Forget pole attachments. Railroad crossing fees are turning out to be the latest hot button issue for broadband providers and one which has apparently grabbed the attention of several state legislatures. Virginia is the latest to tackle the problem, with a new bill passing the state Senate this week and heading to the House of Delegates for a vote.
For a bit of context, Fiber Broadband Association CEO Gary Bolton told Fierce that like pole attachments, railroad crossings are a “challenge” for fiber providers. That’s because every time an operator wants to do a railroad crossing and there’s no existing conduit, they have to contact the railroads that cross the targeted tracks and schedule flagmen to come so they can complete their directional boring. And then there are the fees railroads charge for said crossings.
The Virginia, Maryland, and Delaware Association of Broadband Cooperatives (VMDABC) and the Virginia Association of Counties, which have been pushing for legislation to address the issue, have said crossing fees can total as much as $20,000 per crossing. The Senate bill working its way through Virginia’s legislature aims to cap railroad fees at $750 for each crossing, though a House version of the same measure calls for a $1,500 cap.
Virginia’s legislation would also set a 30-day timeline for railroads for review crossing requests. The process currently can take up to 18 months in extreme cases.
Railroads, of course, are everywhere. According to U.S. Department of Transportation data, there are approximately 136,729 freight railroad route miles in the country. Of these, 92,190 miles are owned and run by seven top-tier railroad companies, while the remaining 44,539 miles are operated by another 626 local and regional railroad companies. There were another 30 commuter railroads in the country as of March 2021, data from the American Public Transportation Association showed.
Indeed, Bolton said railroad crossings are an issue for broadband operators in pretty much every state. Several have taken action on the issue in recent years, though the fee limits vary. Iowa capped railroad crossing fees at $750. Back in 2016, Minnesota set a standard crossing fee of $1,250, as did Nebraska in 2022. Illinois allows for a one-time standard fee of $1,500 for each crossing.
But neither railroads nor fiber are exactly new. So why is this issue grabbing headlines now? Well, it seems to be due to an influx of broadband funding and the rise of universal broadband initiatives.
In 2021, Virginia’s then-governor announced a $2 billion campaign – backed by more than $722 million in state funding – to deliver broadband to every resident there by 2024. A few months later, in May 2022, President Joe Biden kicked off a nationwide initiative to deliver “Internet for All,” with $45 billion in federal support.
Virginia awarded the aforementioned $722 million to connect 278,550 locations in its fiscal year 2022 (July 1, 2021 through June 30, 2022) through the Virginia Telecommunication Initiative (VATI) grant program. In its FY 2023,(July 1, 2022 to June 30, 2023) it set aside $49.7 million for additional VATI grants. Those awards do not yet appear to have been made.
As Virginia seeks to connect its remaining unserved over the next few years, VMDABC said the number of railroad crossings is expected to jump from one to five per year to 50 to 100 crossings per project. It is unclear whether this is due to an increase in the number, extent and location of the expected projects or some other factor. But using the upper limit of current passing fees ($20,000), that means crossing fees could run between $1 million and $2 million per project in a worst case scenario if the legislation doesn’t pass.
While that doesn't seem like much when contrasted with the billions in funding on the table for broadband, it's worth noting those grant dollars may not stretch as far as one might think when you consider the cost per passing in hard-to-reach rural and remote areas can stretch into the tens and hundreds of thousands of dollars.
VMDABC Chair Casey Logan said in a statement to Fierce following Thursday’s Senate vote in Virginia the legislation is “absolutely vital in ensuring that every Virginian who wants broadband is able to access the internet.” He added "This legislation will allow us to get the job done and cement Virginia’s status as a nationwide leader in closing the digital divide."
Delaware and Maryland, the other two states where VMDABC has members, do not yet appear to have railroad crossing fee legislation on the books. Delaware, like Virginia, has a universal broadband initiative and recently awarded grant funding to Verizon, Comcast and Mediacom to reach more than 11,000 unserved locations.