Tag Archives: FBA

Is There a Fiber Crunch?

There have been a number of articles in the industry press predicting a major shortage of fiber in 2026. Fiber manufacturers have already been working at full capacity due to the large amounts of fiber networks being built. Telcos like AT&T, Frontier, Brightspeed, Windstream, Consolidated, and many others have been busy building fiber. The big cable companies like Comcast, Charter, and Cox have been building fiber. There are numerous fiber overbuilders like Lumos and Metronet, which were purchased by T-Mobile and numerous other companies funded by venture capital. By my math, there was also over $13 billion spent in 2025 to build fiber, funded by grants and subsidies like ARPA, Capital Project Funds, RDOF, ReConnect, EA-CAM, etc.

2026 should also be a busy year for fiber construction. The telcos, cable companies, and fiber overbuilders are all planning a lot of fiber construction. There is still a little over $10 billion in planned fiber construction funded by the same existing subsidy and grant programs, plus there will start to be orders for fiber from BEAD grants as the year goes by.

Fierce Network talked to the major fiber manufacturers like CommScope, Clearfield, Corning, and STL, and was told that the companies are seeing unprecedented demand to provide fiber for AI data centers. This demand comes from both inside new data centers and also for the networks that tie data centers together.

I think people will be surprised to hear the amount of fiber wiring needed inside an AI data center. The Fierce Network article quoted Rahul Puri, the CEO of the Optical Networking Business STL, as saying that an AI data center needs 36 times as much fiber wiring as a normal data center. Anybody who’s ever been in a traditional data center will be floored by that assertion since there are typically large amounts of fiber wiring either under the floors or overhead of racks in a traditional data center. A Fierce Network article in December said that the giant 1 million processor data center being built in Louisiana by Meta will require 8 million miles of individual strands of fiber. Most of these strands will be part of fiber bundles of hundreds to a thousand fibers. The data needed to connect processors is gigantic.

Corning and other vendors are working on new technologies that will provide the needed connectivity within a data center, such as co-packaged optics that place optics and electronics closer together. Other vendors like STL are investigating hollow-core fiber to increase density and decrease latency.

There is also a huge demand for middle-mile fiber to connect AI data centers. Research firm RVA LLC predicts that 92,000 new route miles of fiber will be needed to connect data centers over the next five years. These are also big fiber bundles. My firm worked on a data center proposal last year that didn’t come to fruition, where the data center builder wanted a 512-fiber backhaul network.

One of the biggest challenges for the vendors is that there are different kinds of fiber for different uses, like inside a data center, in middle-mile networks, in last-mile networks, for drops, and inside buildings. The challenge for vendors will be to match manufacturing output with demand.

Vendors and industry experts are predicting that some kinds of fiber could experience ordering backlogs as long as a year. Vendors are likely going to satisfy their largest customers first, so smaller projects might find themselves in a bind.

It will be ironic after all of the hurry up and wait for BEAD if grant projects are badly delayed due to a fiber supply chain problem. But all of the industry predictions are based upon demand staying firm. There  are a number of credible predictions that there will be an AI market contraction in the coming year since data center supply seems to have outstripped the ability to generate the revenues needed to make the industry viable.

The Fiber Broadband Association says it is not expecting big backlogs in the fiber needed to build last-mile networks. I guess none of us will know for sure until we start seeing smaller ISPs place orders for fiber later this year.

Constraints on Satellite Broadband

In a 2024 end-of-year memo, Gary Bolton of the Fiber Broadband Association said that FBA had partnered with the consulting firm Cartesian to look at the pros and cons of Starlink in the U.S. FBA says that report shows that Starlink currently has 1.4 million customers in the U.S., and with the current satellite constellation has the capacity to serve 1.7 million customers.

FBA is a pro-fiber trade association, and as such, it probably takes the most pessimistic look at satellite capacity. The short summary I’ve seen of the Cartesian report says that satellite broadband has some natural limitations on capacity. The implied conclusion of the report is that Starlink can’t serve everybody in rural America.

Starlink has never claimed that ability or goal. However, since there are those advocating that most of the $42 billion BEAD grant award should go to satellite broadband, it’s fair to assess Starlink’s capacity.

Starlink currently has 6,957 working broadband satellites with the stated goal is to grow to 30,000 satellites. That would be a 430% increase, and if the FBA claimed limit of 1.7 million U.S. customers is right, that implies a future capacity of more than 7 million U.S. customers when the constellation is completed – which could be even higher if new satellites have more capacity than older ones.

One of the more important FBA claim is that Starlink has a limitation on the number of people that can be served in any geographic area. That seems to be true today as evidenced by reports that Starlink has quietly implemented waiting lists for service in some parts of the country, presumably due to local capacity.

