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Focus on Regulation

Superstorm Sandy Foreshadows a New Paradigm for Protecting Critical Communications and Electric Infrastructure

On October 29, 2012, Hurricane Sandy sent a fourteen-foot storm surge through New York City. Winds ravaged aerial infrastructure and water cascaded through subway tunnels and utility conduit systems, leading to a series of power station failures that left Wall Street and the rest of Manhattan below 34th Street without electrical power and with only minimal voice and data services. When the storm passed, more than 110 people had died and early estimates of the economic devastation exceeded $50 billion.

The tragic loss of life and economic devastation that Sandy wrought throughout the Northeast has prompted a new round of calls for improved voice and data infrastructure—a complex and costly proposition that may have a profound effect on communications service providers for years to come.

Shortly after Hurricane Sandy struck, Federal Communications Chairman Julius Genachowski was asked whether the communications problems that New York and New Jersey suffered suggested that the FCC needed to impose new regulations. “We need to look at this,” Communications Daily quoted him as saying. “We’ve had other problems and we are looking at this.”

Prior to Sandy, numerous state and federal agencies already were considering ways to protect critical infrastructure. Some agencies, particularly those agencies in areas that had suffered extreme weather events, are at advanced stages in adopting rules to protect this infrastructure. In the wake of Sandy, however, politicians are already leading the call for renewed attention to the reliability and resiliency of electric and communications infrastructure. To take just one example, New York Governor Andrew Cuomo threatened to revoke a New York utility’s right to operate if it failed to adequately respond to outages.

Although the Federal Communications Commission has not yet commenced formal proceedings, the FCC’s Homeland Security Bureau performed an active role during the Hurricane, tracking, for instance, the recovery rate for the 25 percent of cell towers that were knocked offline in the area affected by Sandy. Earlier this year, the FCC had opened an investigation into infrastructure reliability following the June 2012 derecho windstorm, which caused widespread damage across the Eastern United States, particularly in the Mid-Atlantic region. The derecho investigation focuses on the multi-tiered failure of 911 services stemming from two power outages at a carrier’s Northern Virginia central offices. These outages interrupted 911 services for 2.3 million people, some of whom lost 911 service for as long as four days. Although the FCC has yet to issue its final report, this proceeding has set the stage for significant government action in the months and years to come.

As destructive as the derecho was, Sandy knocked out electric service for an estimated 8.6 million people. And in 158 counties across 10 states from Virginia to Massachusetts, Sandy shut down cell service at one quarter of all cellular sites and cut off cable service to one quarter of all cable customers. Ten days later, more than 760,000 people still did not have power.

Beyond the estimated $550 to $600 million that Sandy could cost telecommunications and cable operators in direct repairs alone, the regulatory and political fallout could cost them even more. In the wake of major natural disasters, state utility commissions have adopted wide-ranging rules seeking to disaster-proof, or in industry parlance, “harden,” critical communications infrastructure. Regulatory initiatives have extended throughout the country, including:

  • California. In the wake of devastating wildfires, California adopted regulations to reduce the fire hazards associated with overhead power lines and aerial communication facilities. Among other things, California now requires annual inspections of aerial facilities in the highest fire-threat areas and requires more stringent vegetation management.
  • Connecticut. After widespread infrastructure outages following two storms in 2011, the legislature enacted a law directing the state utility commission to adopt rules for communications and electric companies to ensure reliable service during natural disasters. Although the rulemaking regarding communications providers is ongoing, the agency has already required electric utilities to better manage vegetation, submit emergency response plans, and conduct outage response exercises annually.
  • Florida. Following a destructive series of hurricanes in 2004 and 2005, Florida implemented a multi-proceeding initiative to harden infrastructure to withstand such storms in the future. Florida adopted stricter construction standards for new infrastructure, required utilities to inspect infrastructure more frequently, and mandated utilities to provide vegetation management programs.
  • Texas. In an effort to prepare its infrastructure for future superstorms, Texas adopted a rule requiring utilities to prepare storm hardening plans and periodically file them with the state commission.

