Cities get better deals from wireless companies in a free market

by Steve Blum • , , , ,

One of the working groups spun off by the Federal Communications Commission’s broadband deployment advisory committee (BDAC) – an industry dominated body – looked at how much it costs telecoms companies to attach wires and wireless gear to poles. The results of that study are here. It was based on information that participants voluntarily submitted – the study kindly describes it as a “convenience sample” – so there’s a limit to its reliability. Even so it paints an interesting picture.

Nationally, fees for attaching wires to utility poles run in the $16 to $18 per year range, on average. That’s a little more than in California, where a cost sharing formula established by the California Public Utilities Commission results in fees typically in the $20 to $25 range. It’s not surprising that costs here tend to be higher than other parts of the U.S.

There’s a greater variance when wireless facilities are involved. That’s mainly because there’s greater variety in the methods used to arrive at those fees. In some cases, for example utility poles in California, the wireline attachment formula is used to calculate a per foot fee. So if a telco is charged $20 per pole per year to attach a cable, which typically occupies a foot of space, a wireless facility that takes up 5 feet of pole space would cost $100.

In other cases, the rate is set by negotiation. One of the problems with the study is that it throws utility poles and street light poles into the same bucket. Those are owned, managed and regulated differently, and aren’t directly comparable. That said, the study shows that there’s a wide variance in wireless facility attachment costs, with a mean rate of $506 but a median of $57.

There’s a brief discussion of streetlight lease fees, which in some cases run from $400 to $15,000 per year when market forces are at play. In other cases, state legislatures have preempted local ownership and set much lower rates. That was tried last year in California, but governor Jerry Brown vetoed a bill – senate bill 649 – that would have capped streetlight (and other municipally owned, non-utility pole) lease rates at $250.