HARRISBURG — A federal official last month added a new wrinkle to Pennsylvania’s plan to use more than $700 million to expand high-speed internet access across the commonwealth.
Speaking at a conference, Arielle Roth, head of the National Telecommunications and Information Administration, said Pennsylvania is “driving up costs” by classifying fiber-optic technicians as electrical workers under the state’s prevailing wage law.
As a condition of receiving the money, Pennsylvania will have to change the way it classifies those workers, she said.
If that condition becomes a sticking point between Pennsylvania and the federal government, or the subject of legal challenges, it could further delay the rollout of $711 million dollars to connect homes and businesses across rural Pennsylvania.
Roth’s comments represent the latest in a series of shake-ups for the massive broadband program, following sweeping rule changes last summer and a delay in federal approval for Pennsylvania’s spending plan earlier this year.
The change Roth called for has previously been resisted by state officials, leading to a protracted legal dispute brought by Verizon and the Broadband Communications Association of Pennsylvania, or BCAP, an industry group.
Pennsylvania’s Department of Labor and Industry maintains that workers installing fiber-optic cable should be classified as “electrical lineman.”
Verizon and BCAP argue the two kinds of work are fundamentally different: Classifying fiber technicians as electrical workers, they say, inflates their wages by about $20 an hour, compared to how much they typically earn in the private sector.
Their push to challenge the Department of Labor and Industry’s decision, however, has been repeatedly rebuffed by the state — first, by a state appeals board and then by Commonwealth Court, which last week sided with the agency.
“For the state to artificially inflate the wage rates on a taxpayer-funded program is just absurd,” said BCAP President Todd Eachus.
The group respects the court’s decision, he said, but there is “a vast difference” between “what the department is legally permitted to do, and what is right and wrong in the creation of the proper classifications.”
It’s not clear how the Shapiro administration will respond to Roth.
Asked about the situation during recent budget hearings, state officials said they had not received specific award conditions from the federal government.
Labor is typically the largest cost involved in deploying fiber broadband.
At the current — and higher — wage rate, Pennsylvania has more than enough funding to connect all the remaining locations in the commonwealth that do not have broadband access, Nancy Walker, secretary of labor and industry, told state lawmakers.
“The unserved customers will become zero, it has nothing to do with the classification,” she said.
An NTIA spokesperson did not respond to requests for comment.
State Rep. Rob Matzie (D., Beaver), who sits on the board of the state broadband development authority, told Spotlight PA he was frustrated by Roth’s comments.
“They changed the rules last summer, now they want to change them again — or at least have said so in a speech,” he said.
“Until we get something in writing, everybody is in limbo.”
Wires, cables, and classifications
Under Pennsylvania law, the Department of Labor and Industry sets minimum rates that workers must be paid on publicly-funded building projects, depending on the location and the kinds of work being performed.
The statute, known as the prevailing wage law, applies to projects worth more than $25,000, and aims to protect local workers by ensuring companies bidding on government contracts cannot gain an advantage by paying substandard wages.
The question of how to classify workers installing fiber-optic cables for broadband in Pennsylvania has been contested for years.
In 2018, the Department of Labor and Industry clarified its position that workers who install “wires” and “cables” fall under the category of “electrical lineman.”
The issue drew little attention until early 2023.
But with a huge surge of federal broadband dollars on the horizon — $200 million in pandemic aid, plus more than $1 billion from the infrastructure package — the department’s decision came under more scrutiny from internet service providers.
Under state law, the agency can create new classifications upon request if it determines there is enough evidence that a new category is supported by “custom and usage” in the construction industry.
In letters, and later in legal filings, BCAP and Verizon — which stands to receive more than $180 million across the two grant programs — argued for a new classification.
Deploying fiber broadband, Verizon said, involves stringing fiber from telephone poles, splicing lengths of it together, or burying it underground. Work covered by the electrical classification, by contrast, involves high-voltage transmission lines, is more dangerous, and requires more training, the company argued. As a result, electrical workers are typically paid around $20 an hour more than fiber installers.
Three broadband experts told Spotlight PA that classifying fiber technicians as electrical workers isn’t accurate.
