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Joint-use of Power Poles Raises Safety Concerns

A recent court settlement in California has sent a message to communications companies who have joint-use arrangements with power companies.

The lawsuit was settled for more than $63.5 million with the state of California as a result of the October 21, 2007, Malibu Canyon fire that burned 3,836 acres, damaged 36 vehicles and 33 structures, including Castle Kashan and the Malibu Presbyterian Church. On October 21, 2007, three power poles next to Malibu Canyon Road failed in heavy Santa Ana winds and ignited dry brush nearby. The results of the forensic investigation indicated that the pole may have failed from being overloaded with communications equipment.

The lawsuit, brought by the state of California, was against Verizon, AT&T, NextG and Sprint, and was the result of what California calls “sub-par attachments and pole overloading.” In addition, The California Public Utilities Commission (CPUC) last week approved a $12 million settlement with the three cellphone companies for their involvement in the cause of the fire.

Of the $12 million settlement, $6.9 million will be paid to the State of California’s general fund. The remainder, $5.1 million, will be spent on replacing existing wooden power poles along the 3.4 miles of lower Malibu Canyon. Another portion will be spent on an independent safety survey to study a representative sample of Southern California Edison power poles across its 50,000-square-mile service area. The intent of the study, according to the settlement, is to determine the severity of the problem with pole overloading, a practice that was blamed for a power outage in the San Gabriel Valley in Fall 2011 when a windstorm blew over more than 200 Edison power poles.

As part of the settlement Southern California Edison will be required to conduct safety assessments of all its poles in the Malibu area by March 2015. Any non-conforming poles are required to be upgraded within two years following the assessment. The communications companies must also inspect any poles that are in joint-use for safety violations and bring them up to standard. Edison has placed the highest priority on 151 poles along Malibu Canyon Road stretching from Pacific Coast Highway to Mulholland Highway. Other high-priority areas include Topanga Canyon Boulevard (232 poles), Mulholland Highway (335 poles), Latigo Canyon Road, Kanan Dume Road and “Malibu area high-fire and high-wind areas” (735 poles).

All of the involved companies have begun to implement inspection procedures. NextG is required to audit approximately 30,000 pole attachments in Edison territory and 30,000 non-Edison attachments by November 18. After the audit, NextG must upgrade subpar attachments within three years, according to documents. AT&T, Sprint and Verizon began their utility pole assessments along Malibu Canyon Road in May 2013, according to documents obtained by The Malibu Times.

In addition, AT&T, Sprint and Verizon have inspected their poles and found 92 of them, located along a 3.38 mile stretch of Malibu Canyon, will need to have upgrades to be compliant with the safety standards in place. The phone companies are also in the process of surveying all of their joint-use poles ( 2,000 poles) in Southern California Edison’s service territory. Any poles found to be overloaded with equipment must be brought into compliance as well.

The three cellphone companies, AT&T, Sprint and Verizon Wireless, continue to deny the allegations. However, the companies agreed at a meeting to pay the state $4 million each in a settlement. Southern California Edison and NextG still face a trial and $74 million in fines proposed by state investigators for their role in the fire.


Crown Castle Acquisition of NextG Biggest Story of the Year

It seemed only a matter of time before NextG Networks was purchased by a tower company. The only questions were when and by whom.

Crown Castle International answered those questions on Dec. 16 buying NextG for $1 billion, one of the largest investments into DAS ever. The deal was vindication that DAS and small-cell technology would continue to be an increasing segment of the wireless coverage equation.

“Increasingly, we believe that small-cell architecture, such as DAS, will be an important complement to traditional macro tower installations,” said Ben Moreland, Crown Castle’s president and CEO, said in a prepared release.

Zacks Investment Research praised the synergies of the NextG acquisition, which brings Crown Casetle 7,000 nodes-on-air, 1,500 nodes under construction and rights to more than 4,600 miles of fiber.

Crown Castle’s DAS network will reach more than 10,000 nodes spread across 26 U.S. metropolitan areas, with 80 percent located in the top 10 U.S. metropolitan areas.

“Considering rapid mobile data growth and wireless coverage requirements in urban areas increasingly focused on narrow areas, DAS networks will continue to be an important role in accommodating this demand. Outdoor DAS is more of a competitor to rooftops than to towers, so this should not affect tower leasing demand at CCI (or its peers),” said Jonathan Atkin, analyst, RBC Capital Markets.

Additionally, there is a lot of room to grow through additional collocation on NextG’s infrastructure and will allow Crown Castle to better compete with the other tower companies, according to Zacks.

“NextG has huge underutilized capacity. Currently, the company has only 1.25 tenants per network on an average. This will provide significant scope for Crown Castle to add more customers without incurring additional capital expenditure,” the investment research firm wrote.

Not everyone was enamored with the NextG acquisition. Craig Stanziano, president and founder, Distributed Wireless Group, thinkgs it should be a concern to the DAS community.

“Consolidation has its benefits but from the guys who actually provide the ‘real’ services to ‘make it happen’ it is further restriction on available clients to market services too. Hence, bids on jobs will get more competitive. This will result further consolidation of those ‘real’ service providers as well! We are seeing the start of commoditization to the DAS sector!” Stanziano said in email to DAS Bulletin

The most recent tower company investment in DAS came in September 2010, when Crown Castle acquired Newpath Networks for $114 million. Before that, SBA Communications made a $128.4 million investment in ExteNet Systems in January of 2010. Before that, you have to look back to 2005 when American Tower gained entrance into DAS through its multibillion dollar merger with tower company and DAS provider SpectraSite.