The Wall Street Journal’s exposé on lead-covered cables has brought forth concerns about environmental contamination as well as the financial repercussions telcos may incur.
Another pressing question is how the issue will impact states’ allocations for the Broadband Equity, Access and Deployment (BEAD) program. According to New Street Research, some states may seek to use BEAD funds for remediation, “particularly if there is a location with a clear and present danger of harm.”
“While no states are likely to want to allocate money for remediation that is needed for connecting unserved or underserved locations, over a dozen states likely have more than sufficient funds to fulfill that Congressional directive,” wrote NSR’s Blair Levin in a note to investors Monday.
New York has already launched an investigation into the matter. Governor Kathy Hochul last week directed states agencies to determine the potential public health risks associated with exposure to lead-covered cables.
As part of the effort, the state government sent a letter to 246 telcos requesting them to provide a full inventory of aerial and buried cables containing lead – for both cable that’s still in use and cable that’s no longer in service but has yet to be removed.
“The health and safety of New Yorkers is the top priority of my administration, and we are using all of the tools at our disposal to ensure communities are out of harm's way,” said Hochul in a statement.
The WSJ reported at least 2,000 old telco cables contain degraded lead. Many of these cables are in places where people live and work, with the lead affecting water, soil and overhead lines.
Once the investigation broke, AT&T, Verizon and other major telcos saw their stocks take a downturn, with AT&T shares dropping to their lowest point in three decades.
“We will hold the telecommunication companies responsible and take swift action to remediate any problems,” Hochul added.
Further, Hochul directed the state’s Department of Health and Department of Environmental Conservation to conduct sampling for lead at a park in Wappinger Falls, one of the areas the Journal said had elevated lead levels.
New York state already closed the park for inspection, with the governor’s office stating the sampling results will be made public “as soon as they are available.”
NSR expects other states will take similar action, given they are now “principal players” in broadband deployment policy. In the case of BEAD, states may want to make grants dependent on remediation efforts in unserved and underserved areas with lead issues.
“There is also a risk to the state in granting funds to companies that may have significant, but undisclosed, financial risks that may make it difficult to fulfill the promises made in applying for the grant,” Levin wrote.