Monday, October 5, 2009

The Broadband Conduit Deployment Act of 2009 - A Good Start - Boston 10/05/09 by Alan D. Mandl, Esq.*

On May 14, 2009, the Broadband Conduit Deployment Act of 2009 (H.R.
2428) was introduced by Representative Anna Eshoo (D-CA) together with Representatives Waxman (D-CA), Boucher (D-VA) and Markey (D-MA) as co-sponsors.

On June 15, 2009, a Senate version of the Broadband Conduit Deployment Act
(S. 1266) was introduced by Senators Klobuchar (D-MN), Warner (D-VA), and Lincoln (D-AK) .

The general thrust of the bills is to mandate state construction of “broadband conduit” in the case of specific, federally-aided highway construction projects, subject to waivers and consideration of existing broadband facilities and demand. Bills seeking to enable conduit and fiber deployment are a welcome sign and a good start, as noted on this web site when H.R. 2428 was introduced. However, there are many details and collateral issues that will need to be considered and addressed.

By way of background, a number of states have adopted programs to accommodate the use of telecommunications conduit in state-controlled highways. Existing federal regulations require state transportation departments to develop and provide detailed utility accommodation policies. Shared resource agreements have been developed to govern infrastructure use by utilities and others within a federally aided highway.

The Federal Highway Administration (FHWA) and the Federal Communications Commission
(FCC) issued guidance to the states to assure that these arrangements comply with Section 253 of the Telecommunications Act of 1996. In 2000, the Research and Innovative Technology Administration of DOT issued further guidance to the states. However, many federally-aided roadways are not superhighways with existing conduit banks. The sponsors of these bills have correctly perceived a need to expand broadband conduit beyond the level that has been built out under existing programs.

The construction of broadband conduit in federally-aided highways does not eliminate the challenge of extending wireline and wireless facilities needed in the “last mile” to deliver broadband access to unserved and underserved communities. This legislation may assist builders of middle mile infrastructures that are needed to complement last mile wireline and wireless broadband facilities.

However, significant economic risk remains for owners of both middle mile and last mile facilities when it comes to providing middle mile transport and Internet access to unserved areas.

The substantive directives contained in H.R. 2428 and S. 1266 must be carefully reviewed during the legislative process. They need to be examined in the context of existing federally –aided highway construction and utility accommodation policies. In addition, the fiscal impacts of a conduit build out mandate upon the states (construction costs and delays, tax revenues, exposure to conduit carrying costs, fee-based revenues from conduit users) must be examined.

This article reviews key provisions of H.R. 2428 and S. 1266 and identifies some issues for consideration before any final legislation is enacted. Amendments may provide greater guidance to the Secretary and affected stakeholders. They also may help avoid potential collisions between state builders of conduit and Section 253 of the federal Telecommunications Act of 1996.

Key Provisions of the Bills
The companion bills contain the following key provisions:

• The Secretary of Transportation must require (subject to waiver provisions and other possible exceptions) that states install “broadband conduit” as part of any “covered highway construction project.”

• A “covered highway construction project” is defined as a “project to construct a new highway or to
construct an additional lane or shoulder for an existing highway” that is commenced after the date of enactment of the law and that receives federal funding under Title 23 of the United States Code

• “Broadband” is defined as “an Internet Protocol-based transmission service that enables users to
send and receive voice, video, data, graphics, or a combination thereof”, while “Broadband Conduit” means “a conduit for fiber optic cables that support broadband or, where appropriate, wireless facilities for broadband service”

• The Act directs the Secretary to ensure that an appropriate number of broadband conduits are installed to accommodate multiple broadband providers, taking into account the availability of existing conduits

• The Secretary also must determine the size of the conduits in light of industry best practices and potential demand and placement of handholes and manholes for fiber access and fiber pulling; standards must be established by the Secretary to carry out the above directives, taking into account population density in the area of the covered construction project, the type of highway involved and existing broadband access in the area of the project

