First chips, now fiber?

The data center and telecommunications industries are having trouble acquiring the optical fiber cables needed for network infrastructure, the result of lingering manufacturing and supply chain disruptions caused by the coronavirus pandemic.

Already facing a pandemic-driven shortage of semiconductor chips, network providers have also been coping with the lack of available fiber for months. AT&T, the largest buyer of optical fiber cable in the U.S., is significantly paring back its planned network expansion because the company can’t secure enough cable to meet its goals.

"Up through the second quarter, we hadn't really experienced any impact from the supply chain disruptions that are happening across the industry, but since the start of the third quarter, we are seeing dislocation across the board, including in fiber supply," AT&T Chief Financial Officer Pascal Desroches said this week, according to Ars Technica.

AT&T’s broadband service will reach 500,000 fewer new homes than expected this year due to the fiber shortage — that’s around 16% short of the company’s initial goal of 3 million new connections by year’s end, according to a statement from AT&T.

But while the shortage’s impact is just hitting industry giants, smaller players have been feeling the effects for months. In July, an FCC filing by NTCA-The Rural Broadband Association, a group representing rural internet service providers, pointed to difficulty acquiring optical fiber as an area of singular concern.

"NTCA members report widespread delays in obtaining communications equipment of all kinds, which extends not only to electronics (such as routers, optical network terminals, and customer premises equipment 'CPE') but also fiber,” the NTCA said in the filing. “At the same time, members also reported shortages caused by an increased demand for the equipment, especially fiber.”

According to the NTCA, manufacturing disruptions in China and skyrocketing demand for fiber have been particularly hard on smaller network providers with less purchasing power and less available capital to stockpile materials compared with companies like AT&T.

For data center developers and operators, the national fiber shortage may present challenges, as network providers suspend or delay efforts to build redundancy or expand network infrastructure. Fewer new home broadband connections also means fewer new users of data-heavy applications like streaming services and gaming platforms. This in turn could lead to lower-than-expected demand for cloud services or space at colocation facilities.

A sustained fiber shortage could also threaten ambitious plans by the federal government to expand broadband infrastructure throughout the country, particularly in rural areas. The $1.2 trillion infrastructure bill passed by the Senate earlier this month designates more than $64B in federal subsidies for new network connections and optical fiber. A lack of available optical fiber cable could present headaches if the bill is signed into law as expected.