In addition, many states have examined placing critical infrastructure underground. Although undergrounding may increase aerial infrastructure reliability in certain kinds of weather events (such as hurricanes), it is many times more expensive than building aerial facilities. Placing facilities underground increases the cost and complexity of auditing and maintenance and, of course, can actually prove counterproductive during intense flooding.

Sandy has also highlighted the role of maintaining electric power—particularly backup power—to keep communications networks up and running. The service outages suffered by communications networks during Hurricane Sandy can largely be attributed to the loss of commercial power. Service providers were able to mitigate these outages by pre-positioning generators at wireless towers and wireline network sites; by deploying additional mobile generators after the storm; and by deploying mobile temporary wireless facilities. But these measures could not prevent outright the loss of communications services. One direct result of Sandy: renewed calls for regulators to issue backup power requirements for communications service providers.

If the FCC adopts new backup power requirements, the new requirements will likely build on the FCC’s previous efforts. Past efforts at regulating infrastructure included:

  • Overturned Backup Power Rules. FCC Rule 12.2, originally issued in 2007, required local exchange carriers and CMRS providers to have an “emergency backup power source for all assets that are normally powered from local AC commercial power, including those inside central offices, cell sites, remote switches and digital loop carrier system remote terminals.” The Rule required such backup power to be maintained for a minimum of 24 hours for assets inside central offices, and eight hours for cell sites and remote facilities. Although a version of Rule 12.2, as modified by an Order on Reconsideration, still appears in the C.F.R., the Rule never took effect due to court challenges and the FCC’s decision not to contest the Office of Management and Budget’s disapproval of the Rule’s reporting requirements. If the FCC were to issue new requirements, Rule 12.2 likely would be where the Commission begins its work.
  • Ongoing Reliability Notice of Inquiry. The FCC initiated the “Reliability Notice” in 2011 in order to develop a record on a wide range of issues regarding the reliability and continuity of the nation’s communications networks. Although the FCC has not taken any action regarding this inquiry, the FCC sought comment on several backup power related issues, including whether there is a need for backup power requirements, what sorts of standards should be specified in such requirements and whether different standards should apply to different types of service providers.
  • Pending Derecho Investigation. In its derecho investigation, the FCCis examining the role of the failures of commercial power and backup power systems at the two Northern Virginia central offices, which deprived 2.3 million people of 911 service. The Commission’s eventual report will likely discuss backup power requirements at providers’ central offices.
  • Recommendations of the Network Reliability and Interoperability Council. The FCC’s Network Reliability and Interoperability Council (a forerunner to today’s “CSRIC”) has issued best practices related to backup power. These practices include, among other things, recommendations that service providers supply: (1) backup power at cell sites and remote locations; (2) fixed power generators at cell sites; and (3) portable generators at sites lacking fixed generators.

These efforts suggest the FCC intends to scrutinize numerous areas of systemic vulnerability for communications systems, including Infrastructure integrity and infrastructure hardening; disaster preparedness, response, coordination, and remediation; and backup power requirements for communications networks. Finally, although 911-related issues may have played only a minor role during Superstorm Sandy, 911 issues remain critical for disaster-preparedness and promise to be a fertile area for regulatory developments. As the DC-area derecho illustrates, extreme weather events can destroy or disable 911 systems. The FCC’s Public Safety and Homeland Security Bureau is leading many 911 initiatives, including requiring E911 wireless call identification capability, requiring 911 capability for VoIP providers, and evaluating the reliability of the nation’s 911 system. The next 911-related step expected from the FCC is its evaluation of the derecho and 911 reliability.

As extreme weather events increase in scale and frequency, balancing the cost of new regulations against the potential benefits poses challenges for regulators and the commercial industry alike. Although Hurricane Sandy has passed, the political storm over new infrastructure hardening and resiliency requirements has only just begun.