Just as with any ISP, Starlink also has potential limitations due to backhaul. Starlink currently shows 64 working ground stations, with plans underway to complete 99. A ground station is where broadband traffic passes back and forth between satellites and the terrestrial Internet. Starlink can obviously build more ground stations in the future as needed.

Perhaps the biggest constraint on Starlink is getting the needed spectrum to communicate between satellites and ground stations. Roger Entner of Recon Analytics was quoted recently as saying that Starlink doesn’t have enough spectrum today and new spectrum doesn’t seem to be likely over the next several years. Anybody who follows filings at the FCC has seen numerous filings made by Starlink and cellular companies over the last five years arguing about the allocation of spectrum. A lot of the spectrum that Starlink needs is also currently being used by the military and other parts of the government. It seems likely that Starlink will eventually get the spectrum it needs, but spectrum fights have never been resolved quickly, and this will be a slow struggle.

I have to agree with FBA that Starlink isn’t prepared to handle everybody in rural America today – something I’m sure Starlink would acknowledge. The question that FBA is raising is if satellite capacity can grow quickly enough to meet increasing demands from BEAD plus normal growth. The BEAD program gives ISPs four years to implement BEAD awards. Starlink’s first satellite launch was in May 2019. Who knows what the company can do in four more years?

The Continued Growth of Fiber

The Fiber Broadband Association announced the results of a fiber deployment survey from RVA LLC Market Research & Consulting. That firm has been tracking the deployment of fiber across the U.S. for many years. The survey was for the year ending in September 2024.

The survey reports the following:

  • ISPs built fiber to pass 10.3 million homes in the last year, a new all-time high. That includes 8.4 million new passings that got fiber and 1.9 million passings that got an additional fiber connection.
  • RVA estimates that fiber now passes 56.5% of U.S. homes.
  • Fiber ISPs are increasing penetration rates on fiber over time, with an overall take rate of 45%. ISPs are achieving a 20% penetration more quickly than in the past.
  • RVA claims that cable company penetration rates in fiber neighborhoods have fallen by 33%, with the other new fiber passings coming from customers that previously had DSL or other technologies.

The remaining fiber market is still immense, with almost 149 million homes that don’t have fiber. RVA estimates this at:

  • Densely populated mid to high-income areas – 90.6 million.
  • Densely populated low-income areas – 21.5 million.
  • Small towns / rural – 29.2 million.
  • Second homes – 7.3 million.

The following graph from RVA that shows fiber construction over time is interesting.

The early fiber growth from 2005 – 2008 mostly came from Verizon FiOS. No other large ISPs climbed on the fiber wagon for many years. The fall-off of fiber construction during the pandemic is dramatic, with over 3 million fewer new homes being passed with fiber in 2020.

There are a lot of different entities building fiber. The biggest market share is held buy the large telcos and their affiliates (63.8%). Next comes smaller tier 2 and 3 telcos (11.6%), fiber overbuilders (10.2%), cable companies (9.3%), municipalities (2.7%), and electric cooperatives (2.4%).

A Technician Shortage?

The Powers and Communications Contractors Association (PCCA) along with the Fiber Broadband Association announced the completion of a study, Broadband Markets Workforce Needs, at the recent Fiber Connect 2024 convention that predicts the industry is going to be short of the fiber construction workers, fiber technicians, and engineers needed to meet the upcoming broadband deployment driven by BEAD and other federal grant programs.

To avoid construction delays, PCCA suggests that 28,000 more broadband construction technicians and 30,000 more broadband technician workers are needed to meet the demands of constructing BEAD and other federal broadband programs. While not estimating a number, they also say that the industry is short of the drafting, design, and engineering resources needed to support the grant programs.

PCCA also predicts that there will be 199,200 fiber construction workers and technicians retiring over the next decade who will have to be replaced.

PCCA warns there will be significant BEAD construction bottlenecks and delays if the industry can’t find a way to fill these positions.

The contractor industry has a conundrum. I’ve talked to a number of my clients lately who say they are having no problem finding crews for current fiber projects.  It’s hard for a construction contractor to justify putting a lot of effort and cost into hiring and training technicians at a time when there isn’t any apparent labor shortage.

There is no doubt that BEAD is going to create a big construction bubble. By the time you consider ISP matching funds, BEAD will result in more than $50 billion in broadband spending condensed over a few years. I predict the bulk of this money will be spent between 2026 – 2028.

BEAD isn’t the only program driving construction. There will be federal spending during this same time period for RDOF and ReConnect. There are plenty of projects still underway and funded by ARPA grants. There will be  some early spending from the EA-CAM subsidy. It’s even possible that there could be spending from the FCC’s proposed 5G Fund.

