NSR Estimates Lead Cable Remediation Cost at $60 Billion

UPDATE New Street Research believes it could cost nearly $60 billion to remediate the approximately 2,000 miles of lead-sheathed copper wires that criss-cross the nation’s ground and water. The Wall Street Journal articles say the cables pose a health hazard, Inside Towers reported.

The researchers are basing their estimates on discussions with incumbent local exchange carriers (ILECs). Some of them dispute the WSJ’s conclusions, writes NSR Lead U.S. Analyst Jonathan Chaplin in an investor note.

It’s unclear whether this is an issue, how much it would cost to fix and who would pay the tab.  

NSR says telecoms began phasing out lead sheathed copper wires in the 1950s. Many times, they were left in place because it was thought that was safer than disturbing them, NSR Policy Advisor Blair Levin wrote in an earlier note on the issue.

The researchers estimate that some 48 million housing units are being exposed to lead casing, even as fiber upgrades began in 2005. That’s after a larger number was replaced over time due to construction, failure and routine maintenance or repair.

“Based on conversations with ILECs, buried copper was largely left in place in areas where fiber has been deployed. Similarly in aerial plants, [meaning cables on poles] copper has also often been left in place, with new fiber lashed over the old copper cables,” writes Chaplin.

NSR believes AT&T likely has the highest exposure overall (23.186 million housing and business units), followed by Verizon (7.631) and Lumen (6.295). “AT&T and Verizon have the most fiber-fed units which still have exposure, while AT&T and Lumen likely have the most exposed copper-fed units,” according to Chaplin. But he’s clear the ILECs aren’t giving the researchers much information.

The BEAD program will see fiber deployed to 14 million units over five years. “We would assume that states will make removing lead-cased copper cables a condition of receiving BEAD funds, now that the issue has emerged,” notes Chaplin. This assumes the conclusions in the WSJ articles are true. Of that 14 million, about 30 percent, or four million BEAD-eligible units, could have lead exposure, NSR estimates.

“Based on our conversations with the ILECs, we believe that the labor cost to remove copper wires will be similar to the labor cost to install fiber, excluding the fiber splicing cost,” writes Chaplin. “The cost to deploy fiber ranges from $1,000-$1,500 per unit for most ILECs.”

NSR says if removing the cables is required, it’s not clear who would pay that tab, possibly the companies, customers or taxpayers. “We think the government has a tough choice: if they force ILECs to pay the bill, some will be forced into bankruptcy delaying the remediation process in those markets potentially indefinitely. It will significantly slow the deployment of fiber infrastructure in the U.S. It would also leave less resources available to bring broadband to unserved and underserved markets via the BEAD program,” writes NSR. Researchers believe it’s likely either customers or taxpayers would foot the expense.

AT&T created a web page in response to the WSJ articles. It says: “The health, safety and well-being of our people, our customers, and our communities is of paramount importance. For decades, we have managed legacy lead-clad cables in compliance with applicable laws and regulations, and we have followed industry-wide best practices to maintain this legacy infrastructure in a way that’s safe for all based on established science.”

The company notes that some of the WSJ’s reporting conflicts with what independent experts and science have stated about the safety of lead-clad telecom cables. It also conflicts with results of AT&T’s testing, which the telecom says it’s shared with the public and the WSJ.

AT&T says, “should there be a need for further analysis of this topic, we will work collaboratively with industry peers and other stakeholders and act responsibly.”

By Leslie Stimson, Inside Towers Washington Bureau Chief

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