A Nationwide "One-Touch Make-Ready" Policy Would Spur Broadband Investment

On January 25, 2018, Corning Incorporated filed a report with the FCC titled “Assessing the Impact of Removing Regulatory Barriers on Next Generation Wireless and Wireline Broadband Infrastructure Investment: Annex 1, Model Sensitivities.” This report, prepared by CMA Strategy Consulting and supported by Corning, finds that adoption of a nationwide “one-touch make-ready” (OTMR) policy would create an additional $12.6 billion in capital expenditures invested by fiber providers and an additional $8.8 billion in capital expenditures invested by 5G wireless providers.

In the FCC’s Notice of Proposed Rulemaking for “accelerating wireline broadband deployment by removing barriers to infrastructure investment,” the Commission proposed an OTMR policy, which ensures that attachment poles are prepared for the installation of new broadband infrastructure. In many municipalities, when a provider wishes to attach equipment to a pole, providers currently attached to that pole must approve the plans and hire contractors to carry out the work of moving existing attachments to make room for the new ones. The current process creates unnecessary costs among multiple providers and multiple contractors. With an OTMR policy, a single, pre-approved contractor is able to perform all of the necessary attachments, significantly reducing the costs of broadband deployment.

The CMA Strategy Consulting report analyzes the potential impacts of a nationwide OTMR policy on the deployments of fiber-to-the-premise (FTTP) and 5G wireless broadband. A nationwide OTMR policy would result in an additional 8.3 million premises passed by fiber providers, which corresponds to $12.6 billion in capital expenditures invested by fiber providers. It also would result in an additional 5.9 million premises passed by 5G wireless providers, which corresponds to $8.8 billion in capital expenditures invested by 5G wireless providers.

Importantly, twenty states and the District of Columbia are certified for “reverse preemption,” which means these states are not required to adopt FCC regulations regarding pole attachments, potentially limiting the positive impacts of an OTMR policy. However, if an OTMR policy is adopted and these states choose not to implement it, there still would be an additional 5.1 million premises passed by fiber, which corresponds to $7.7 billion in capital expenditures invested by fiber providers. And for 5G technology, there would be an additional 3.7 million premises passed, which corresponds to $5.4 billion in capital expenditures invested by 5G wireless providers.

The report also estimates the impact of higher-than-average municipality-imposed fees on nationwide 5G deployment if those above-average fees were to become the national average.

In many cases, the annual pole attachment fee for small cells, which are the infrastructure supporting deployment of 5G technology, is about $20 per pole. But some municipalities charge annual fees of $500 to $37,000 per pole. Applying a nationwide fee of $12,000 annually per pole would result in 28.2 million fewer premises passed by 5G technology, which corresponds to $37.9 billion in foregone network investment.

Some municipalities require application fees for pole attachments that are separate from the annual fees. These application fees range from $500 to $15,000 per pole. A nationwide application fee of $500 per pole would result in 7.9 million fewer premises passed by 5G technology, which corresponds to $11.6 billion in foregone network investment.

Lastly, while gross revenue fees are more common in the cable market, some municipalities have attempted to charge broadband providers fees of up to 5% of gross revenues for access to municipally owned rights-of-ways. If this were the national standard, there would be 9.4 million fewer premises passed by 5G technology, which corresponds to $13.6 billion in foregone network investment.

This report by CMA Strategy Consulting provides two very important takeaways. First, a nationwide OTMR policy would lead to an additional $7.7 to $12.6 billion in capital expenditures invested by fiber providers and an additional $5.4 to $8.8 billion in capital expenditures invested by 5G wireless providers, depending on how many states choose to adopt the policy. Secondly, the report highlights an unfortunate trend by some municipalities to charge excessive fees that surely will hinder deployment of advanced broadband networks and services.

The CMA report demonstrates that a nationwide OTMR policy would further the rapid deployment of next-generation broadband services. By significantly lowering the costs of deployment, a nationwide OTMR policy would create more competition, investment, and innovation, all benefitting America’s broadband consumers.