“We’re trying to have the prevailing wages from one skillset and job applied to a different skillset and job,” said Sascha Meinrath, a professor of telecommunications at Penn State.
State officials, however, declined repeated requests from BCAP and Verizon to create new classifications.
In May 2024, BCAP and two Verizon subsidiaries filed a formal appeal with a state board.
Unions representing fiber and electrical workers joined the case, on different sides.
The Communication Workers of America, which represents Verizon’s fiber technicians, argued in support of the company’s position. Meanwhile, two local chapters of the International Brotherhood of Electrical Workers sided with the state.
BCAP also raised the issue with every member of the Broadband Development Authority’s board, as well as “virtually every member of the General Assembly,” state officials later said in a legal filing.
Last year, Republican lawmakers in both chambers introduced legislation that would require the state to create a separate classification for fiber workers, but the bills have not advanced.
Cost pressures
As Verizon and BCAP’s appeal progressed through Pennsylvania’s legal process, the Trump administration made major changes to the broadband program.
Under President Joe Biden, the program aimed to connect as many locations as possible with fiber internet, which is widely considered the fastest and most reliable broadband technology, but is also the most expensive to deploy.
New rules unveiled last June removed the priority given to fiber and focused on lowering costs. The change made applications from satellite and wireless internet providers more competitive, despite criticisms from experts and advocates that these connections are less reliable and may not be able to keep up with future demands for faster speeds.
Last summer, the federal government warned states with prevailing wage laws to “accurately classify workers” to ensure they followed federal grant guidelines on “reasonable costs.”
In September, the appeals board in the classification case here sided with the Department of Labor and Industry. Verizon and BCAP appealed that decision to Commonwealth Court.
Up against a time crunch, they asked the court for an expedited review: The appeal was filed one month after Pennsylvania submitted its final spending plan to the federal government.
On top of the rule changes, the higher wage rate had made it even harder for companies offering fiber internet to compete for grants, BCAP said. Labor typically accounts for around two-thirds of the cost of deploying fiber, according to a recent report from the Fiber Broadband Association. Satellite and wireless internet are far less labor-intensive.
BCAP argued that the commonwealth’s refusal to create a new classification “creates a dichotomy between proposals that would create many jobs for Pennsylvania workers versus proposals that would take away jobs from Pennsylvania labor.”
State officials countered that accepting the request for new classifications would “effectively “outsource” the administration of the prevailing wage law to “interested third parties” — referring to Verizon and BCAP. They also said creating new classifications would increase the likelihood that some workers are misclassified into the lower-paid category.
In late February, Roth said in a speech at a conference that Pennsylvania “is going to be required as a condition of its grant agreement” to change the way it classifies broadband workers.
Then in March, Commonwealth Court ruled in the state’s favor.
What now?
If the federal government follows through on Roth’s comments, a grant process that is already well underway would see more changes.
“It’s awful late to still be fighting about this issue,” said Doug Dawson, president of CCG Consulting, a national telecommunications firm.
The consequences for Pennsylvania depend on how the change is implemented.
For years, supporters of creating new classifications for fiber technicians have argued that reducing labor costs would free up money to expand broadband to more locations. But at this stage, that appears unlikely: companies already factored in the current rate when submitting applications for the grant funds.
State officials say that the $711 million Pennsylvania expects to receive under the program will be enough to connect the roughly 130,000 locations that still do not have broadband access.
“Paying proper prevailing wages does not make the project unaffordable,” said state Sen. John Kane (D., Chester), another member of the broadband authority’s board.
Pennsylvania currently expects to have roughly $400 million in leftover funds, as a result of the rule changes and a reduction in the number of eligible locations.
What it will do with that money is unclear.
The federal government originally said it would issue guidance on how states can use their leftovers by early March, but recently announced a delay.
The infrastructure law that created the broadband program outlined a range of ways states could spend remaining funds, including helping residents with their internet bills and teaching them digital skills.
This would address a need in Pennsylvania: even in areas where broadband is available, many people cannot afford to pay for it or lack the necessary skills, or devices to use it, the state broadband authority has found.
Advocates say efforts to address these problems are sorely needed, after the Trump administration last year abruptly canceled a separate grant program that aimed to improve digital literacy and help low-income residents get online.