Access Issue Slows Fiber-Optic Network Launch in Erie, Pa.

The problem — more than anything else — has been gaining access to existing utility poles in the city that were expected to carry fiber-optics through the neighborhoods they are intended to serve.

by Louis Sahagun, Los Angeles Times / June 10, 2019
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(TNS) — Joel Deuterman, CEO of Velocity Network, which is based in Erie, Pa., said he has stopped advertising his company's residential fiber-optic internet service.

His crews are still out there installing the bundled fibers. And Deuterman still dreams one day of bringing his service to thousands of Erie-area customers, many of whom have already said they're prepared to buy the high-speed service when it's available in their neighborhoods.

For now, though, he's careful not to promise more than he can deliver.

"We are so far behind it's embarrassing, which is why we don't market it anymore," he said.

The problem — more than anything else — has been gaining access to existing utility poles that were expected to carry fiber-optics through the neighborhoods they would serve.

In Erie, about 70 percent of those poles are owned by FirstEnergy Corp., the parent company of Penelec. Most of the rest are owned by Verizon Communications.

For Velocity, the problem is that gaining access to the poles is taking far longer and proving more expensive than Deuterman ever imagined.

Approval permits are required before Velocity or any other company can attach its lines to a Penelec utility pole.

"Whenever we get a request for a new attachment, someone must physically visit and inspect each and every pole to determine whether there is adequate space available for new equipment," said Todd Meyers, a spokesman for FirstEnergy. "The National Electric Safety Code mandates specific clearances between wires. Sometimes the pole is ready to accommodate new equipment and work can proceed. Other times, our contractors must perform 'make-ready' work before new facilities can be attached."

Meyers said the buildup of work isn't the result — as some believe — of buyouts that reduced employment at the utility. Engineers and line workers weren't eligible for an early-retirement incentive that reduced the company's headcount, he said.

"Rather, it was the sheer volume of requests for new attachments, swelling from a manageable 200 or 300 per year as recently as three years ago to a tsunami of thousands upon thousands today," he said. "Too much work to handle in-house — and building a contractor network takes time, particularly when other utilities face the same dilemma and compete for many of the same contractors."

Meyers said permission to attach a line to a pole can't simply be granted sight unseen.

The utility's top priority has to be providing safe and reliable electricity to its customers, he said.

But delays are only part of the problem, according to Velocity.

Costs also have skyrocketed.

"It used to cost us about $50 a pole to have those routes engineered. It's not cheap because we are talking about thousands of poles, but affordable. It keeps me competitive in the industry," Deuterman said.

That has changed in the past year or so.

"My price per pole has literally shot up to an average of over $350 a pole. That is a seven-fold increase," he said. "That is not even double, which would be horrible. I can't build out fiber at that cost."

In some cases, the bill for stringing the wire to another pole far exceeds $350.

On that point, Meyers said, "All attachment-related costs must be totally reimbursable by the fiber-optic companies because Penelec's utility customers should not have to pay for any work that subsidizes/benefits a third party."

All of this makes budgeting difficult, said Brad Wiertel, Velocity's chief operating officer.

"I can look and say I want to build fiber on 11th (Street) between Peach and Sassafras," Wiertel said. "I know how much materials are going to cost me. But I don't know how much Penelec is going to charge to attach to those poles. My team could look at the pole and say no power work needs to happen. But if the power company says you need to replace it and it's going to cost you $5,000, you could go from $50 and it could turn out to be $5,000 or even $10,000."

Deuterman said he had hoped to have 2,000 fiber customers by this time. Instead, the number is closer to 500.

"We are still committed to making this happen," Wiertel said. "But the delays are hard to explain to a customer who wants to have our service."

The problem isn't unique to Erie or Velocity Network.

"It's not just a Penelec problem," Wiertel said. "This is a systemic problem in the industry. We need some consistency."

The Federal Communications Commission apparently sees it the same way. The FCC voted unanimously in August to adopt what's being called the one-touch, make-ready policy for new broadband connections on utility poles.

The FCC explains the new rules, which took effect May 20, as follows: "This process speeds and reduces the cost of broadband deployment by allowing the party with the strongest incentive — the new attacher — to prepare the pole quickly, rather than spread the work across multiple parties."

The FCC expects the regulatory order to be a game-changer that spurs investment.

According to the FCC, one-touch-make-ready could result in bringing fiber to or past 8.3 million houses along with an investment of $12.6 billion in new fiber network.

The American Enterprise Institute contends this might be a case where government rule-making can help businesses while expanding broadband service.

In a September commentary, the group said of the FCC changes: "This is a welcome development to meet the exploding demand for data services, to catch up in the 5G race with China, and to stimulate competition between different broadband infrastructures."

Wiertel hopes that it helps.

While Velocity Network remains on solid ground — the company does other things, including information technology — the company remains eager to get its fiber initiative back on track.

In Erie, a price-sensitive market, Velocity Network launched that initiative knowing that it would likely cost $1,000 for each household it added.

As it stands, both the timetable for adding households and the budget for adding them have become unpredictable.

"We are not putting out false hope until we get we get some more clarity," Wiertel said. "But we think the FCC and the regulatory environment is going to speed up the process."

©2019 the Erie Times-News (Erie, Pa.). Distributed by Tribune Content Agency, LLC.

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