by AT&T. The majority of the poles in Louisville are owned by AT&T and Louisville Gas & Electric. However, AT&T filed a suit against the city saying that it violates a number of state and federal laws.
Interestingly, the telco announced it was targeting parts of the city with its 1 Gbps service a week following the suit, raising suspicion that AT&T is trying to put a cap on new competition.
Google Fiber is facing yet another battle over access to utility poles in Silicon Valley, asking the California Public Utilities Commission (CPUC) to allow it to install its fiber network in the area using the poles. However, incumbent carrier AT&T and the California Cable & Telecommunications Association are moving to block Google's access to utility poles.
However, AT&T told FierceInstaller's sister publication FierceTelecom that it was the first provider to work with Google Fiber on granting access to AT&T's utility poles. "We already have a national agreement with Google to give them access on a city-by-city basis. We're glad to grant them access to our poles like we have for others, but Google attempting to change the rules for their benefit is ridiculous."
Besides the make ready issue, pole attachment costs continue to be headache for competitors and even traditional telcos like Verizon (NYSE: VZ), which is disputing pole access rates with Florida Power and Light (FPL) in Florida and Dominion Power in Virginia.
Verizon argues that Dominion requires it to pay more for pole access than its CLEC competitors. In an FCC filing, the service provider said that after the FCC passed its Pole Attachment Order in 2011, it has paid more in "gross rent" than it would have paid at the FCC's new telecom rate and the higher rates will inhibit new broadband build outs.
What's troubling about Verizon's fight with FPL is that the telco and Frontier Communications, which is purchasing the telco's assets in Florida could face a service disruption if the two carriers can't resolve an ongoing dispute over pole attachments.
For its part, the FCC has worked to resolve pole attachment issues. The FCC's 2011 order recognized that a disparity in the rate formulas used for cable and telcos could have "negative implications for competition and broadband deployment."
Following the initial ruling, Level 3 Communications and Comptel (now Incompas) asked the FCC to make clarifications to the 2011 Pole Attachment Order. The FCC finally responded in December 2015 when it granted Level 3 and other's petition to harmonize the attachment rate cost model for pole attachments, which would be at or near the cable rate formula level, providing a level of certainty for service providers.
But the pole attachment issue isn't a problem for every provider. Regional providers like Fatbeam that mainly serve smaller markets like Coeur d'Alene, Idaho and Yakima, Wash., have established relationships with large utility companies, including Pacific Power and Light and Avista.
"In Kentucky, Google Fiber requested the city council change some rights of way statutes and AT&T and Comcast said not so fast," said Greg Green, President of Fatbeam, in an interview with FierceInstaller. "My number one rule as a business owner is I let the big guys fight those battles for us because we're all united on that front."
With the entry of more broadband competitors into the U.S. broadband market, the pole attachment issue will continue to be a contentious fight between all parties. While the pole attachment issue is not going away anytime soon, it's clear that Google Fiber is changing the conversation about how broadband networks are built.--Sean