Telecomms Tread Water to Avoid Expensive FCC Backup Power Regulation

Implications: The FCC seems determined to have Telecommunications Service providers increase backup power to the eight hours written in their regulations.  The courts have provided opportunities for the Telecommunications companies to delay enforcement and have eased the degree to which smaller service providers must comply, but there is no long term path for the industry to avoid the FCC’s general directive.  At some point, battery companies or other backup power equipment manufacturers will realize a market opportunity, probably at the expense of Telecommunications service consumers. 

Analysis: The FCC’s “Katrina Panel” found that Telecommunications service providers were woefully out of compliance with the agency’s regulation requiring eight hour backup power for cell towers during and after Hurricane Katrina.  In the affected area, few of the towers that were capable of operating lasted more than an hour or so due to insufficient backup battery capacity, poorly maintained batteries or both.  You would have thought that after experiencing the Northeast Power Blackout and the catastrophic events of 9/11, that backup power for telecommunications would become a matter of great importance to our nation that would lead to network power improvements – unfortunately, Katrina proved this to be untrue.  As a result, the FCC published the "Katrina Panel Order" in June 2007 to bring the industry into compliance with statute. 

The cost of installing batteries in their share of the hundreds of thousands of towers and other stations in our enormous Telecommunications network must have been daunting to every service provider – large and small.  However, who said it had to be done all at once?  The process that the FCC has taken is rather harsh – comply now!  The response from the Telecommunications industry is somewhat cavalier or maybe a touch immature – you can’t make me, at least not today.  [For a more objective review of this process, please visit http://njslom.org/cell-towers-fcc-ruling.html and follow the links to documents explaining the regulations and the appeals process.]  I certainly hope that behind the scenes a more rational approach of gradually phasing-in additional backup power is being planned by the industry in cooperation with the FCC.  We can all benefit from the security of having a few hours to make critical phone calls after power goes down in an emergency – it can save lives and is worth the added expense.  What we need is a cooperative effort to get there which should include public awareness and perhaps broader government attention. 

Meanwhile, the battery industry is watching this wrangle between its Telecommunications customers and the FCC with great interest.  It can mean a huge opportunity for lead acid – where Exide has the largest market share followed by EnerSys and then C&D Technologies. 

Lithium ion manufacturers are also watching closely.  The expansion of lead acid batteries from say 2 hours to 8 hours requires four times the space.  A majority of the existing cabinets – say 80% – can accommodate the expansion, but what about the other 20%?  Variances and increased rent for most of these installations along with added hardware plus installation costs create a value proposition for more compact batteries, like lithium ion.  By placing the higher energy battery into the existing cabinet, significant one-time savings are realized.  This has led to Requests for Proposals by Telecommunications companies and to alliances among lead acid and lithium ion battery makers to jointly serve the emerging market needs.  Also, Telcordia - the organization that governs standards and specifications for the Telecommunications industry - issued a lithium battery specification that was based on the former one for lead acid.  Despite the events last year with Avestor lithium metal batteries in the AT&T CATV cabinets, the Telecomm industry is moving ahead and getting behind lithium - as long as it is lithium ion. 

This is a market to watch, for everyone involved with Telecomm, batteries and network power backup systems.