On top of the federal funding is the continued fiber expansion of the biggest telcos, cable companies, and fiber overbuilders. If these companies stay on their predicted expansion paths, they might easily be building fiber to pass 5 – 7 million new locations per year during this same time period. There also seems to be a boom in long-haul and middle-mile fiber construction.

The PCCA is not wrong. There is a tsunami of fiber construction coming. Contractors are going to want to meet the demand. But I expect they will also be cautious. Contractors have seen many booms and busts over the years – ask any contractor who worked for Verizon 5G. As busy as BEAD is going to make the industry, contractors are not going to want to invest too heavily in expensive construction equipment that might not have much use when the bubble is over.

I’m just conjecturing, but I expect we’re going to see exactly what PCCA is predicting – labor supply chain delays. If past experience is a teacher, this is going to be an insidious shortage. Most projects will find a willing contractor. But those contractors will struggle to keep the needed staff during the life of the project. Subcontractors who work on projects will disappear overnight if somebody offers them more pay elsewhere. Regardless of how a shortage manifests, fiber construction projects will fall behind schedule as labor shortages pile up.

Lobbying for Grants

As you might expect, the lobbying is becoming hot and heavy to position ISPs to win the $42.5 billion of Broadband Equity, Access, and Deployment (BEAD) grants that will likely start being awarded in 2023. This is one of the most interesting lobbying challenges I’ve ever seen because there is no one central place that will be awarding these grants.

Congress gave the responsibility for these grants to the NTIA, but the money is going to flow from them to the states. There seems to be a lot of lobbying happening with state legislators, but even that might not be very effective. States must file broadband grant plans that largely follow the rules established by Congress as interpreted by the NTIA. States will have some leeway on how to award grants, but states will still have to follow the basic NTIA rules.

I fully expect many states will have bias. This could mean favoring grants for the large incumbents or favoring grants for cooperatives or municipalities. But even states with a bias will have a hard time turning down solid grant applications that includes a significant amount of matching funding from a local government. This raises the big question of who should be lobbied – the NTIA, state legislators, or individual communities? From what I’m seeing, the answer seems to be all of the above.

We’re starting to see the lobbying position of some of the major industry players. Trade associations have filed comments with the NTIA outlining how they think grants should work. Open letters are being sent to legislators, and to state and federal agencies arguing for various positions. Happening more quietly is one-on-one meetings with local and state government officials. Following are a few of the lobbying positions that I’m starting to regularly see.

The Wireless Internet Service Provider Association (WISPA) represents ISPs using wireless technologies to reach customers. The gist of the WISPA comments is that BEAD funding should not be used to overbuild broadband in any area where an ISP is already delivering broadband of at least 100/20 Mbps service. This position is making the argument that grants should not be used to overbuild any technology, including wireless broadband, that is delivering adequate speeds. It’s easy to understand this position since there has been a lot of discussion about basing grant eligibility on the fastest landline broadband options available today and ignoring the speeds of existing wireless broadband.

The NTCA – The Rural Broadband Association represents independent telephone companies. Its filed comments voice a similar concern against overbuilding but are not quite as rigidly opposed to some overbuilding. NTCA said it is opposed to providing funds to overbuild areas that already have technologies capable of 100/20 Mbps. However, the association said it is open to the idea of combining funding from the BEAD grants to supplement existing federal or state grants if the extra grant funding will boost the speeds of existing technologies to 100/100 Mbps or gigabit speeds. This concept is being referred to as the ‘layering of grants’ to describe combining federal, state, and local grants.

USTelecom, the lobbying arm for the big telcos recently issued a letter to everybody in DC with its thoughts on the best way to administer the grants. They ask to rescind any grant rules that favor municipalities, cooperatives, or non-profits. They want money to go to communities only through partnerships with ISPs. They want past experience as an ISP to be the most important factor in judging who can be funded. This is clearly a wish list that would blatantly slant the money towards the big ISPs.

The Fiber Broadband Association (FBA) represents ISPs that build gigabit fiber networks. The association argues that fiber is the ultimate broadband technology and that federal grant money should not be used to fund any technology that does not create a long-term benefit to a community. This argument is best summarized by saying that grants should only be used to support technologies that are future-proof.

Interestingly, I’m not hearing any lobbying coming directly from the big cable companies – and that makes sense.  For example, Charter is clearly chasing grant money across the country and is promising to build fiber if awarded grant funding. But Charter can’t be publicly talking about how fiber is a future-proofed technology when it owns huge hybrid fiber/coaxial networks.

I think the big ISPs also understand the nuances of the BEAD grants the best. I’m starting to see the big ISPs show up in local communities asking to create partnerships. There is not a lot to be gained by Charter of AT&T lobbying the NTIA or state grant offices to get the policies they want, although I’m sure they are doing so quietly. The best way to win the BEAD grants is to go arm-in-arm with a local community partner to ask for the funding.