• The Secretary must ensure that broadband conduit has a pull tape and capability of supporting best practice industry standards for fiber placement

• The Secretary also must ensure that broadband conduit is installed at an appropriate depth

• Under the Act, the Secretary will coordinate with the FCC to determine the potential demand for conduit occupancy and existing broadband access in the area of a project

Issues Under the Companion Bills and Recommendations

1. Cost of Construction-
A broadband conduit construction mandate placed upon the states will increase the cost of a “covered highway construction project,” with attendant fiscal impacts upon the states. While federal aid is provided, it will not cover the full cost of the new mandate. From the federal vantage point, expansion of a highway project to include broadband conduit construction will increase the costs that must be scrutinized and the effort involved in ensuring that grant funds are properly spent.

2. Cost of Conduit Maintenance- Should broadband conduit be constructed by a state, the state will bear the responsibility of maintaining that conduit, subject to cost recovery from conduit occupants, if any, and subject to the continued viability of conduit occupants (many failed during the telecom boom about 10 years ago).

3. Determining the Availability of Existing Conduits- Clarification is needed whether the “availability of existing conduits” pertains to the “covered highway construction project” only or to the vicinity where the “covered highway construction project” is located (the latter seems intended). Determining the “availability of existing conduits” has been a daunting task. Conduit record-keeping by incumbent telephone companies often is limited to paper plats. Records may not reflect current conduit construction, conduit occupancy or field conditions, such as collapsed duct and the need for spare maintenance duct.

When CLECs have requested access to conduit, costly and time- consuming make ready surveys have been required to determine the location and capacity of a given conduit run, whether a given conduit run was filled to capacity or if spare capacity was available. This same problem may arise when the Secretary tries to determine “the availability of existing conduit.” The FCC and those states that regulate pole and conduit attachment rates and terms must proactively require conduit owners to maintain better and more accessible records (municipalities also may have some authority to do so as part of their oversight of local rights of way).

4. How to Determine Potential Demand for Broadband Conduit- The “potential demand” for broadband conduit is not tied to any planning horizon and the method for determining potential demand is left for the Secretary to determine, without a specification of methodology (e.g., theoretical demand or demand based upon a solicitation of interest to utilize conduit located in a covered highway construction project route). The build out obligation is not dependent upon any actual expressions of interest from broadband carriers; thus, the potential exists for stranded investment, with attendant economic burdens on the states for ongoing conduit maintenance.

5. Existing Broadband Access- Whether there is “existing broadband access” in the area of a covered highway construction project will require input from the FCC, but it is unclear whether determinations made will necessarily be consistent with similar determinations being made for broadband stimulus funding purposes. The role of broadband mapping in making this determination should be considered.

6. Avoidance of Conflicts with Section 253- No guidelines for the cost or terms of broadband conduit occupancy are mandated, other than guidelines that the states must comply with Section 253 of the Telecommunications Act. Given that federal grants are involved, the Secretary may want to consider the adoption of general grant criteria relating to user fees and terms. Such action may be necessary where the governmental property to be used is proprietary in nature (e.g., a lease of government-owned property may not be subject to the same constraints under Section 253 that apply to the issuance of permits to private parties to erect poles or conduit located in public ways). This issue has been tackled previously by federal agencies and should be examined in this context.

7. Avoidance of Broadband Conduit to Nowhere- The bills do not address how broadband facilities installed in broadband conduit will be connected to locations away from the covered highway construction project. They do not require that any portion of a covered highway project run anywhere near or actually connect to facilities built or to be built in an unserved area or locations from which an unserved area might be reached (e.g., a wireless tower). The Secretary’s authority to grant waivers may be applied to deal with these types of situations.

8. Impact on Privately Built Conduit- Some parties are rightfully concerned that their own recent investments in conduit “in the area” of a covered highway construction project will be deprived of carrier business that their private systems were built to accommodate-however, the bills leave room to avoid this problem.

9. Obligations of State Conduit Owner- Greater guidance on access to broadband conduit, maintenance and security should be provided and not left entirely to development at the state level. Minimum standards should be adopted in order to reduce the risk of disputes over the operation, maintenance and security of conduit.

Additional Suggestions

Waiver Standards
Further specification of considerations that would support a waiver would benefit the states and provide some guidance to the Secretary. The “appropriate” standard in the bills is vague.

Consideration of Existing Programs
An evaluation of existing state highway agency programs under which conduit has been constructed for shared use by state and private parties would help inform Congress whether any elements from these programs should be incorporated into broadband conduit legislation or through legislative directives to the Secretary to consider existing programs.

Seeking Actual Demand Before Building Broadband Conduit
Congress also should consider models under which public notice of planned highway construction would be given and interested carriers could subscribe for duct space. Programs of this type have been adopted in the Cities of Boston and Cambridge in Massachusetts, among other places, in the case of local roads. Given that the mandate to build broadband conduit or seek a waiver already exists under the bill, a public notice process could help determine the amount of broadband conduit that should be incorporated into the project and reflected in any applicable federal aid.

The more burdensome process of assessing “potential demand” based upon other factors is uncertain at best, but would be valuable in evaluating whether carrier demand for conduit bears any relationship to end user demand. If there were no or few takers for broadband conduit, a state might nevertheless propose conduit for the planned construction project, subject to the Secretary’s right to reject all or part of that conduit as unneeded. This type of approach would enable the Secretary to consider both actual carrier demand for conduit as well as the population density in the area of the covered construction project, as directed by the bills.

Importance of the Legislative Process
The legislative process will afford Congress an opportunity to hear from many stakeholders, including competitive wholesale carriers, incumbent local exchange carriers, rural carriers, cable operators, state highway agencies, governmental, business and residential consumers in unserved or underserved areas, public safety officials, radio tower owners, commercial mobile radio service providers and owners of existing underground facilities (water, gas, electric, telecommunications).

Need for Complementary Reforms
For broadband conduit legislation to work as intended, it must be complemented by reforms that address construction builds in the last mile/local loop.

These include, but are not limited to:

(1) Greater control over the costs and delays associated with make ready work performed by pole and conduit owners;

(2) Confirmation of access to pole tops by distributed antenna systems, at reasonable rates;

(3) A single cost-based pole attachment rate, applied to the amount of usable space occupied by the attaching party; and

(4) Improved pole and conduit record-keeping by owners and users; and

(5) Reasonable local siting practices relating to wireless, underground and aerial facilities. The potential for leveraging electric utility smart grids to afford broadband access to the Internet also is worthy of consideration.

Final Points
Two final points:

1. No matter how much middle mile capacity is created, the last mile portion of broadband infrastructures must be constructed and capable of meeting demand.

2. Build outs without committed customer demand can result in business failures-this occurred during the last telecom boom when expected customers of fiber networks failed and their demand for fiber vanished with them.

Significant business risks remain even where conduit construction is partially funded by federal aid.

* Alan D. Mandl is a partner with the Boston and Lincoln, Massachusetts firm, Smith & Duggan LLP. He has worked on wireless and landline telecommunications infrastructure deployments on behalf of private and public clients, including permitting of wireless facilities, construction of intra-municipal fiber facilities, joint and individual conduit build outs, pole attachment agreements and pole and conduit rate issues, and the use of publicly owned conduit infrastructures and rights of way.

Mr. Mandl's previous article for is entitled Infrastructure Deployment Reform Needed To Achieve Sustainable Broadband Goals and Avoid Waste. Attorney Mandl may be reached at

Topic Resources at StimulatingBroadband on Scribd:

1. H.R. 2428 Broadband Conduit Deployment Act

2. S. 1266 Klobuchar Broadband Conduit Deployment Act
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