AT&T, others facing 'significant financial exposure' from lead legacy

According to the financial analysts at New Street Research, AT&T, Verizon and other telecom giants could eventually be forced to cough up significant amounts of money to protect Americans from aging telecommunications wires covered in lead.

The analysts noted that the issue is extremely complex from a regulatory and a business perspective. As a result, they said they don't expect any definitive actions to affect the companies for at least the next several years.

Regardless, "the WSJ article raises the prospects that the telephone companies may face significant financial exposure down the road that the market has not anticipated," the analysts wrote in a note to investors Monday following a lengthy article from the Wall Street Journal published Sunday. "It is difficult to determine the relative potential exposures of the companies, but given its footprint, it is likely AT&T will have the greatest exposure."

The analysts also warned that the issue probably won't blow over anytime soon. The WSJ on Monday published another article on a lead-covered telephone line in New Iberia, Louisiana, that was likely constructed sometime in the 1940s by Southern Bell, a precursor to today's AT&T. According to the publication, that line now may be threatening residents, including children.

"Southern Louisiana is a prime example of how old phone cables are contaminating soil and water across the US, according to a Journal investigation," the publication wrote.

The companies involved in the issue, including AT&T and Verizon, argued that their cables don't pose a health hazard. They also said they generally follow all federal and state guidelines for dealing with lead.

After the exposé

The WSJ allocated substantial resources to its new report on lead in aging telecommunications infrastructure. The publication tested soil and water samples across the US – from Lake Tahoe in California to the Passaic River in New Jersey – and found substantial evidence that lead-covered telecom lines could threaten nearby residents.

It also pointed to several lawsuits on the topic over the past several years. In one, AT&T agreed to remove the cables at a cost of up to $1.5 million, but it didn't admit wrongdoing.

The New Street analysts wrote that they now expect calls from Congress and other government officials for an investigation, which could be conducted by the EPA, OSHA or the FCC. At the end of its articles, the WSJ offers readers with knowledge of lead at telephone companies to submit their names and phone numbers.

However, "it is not clear – and will not be for a very long time (probably post-2024) – what powers the federal agencies will have to fine and/or force remediation and what the policy preferences of those agencies will be," the New Street analysts wrote.

Lead was commonly used for insulation and protection of telecom wires from the late 1800s to the 1960s. The WSJ pointed out that the US government has spent decades eradicating lead from sources such as paint, gasoline and pipes. But the publication also noted that, in some cases, lead-covered telephone lines are so old that no company claims ownership.

Modern telecom cabling is now mostly plastic, but new network buildout projects often do not include efforts to remove aging infrastructure.

Related posts:

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano