No Break in Global Chip Shortages

It looks like the chip shortage is going to last longer than expected. At the beginning of this year, it looked like the chip shortage might be over by early to mid-2027. That no longer seems to be the expectation.

As a reminder of the issue, the chip shortage has come about due to chip manufacturers migrating to produce the more profitable chips used by AI data centers. Recent predictions are that 70% of all memory chips manufactured worldwide will go to data centers for the rest of 2026 into 2027. To put that number into perspective, the first public AI model was introduced to the world in November 2022, and the demand for AI chips has grown since then. At that time, about 32% of chips went to the more traditional data centers used for cloud computing.

Electronics of all types rely on chips known as DRAM (Dynamic Random-Access Memory). A DRAM is comprised of a large number of tiny cells that contain one capacitor and one resistor. The simplicity of the structure makes it relatively easy to affordably manufacture chips in volume. The function of DRAM is to temporarily hold data in storage as the computer uses it, and to dynamically cycle in new data as needed during processing.

Broadband devices like Wi-Fi routers, cable modems, and the core electronics used for fiber and wireless networks use a type of DRAM called DDR4. A few other industries, like automotive and consumer electronics, also rely on DDR4 chips. DDR4 chips have less capacity and are cheaper to make than DDR5 chips used for computers and cellphones. By contrast, AI datacenters use HBM (high-bandwidth memory) chips. These are comprised of a three-dimensional stack of DRAM chips. HBM chips are larger and require more wafer space than normal DRAM, and the manufacturing process is more challenging. At least currently, there is a lot more profit in manufacturing the HBM chips.

Three companies have historically manufactured over 90% of all DRAM chips – SK Hynix Inc., Samsung Electronics Co., Ltd., and Micron Technology, Inc. All three companies have shifted a lot of manufacturing capacity to the HBM chips for AI. Micron fully halted the manufacture of DRAM for personal computers. SK Hynix converted its primary DRAM production line to AI chips in late 2024. DRAM wholesalers are alarmed that the average worldwide DRAM inventory in the supply chain has fallen from a normal 17-week supply in 2024 to a 2-4 week supply currently. All three companies have already pre-sold all of their DRAM capacity for the rest of 2026 and well into 2027.

Unfortunately, there is no short-term relief on the way. Micron is building a new mega-factory in Onondaga, New York, to manufacture DRAM that won’t benefit the supply chain until sometime in 2028. The company is expanding a factory in Taiwan that won’t produce new chips until at least the end of 2027. SK Hynix is investing $13 billion in a new factory in Cheongiu, South Korea, that will be completed at the end of 2027. Samsung is building as new factory in Gyeonngi Province in South Korea that won’t be completed until sometime in 2028.

It doesn’t seem realistic that any other companies will step in to fill the market void because of the complexity and intense quality control needed to make DRAM chips. This means a growing shortage of chips for telecom and other industries for the next two years. A few auto factories have already reduced the number of cars being built due to a lack of chips. For telecom, this is going to result in higher prices and longer waits to get electronics. This also means that ISPs at the bottom of the supply chain, those without the buying power of AT&T or Charter, will see the biggest impacts. Also note that ISPs are going to lose broadband customers who can’t afford to replace a dying computer. As always happens with a big price increase, I can’t imagine that chips will ever return to the old prices. The handful of manufacturers are going to expect higher profits from DRAM than in the past, and due to their monopoly, will be able to charge whatever they want.

Network Challenges from AI Traffic

Cisco recently published a report that looks at the impact of AI traffic on networks. It’s an interesting paper because Cisco found that AI traffic does not operate the same as most other web traffic. While the volume of AI traffic is small today, Cisco predicts that we’ll have to make changes to the web over time to accommodate growing AI traffic volumes. Cisco predicts that by 2035, one fourth of all web traffic will be AI agents and AI models in data centers.

Cisco notes that we’ve spent decades optimizing a web that delivers burst traffic, like video. When a video is viewed from the web, the data stream doesn’t have to be delivered evenly in real time. Instead, all that is needed is for the transmission of the video to reach the viewer before they are ready to watch it. Anybody who has watched a video can see that the streamed video is always working to to stay ahead of what you are watching.

AI traffic is very different. Cisco uses the term AI inference traffic to mean the real-time transfer of AI traffic between the AI models operating in data centers and users. AI inference traffic is delivered at what Cisco calls software speed, meaning the receiving end is ready to digest and use the data as it is delivered, quite different than streamed video that is only trying to stay ahead of a viewer.

The difference between AI traffic and normal web traffic is significant. The typical burst of AI traffic lasts twice as a typical burst of video data. While individual bursts of video data are smaller, the flow rate for video, which means the actual delivery time, lasts ten times longer than AI traffic, since video bursts are spread over time in multiple small bursts.

AI traffic is also two-way and requires a good upstream connection. In fact, Cisco found that 9% of AI traffic requires more upstream traffic than downstream traffic. Cisco believes the need for network upload speeds will increase as AI agents mature.

Current network latency is not a bottleneck for AI traffic, but Cisco says latency will become a problem as the volume of AI traffic increases. This will require a major rework of web architecture when latency becomes an issue.

Cisco found that tasks performed by AI generate 450% more traffic than the same task performed in a more traditional way. In Cisco’s vocabulary, AI agents act as power users and use a lot of network resources.

The bottom line is that AI traffic is different from current web traffic and will not only increase traffic volumes on networks, but it will also change the shape, symmetry, and needed priority of traffic.

There have already been discussions of creating a private web to connect between AI data centers. But that would only solve part of the problem, because AI traffic is eventually delivered to users throughout the web. AI traffic is going to create an interesting new set of challenges for network engineers, something that nobody envisioned just a few years ago.

Is There an AI Divide?

I recently attended and spoke at an AI conference. One of the things that became clear to me is that we are probably headed for a new digital divide related to AI. What do I mean by that?

In that short period of time, AI has touched a large majority of computer users. A survey from Pew in September 2025 showed that 95% of adults had heard of AI. At the time of the survey, 47% of people had heard a lot about AI, up from 26% measured in a 2022 survey. That’s bound to be a higher number in the summer of 2026. As you might expect, people with a high awareness of AI tend to be younger and better educated. For example, 62% of adults under 30 had heard a lot about AI, compared to 32% of those 65 and older. 60% of adults with post-graduate degrees had heard a lot about AI, versus 38% of those with a high school diploma or less.

Only about 3% of U.S. households pay for a consumer AI subscription. There is a lot of expectation that AI companies will be forced to greatly increase the costs of monthly access, which will undoubtedly lower the percentage of folks who are comfortable working directly with AI. Most people who use AI today interface through some tool like virtual assistants, GPS navigation apps, streaming algorithms, or weather forecasts. According to a survey from Quinnipiac University from March 2026, 51% of respondents say they use an AI tool, up from 37% a year earlier.

Another Pew poll showed that 46% of Americans hold a negative view of AI, while only 26% view it favorably. 57% believe the risks outweigh the benefits, and 41% actively distrust AI systems.

All of these statistics point to a possible AI-divide, separating those who believe in and use AI, from those who don’t trust AI and refuse to use it. This divide already exists, and the future question that will  have to be answered is if those who distrust AI will eventually be won over. It’s easy to forget that AI has only been available to the public since the end of 2022, which, for a new technology, is still in the infancy stages.

There will be consequences if there is a permanent gap between those who use AI and those who don’t or won’t. If AI brings measurable advantages to those who use it, then, over time, non-users will be at a disadvantage in many ways. There is also the possibility that those who distrust AI will be able to thwart its expansion. There are already numerous communities creating barriers to new data centers.

It’s easy to conclude that using AI is a choice, and that anybody who doesn’t use AI has to live with that decision. But consider a few statistics from the National Center for Education Statistics (NCES). It reports that 21% of adults are functionally illiterate, meaning they cannot complete basic reading tasks, such as filling out job applications, reading medicine instructions, or helping with children’s homework. 54% of adults have reading skills below a sixth-grade reading level. Less than half of adults demonstrate strong reading comprehension skills.

These statistics are relevant when talking about using and benefitting from AI, which is ultimately a language model. Literacy is far less of an issue when talking about the use of broadband, because it doesn’t require advanced reading skills to watch videos and engage in other forms of online entertainment and social media.

It’s way too early in the life of AI to draw any conclusions about a possible divide, but it’s not hard to foresee a likely divide between those who benefit from AI and those who can’t or won’t. In a decade, this might become the most important digital dividing line, more so than the digital skills divide we talk about today.

Broadband Shorts June 2026

Digital Equity Grant Lawsuit Update. In April, a D.C. federal judge declined to pause litigation over the Administration’s cancellation of the $2.75 billion Digital Equity grants aimed at increasing digital literacy and digital skill training. The suit was filed by the National Digital Inclusion Alliance. The Court found that the case covered distinct issues from the related Climate United Fund v. Citibank case and should proceed on its own merits. A month ago, the administration asked the Court to dismiss the case. However, a DOJ attorney told the Court last week that the government would withdraw from the case and let the grants proceed if all preferences for race are removed from the grant rules. This entire suit, from the beginning, has been about the title of the grant program and not about the substance of the program. This should hearten digital inclusion advocates since there is now a chance of seeing the promised grant funded after all. But before celebrating, its worth noting that the White House removed this grant from its proposed budget for the upcoming fiscal year.

Lower Budget for the FCC. Like is happening with many federal agencies, the House Appropriations Subcommittee is recommending a lower budget than requested by the agency for the fiscal year 2027 that starts in October. The agency had requested a budget of $416 million, and Congress reduced that by 6% to $390.2 million. The Congressional appropriations bill also added some conditions to the appropriations:

  • The FCC will be prohibited from updating minimum service standards for fixed or mobile broadband without first evaluating any impact on affordability and consumer choice.
  • The FCC will be prohibited from enforcing the digital discrimination rules passed by the previous FCC.

Update on FCC Router Ban. The FCC expanded its ban on foreign-made WiFi routers to also include “consumer-grade portable or mobile MiFi Wi-Fi or hotspot devices for residential use” and “LTE/5G CPE devices for residential use”. That’s a gigantic issue for the large cellular carriers who have been selling FWA cellular broadband to roughly 1 million new households per quarter. As a reminder, the FCC router ban only applies to any new routers, and carriers and ISPs can continue to import any existing routers they already use today.

But this is quickly going to become a major issue for carriers. The cable industry asked the FCC in the first week of June to swap some components inside existing routers, which would mean these are not identical to routers that were used before the ban. The cable companies warn that without the ability to modify older models that the cable industry faces a huge router shortage in the near future. The Global Electronics Association (GEA) has continued to argue that the FCC’s policy is flawed because security vulnerabilities are not related to where a router was manufactured and is endemic to the technology. Th good news is that the FCC is reviewing, and has approved several new routers.

New Fiber Factories. Corning is partnering with NVIDIA to build three new fiber factories that will increase the company’s capacity by 50%. The factories will be located in North Carolina and Texas. The cited reason for the expansion was the increased demand for fiber for data centers, but this increases fiber availability for all other purposes. NVIDIA is making a $500 million investment in Corning as part of the deal, and the company has an option to buy an additional 15 million Corning shares. This is another example of companies in the AI space investing in each other.

Supreme Court Upholds FCC Fines. The Supreme Court voted 8 to 1 to uphold the FCC’s authority to issue fines against companies that it regulates. The original suit that asked to eliminate the FCC fine authority was brought by AT&T and Verizon, which were trying to avoid fines levied after the two companies sold customer location data. The two carriers had argued that the FCC was improper to fine them since the companies should have been given the option of requesting a jury trial. The two companies said they are considering not paying the fines as another test of FCC authority.

 Spectrum Auction Results. The FCC held the first spectrum auction in four years and auctioned AWS-3 spectrum that is valuable for cellular traffic. The FCC was worried when the spectrum raised only $95 million in the first few days. The One Big Beautiful Bill had ordered the FCC to resume spectrum auctions as a way to raise money to offset tax cuts in the bill. Congress assumed that all upcoming spectrum auctions would raise $85 billion. At the end, the auction raised just over $3.5 billion, which was a big relief to EchoStar. This spectrum was originally won at auction by EchoStar, which was subsequently accused of claiming bidding discounts it didn’t deserve, and the FCC expected EchoStar to make up any shortfall under $3.4 billion. .

AT&T Offers Daily Rates for iPad Users. In a new pricing plan, AT&T is offering a daily rate of $3 to activate broadband on a SIM-enabled iPad. This can be done using the iPad settings and doesn’t require a special app. No contract, subscription, or credit check is required. This is interesting because this is how broadband is sold in much of Africa, where users buy broadband by the day and use those days to tackle all broadband tasks. The $3 rate is not cheap, at $90 per month, but would be a savings for somebody buying usage as few times per week.

Rural Broadband Customer Survey

The OSS/BSS company Innovative Systems recently released its eleventh annual survey about rural household broadband usage. As usual, it contains a number of interesting insights. The survey was conducted in the first quarter of 2026 to consumers across the country.

Here are some of the most interesting findings about usage:

  • 39% of rural households use broadband more than 10 hours per day. Only 7% use broadband for less than 3 hours per day.
  • 46% of rural households have a family member who works at least part-time from home. 66% of those who work from home are under 35 years of age.
  • 66% of those surveyed used some form of AI. The most common uses were personal chatbots, voice assistants (like Siri), smart home devices, customer service chatbots, or tools for creating or enhancing photos and images.
  • 81% of those between 18-34 used an AI tool compared to 50% of those over 65.
  • 97% of respondents use social media. 81% engage in web browsing. 81% use email. 79% stream entertainment. 70% pay their bills online. 35% access smart devices in the home. 33% play online multiplayer games.

The survey asked about how people interact with their ISP:

  • The average respondent is paying $79 per month for broadband. 30% said they would pay more to get a faster speed. 15% said they would accept a slower speed and pay less.
  • 51% of respondents use paperless billing. 42% use a mobile app to check their broadband account. 30% are bundling TV and broadband.
  • Respondents said they would be interested in additional services from their ISP. 28% are interested in security cameras. 24% are interested in cybersecurity protection services. 18% are interested in TV services.
  • 32% of subscribers don’t know the speed tier they are paying for.
  • 14% buy speeds less than 100 Mbps. 36% buy speeds between 100-499 Mbps. 25% are buying speeds between 500 and 999 Mbps. 26% are subscribed to gigabit or faster speeds.
  • Almost half of customers engage with their ISP using social media. Over half of customers prefer to be contacted by email or text.
  • 19% of respondents have left a review online about their ISP.

The survey also asked about satisfaction with ISPs. Here are some of the key findings:

  • 18% of those surveyed have changed ISPs in the last two years. 50% changed to get a lower price. 42% changed to get a faster speed. 42% were looking for better reliability.
  • When asked for the factors that drive satisfaction with an ISP, the responses said good and consistent speeds (69%), fair price (66%), good customer service (52%), good technical support (37%). Of the lowest importance were the ability to bundle (27%) and the fact that the ISP is local (4%).
  • 57% said they would consider buying broadband from their cellular provider as long as the broadband met their speed and reliability needs. This ranged from 66% of customers aged 18-34 and 44% for those older than 65.
  • 43% said they would consider broadband from Amazon Leo if it is comparable in speed and reliability. This ranged from 50% of those 18-34 and 36% of those over 65.

Finally, the survey asked rural households about television viewing:

  • 45% still get TV programming from a cable or satellite company.
  • 33% get programming from an online streaming service.
  • 15% only watch TV from an antenna.
  • 16% don’t watch TV.

Promises Made, Promises Broken

I noticed that the Charter/Cox merger has been approved by the FCC, the DOJ, and the Public Service Commission of New York. The final hurdle is the California Public Service Commission, where Charter is hoping to get a decision by August from the CPUC. In exchange for an agreement for the merger, Charter has promised to spend at least $275 million on network upgrades to achieve symmetrical gigabit speeds across its California footprint within three years. Charter also promises to offer a statewide low-income price plan for five years that includes a $20 plan for 100/20 Mbps speeds, and that would be free for Lifeline Pilot participants. Finally, Charter promises to provide $23 million in support to the nonprofit CETF (California Emerging Technology Fund) for digital literacy and device subsidies, plus $7 million to regional broadband groups.

I had a chuckle when I saw the promises being made by Charter. It reminded me of many times that carriers didn’t follow through on big promises made to regulators. One of the most memorable broken promises came from Verizon in Pennsylvania – a story that has been well documented in a book by Bruce Kushnick, The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net. In 1993, the State agreed to deregulate Verizon and provide big tax breaks as long as Verizon would deliver 45 Mbps broadband service to the entire state by 2015. By the early 2000s, Verizon reneged on the offer and reduced the promised speeds to 1.5 Mbps. Verizon eventually built FiOS fiber in selected urban and suburban markets and ignored the rest of the state. There were some rural Verizon customers who never even got the slow DSL.

In 1999, the two Baby Bell companies SBC and Ameritech, asked to merge. SBC promised regulators that the merger would spark a new, nationally competitive telecommunications carrier and committed to expand beyond its thirteen-state home region. Within a year of the deal closing, the FCC opened an investigation against SBC for failing to meet its competitive entry timelines and because of growing volumes of consumer complaints about declining residential service quality.

When AT&T asked in 2015 to acquire DirecTV for $48.5 billion, the company promised federal regulators to build out more than 12 million high-speed fiber connections. The company quickly fell short of that promise, and many believed that the company was faking fiber passings by counting apartment complexes that were near to its existing fiber network. AT&T eventually decided that building fiber was its best business plan, but it had totally blown off the 2015 promise.

When Charter asked to merge with Time Warner Cable in 2016, the company promised regulators that it would expand its network to unserved rural areas, that it would hold down prices, and would not implement price caps. By 2020, Charter petitioned the FCC to get off the hook for these promises and called them “unduly burdensome”

In 2020, when T-Mobile wanted to buy Sprint for $26 billion, the company promised it would rapidly expand rural 5G coverage. The company also promised to freeze post-paid rate plans for three years. Soon after the merger, the company said the agreement was no longer feasible.

I could fill a few pages with similar stories. Big carriers make whatever promises are needed to get approval for mergers or deregulation, and then typically proceed almost immediately to find ways to get out of what they promised. It’s hard to predict if California will approve the Charter/Cox merger. But I think California fully understands that promises made related to mergers are rarely promises fully kept.

FCC Questioning State Pole Regulation

The FCC issued a Public Notice with the longest title I can remember: Wireline Competition Bureau Reminds Reverse-preemption States of Obligation to Effectively Regulate Pole Attachments and Seeks Comment on Need for Changes to the Commission’s Certification Rules to Ensure Effective State Pole Attachment Regulation.

The Public Notice asks for comments on the effectiveness of regulations in States that have chosen to regulate pole attachments, meaning rules that regulate how telcos and others get access to poles that are in the public right-of-way. Comments are due on the Public Notice by July 13, 2026.

States were given the right to regulate pole attachments in Section 224 of the 1934 Communications Act. Twenty-three States have elected to regulate poles over the years, and the FCC has created regulations for the States that have not done so. In one of the oddities of regulatory language, States that have elected to regulate pole attachments are said to have “reverse-preempted” the federal pole attachment rules.

The Public Notice is seeking comments on whether States are properly regulating the rates, terms and conditions of pole attachments. More specifically, the FCC is asking what steps it could take to make sure that state pole attachment regulations are “transparent and effective”.

In strongly worded language, the FCC reminds States of the “obligation to effectively and clearly regulate pole attachments in their jurisdictions.” In what feels like a veiled threat, the FCC asks if it should require reverse-preemption States to refile new certifications for FCC review. This could present an opportunity for the FCC to refuse the certifications and take over the pole attachment rules. It will seem likely that there will be lawsuits if the FCC tries to take back jurisdiction of pole attachments, since the state’s right to regulate pole attachments is clearly stated in the Communications Act.

There is one annoying mention in the Public Notice that this is being done to protect the $42 billion BEAD program. NTIA’s Benefit of the Bargain rules cut the amount that will be used for infrastructure in half. Of the remaining BEAD awards, a lot will go to satellite, fixed wireless, or buried fiber construction that will not require the use of pole attachments. If only this was being done to protect $42 billion of infrastructure construction.

I also have to wonder about the timing of this. Many States are in the process of signing BEAD contracts, and some of the earliest steps for an ISP starting a new project is to immediately start the pole attachment paperwork process along with seeking rights-of-way. Even if the pole attachment rules could be better in some states, the FCC’s action would make more sense if it had been started a year earlier.

I think that it would be very disruptive if the FCC chooses to seize pole attachment regulation back from the states. At a minimum, in a state where the regulations reverted to federal authority, it seems likely that pole owners will take some time to fully digest and cope with the change, and to look at forms and processes.

I could be wrong, but this feels more like the FCC trying to take regulatory authority from States more than an attempt to improve BEAD. While BEAD is a large grant program, the many other grant programs in recent years have collectively funded more fiber than BEAD. My guess is that some States will fight to keep their own pole attachment rules, and any attempt to do this will result in a protracted court fight, and that BEAD will be in the rearview window before this is settled.

Extreme Market Segmentation

Linda Hardesty of Fierce Network recently quoted Verizon’s new CEO Dan Shulman as saying that the company is looking at market segmentation. He said that instead of pricing for a few market segments that Verizon might be considering hundreds of thousands of segments. ‘

Hardesty said this stunned her, because nobody has ever talked seriously about market segmentation to that extent before. What Verizon is thinking about doing is to develop multitudes of products and prices to fit small market niches, or even individuals.

This is not entirely a new idea. A few years ago, the public advocate from the California Public Service Commission conducted a detailed study and looked at broadband rates offered by Charter and other big ISPS across Los Angeles and a few other larger markets. They found that Charter prices varied by neighborhood, and surprisingly, the highest prices were in the poorest neighborhoods. Charter mostly did this through promotional and special rates, but there was a clear delineation of rates by the incomes of neighborhoods.

When Verizon talks about segmenting into hundreds of thousands of segments, they are talking about going far beyond what Charter was doing in California. Verizon is talking about profiling customers and making pricing offers specific to each customer.

You might wonder how they can do this. It’s well known that there are companies like Acxiom, Experian, and Epsilon that have created a detailed profile on families and individuals. These profiles are highly detailed and combine information about earnings and financial status, lifestyle, and buying habits. Verizon can combine this with what they know about every customer to be able to offer them the price or package they think will sell. This doesn’t just mean defining low rates, and ISPs might us the profiling to charge more to people they think will pay it.

It’s likely that any attempt to do this is going to be aided by AI. One of the axioms of the telecom industry over the years has been to keep pricing simple to make life easier for the customer service and billing process. But with AI tied to billing systems and customer service that may no longer be needed.

Shulman is oversimplifying when he says that Verizon will be expanding from four segments today, because the company surely has more than that. They company has offered varying special prices to land new customers and negotiates rates to keep existing customers, and probably has dozens of slightly different rates, if not more. But that’s a far cry from separating the market into hundreds of thousands of market segments.

There can only be two reasons why Verizon would do this. Hardesty suggests it’s to make more money by creating multiple tiers of customers, including a tier for those willing to pay premium rates for concierge service.

But I think there is an alternate possibility, which is to reduce churn. Cellular competition, in particular, has gotten fierce and the three big cellular carriers see about 1% of postpaid customers churn each month and 3-4% of prepaid customers. This high level of churn is what drives the gigantic advertising budget of each carrier, and perhaps tailoring custom plans to match the individual customer preference might increase loyalty, reduce churn, and reduce costs.

If Verizon implements this, I’m sure the rest of the industry will be watching closely. If extreme market segmentation is successful, then AT&T and T-Mobile will have to follow to keep even in the competition game. But if it’s unsuccessful, the other carriers will gleefully watch Verizon struggle. It’s going to be an interesting experiment to watch if the company really goes for it.

Walking Away from BEAD

NTIA has released all but four states to begin signing BEAD contracts with grant winners. Mississippi and Oklahoma have gotten final approval by NTIA but are waiting for approval from NIST. NTIA has still not approved the grant proposals from California and Illinois.

Now that the process of negotiating contracts for grant winners has started, news is seeping out of some grant winners backing out and refusing to accept the BEAD grant awards.

The largest BEAD award being rejected is by Astound in Texas, which is walking away from $166 million in grants. The company explained this by saying that it had only won five of the thirty-three project areas it had applied for, and that the remote geographic areas of the awards made no sense without winning more awards. I have to wonder if the company’s pending merger with Google Fiber also played a role in the company walking away. While it isn’t official, I’ve heard through the grapevine that Astound is also going to walk away from $112 million of BEAD grants in Oregon. The company has also tentatively won $100 million in Washington.

Another ISP walking away from a lot of awards is Resound Networks. Resound is walking away from $60.2 million in New Mexico, $23.1 million in Texas, $8 million in Kansas, $5.2 million in Arkansas, and $3.9 million in Colorado. The company also has relatively small grants in Arizona and Oklahoma. Resound is tentatively slated to win $34.4 million in California, which still has not been approved by NTIA.

There are three ISPs that haven’t signed grant contracts in Nebraska: Amazon, Northeast Nebraska Telephone Company, and Pinpoint Communications. I have to wonder what it means for a satellite company to not accept a grant, since the company has grant awards across the country.

There are bound to be other ISPs who will walk away that we haven’t yet heard about, since States have six months to get contracts from grant winners after the State signed a contract with NTIA for the BEAD money. I’ve been hearing about a lot of smaller ISPs that are still thinking about walking away from BEAD. Some will do so because the too-low grant funding means they can’t get a letter of credit.

It won’t be surprising if there are more rejections of BEAD. When NTIA initiated the Benefit of the Bargain rules, it significantly sliced the amount of grant funding per location. Many ISPs had said before Benefit of the Bargain that the long-term math for taking BEAD grants was marginal. That math took a big turn for the worse when NTIA forced the States to further lower the amount of grant awards. Any ISP that stays after the Benefit of the Bargain is accepting a smaller margin than they originally had hoped for.

At the same time that the amount of grant awards has been squeezed downward, ISPs are seeing inflation in the cost of fiber construction – inflation much higher than the rate of increase for the whole economy. The Fiber Broadband Association conducted a survey with members at the end of 2025 and asked about expected increases in construction costs for 2026. 88% of the respondents expected a cost increase for construction in 2026. 62% of respondents expected a ‘slight’ cost increase of less than 10%. 26% expect a cost increase of more than 10%. 9% expect costs to stay the same, and 3% expect costs to decrease by less than 10%.

It will be interesting to see how ISPs respond to this same question at the end of 2026. The industry is being pounded by increases in chip costs due to shortages as chip manufacturers have pivoted to building AI chips. Higher oil prices have affected the cost of shipping and operating work vehicles, and oil is a raw material component of things like fiber sheathing, conduit, and electronics housings. There is a lot of pressure this year from wage increases. The Federal Reserve made it clear last week that it will not be lowering interest rates this year and may have to instead increase them by year’s end.

We’re still seeing defaults six years after the initial RDOF awards, and I expect there will be ISPs that accept BEAD now but realize in a few years that they can’t make the math work.

I feel sorry for State Broadband Offices that are being asked to find replacements for ISPs that reject BEAD awards. It feels unlikely that NTIA will allow States to increase the size of the grant awards after a rejection. Every default could become a windfall for satellite companies, while a lot of communities are losing the chance to get fiber.

Satellite News June 2026

FCC Approves AST SpaceMobile Constellation. The FCC approved an application from AST SpaceMobile to launch an additional 248 low-orbit satellites to deliver mobile service using 700 MHz and 800 MHz spectrum. These is a premium spectrum for this use since it carries further and penetrates clouds and storms better than higher frequencies. A year ago, the FCC gave the company permission to test direct-to-device connectivity using Band 14 spectrum, which is 700 MHz spectrum that had previously been reserved for public safety and first responder emergency use.

AT&T is Looking for Multiple Partners for D2D. AT&T Chairman and CEO John Stankey said recently that the company is looking at additional partners other than its current partnership with AST SpaceMobile for offering direct-to-device cellular services. He noted that SpaceX should have better capacity after it purchased spectrum from EchoStar. He also noted that Amazon will be a player when it completes the acquisition of Globalstar in 2027. Stankey noted that he is not interested in helping the D2D satellite companies disrupt the terrestrial satellite business, and that he believes that D2D is an alternate service that makes the most sense where cell networks don’t reach.

UK Launches D2D Service. The UK became the first country in Europe where a cellular company is offering D2D service for smartphones that is integrated into normal cellular service without the need for a special phone or a separate app. Virgin Media O2 uses the Starlink constellation and licensed 1800 MHz spectrum to offer an add-on service. Virgin customers can add satellite cellular service for £3 per month or can get the service for free with premium cellular packages. The initial service offers messaging and data, and works automatically in areas where Virgin doesn’t have good cell coverage.

This action in the UK is prompting the European Union to accelerate its effort to finalize spectrum for D2D service. The EU’s current spectrum plans include using 2 GHz spectrum, which is prized by LEO satellite companies, but Starlink and Amazon Leo are worried about current EU plans to allocate most of this spectrum to European satellite companies.

SpaceX IPO. In preparation for the SpaceX IPO on Nasdaq, the company announced that it had $13 billion in losses since the beginning of 2023. In 2025, the company had almost $18.7 billion in revenue but had an overall loss of $4.9 billion. The recent losses were driven by xAI, the company’s artificial intelligence venture that was founded in 2023.

The SpaceX IPO (SPCX) sold 556 million shares at a price of $135 on June 12. On the day when trading opened, the price started at $150 per share and closed at $160.95 at the end of the first trading session. The stock climbed to as much as $216 per share before ending around $190 per share yesterday.

Blue Origin Disaster. Amazon’s space ventures suffered a setback when the heavy-duty New Glenn rocket exploded on the launch pad in late May at the Canaveral Space Force Station in Florida. This will likely slow the launch of Amazon Leo, as this rocket was scheduled to carry 48 satellites into space. This also probably delays the company’s planned moon mission. The FCC had recently granted Amazon a requested delay in meeting the dates for activating the broadband satellite constellation.

100 Million Starlink Subscribers? New Street Research predicted that Starlink could reach 100 million subscribers by 2034. The prediction is based on the increasing number of satellites in the Starlink constellation and the technical improvements that will be introduced with the next generation of V3 satellites. For Starlink to reach that many subscribers will likely require the company to compete in urban or suburban areas with lower prices.