Light Reading reported that the financial analysts of Wells Fargo said in a new report that they were lowering the forecast of optical fiber construction this year and next year. But even the expected decline reflects substantial growth.

The analyst wrote: “The final destination is basically unchanged, but there may be some detours on the road to the destination.” Specifically, they pointed out that AT&T, Lumen Technologies, Altice and other American fiber builders are facing various problems, from licensing challenges to labor shortages to supply chain problems.

Therefore, the company said that it is currently expected that the optical fiber industry will jointly build optical fiber connections for more than 8 million new locations across the United States in 2022, down from about 9 million they expected. In 2023, the company now expects the industry to grow to 10 million new locations, down from 11 million previously.

However, this is not entirely surprising. Jeff Heynen, an analyst at Dell’Oro Group, a research and consulting firm, wrote in early 2021: “In the short term, the bigger problem is not demand, but supply.” At that time, he thought that the shortage of optical fiber components and installation technicians might hinder the construction of optical fiber, which Cowen’s financial analysts called “historic construction”.

Michelle Brukwicki, chief financial officer of TDS Telecom, an optical fiber operator, said on the company’s recent quarterly financial report conference call: “Although we are satisfied with the 72000 optical fiber service addresses deployed so far this year, due to some adverse factors in the whole industry, such as labor shortage and complex approval, our progress is slower than planned, which has put pressure on us to achieve our goals.” Despite these difficulties, TDS managers said that they still believe that by 2026, the company can use optical fiber to cover 60% of the existing network (1.2 million locations in total), up from about 36% at present.

Similarly, Lumen Technologies had hoped to establish fiber optic connections to 1 million new locations by the end of this year. However, many analysts believe that this goal cannot be achieved due to the shortage of labor and parts.

Altice also reported licensing issues. Dexter Goei, the executive chairman and former CEO of the company, said in the company’s recent financial report conference call: “New York has always been a bottleneck in approval. In New York, we may have 200000 to 300000 licenses waiting. While waiting for New York’s permission, we were able to transfer some of our work to New Jersey and Connecticut this year.”

Even AT&T, which has the most ambitious optical fiber construction plan in the United States, is in trouble. Wells Fargo analysts pointed out that the operator’s quarterly optical fiber laying data fell from about 1 million sets in the second quarter to just 500000 sets in the third quarter of this year. AT&T’s capital expenditure forecast for 2022 shows that network expenditure will slow down in the fourth quarter. Nevertheless, AT&T insists that its optical fiber coverage will double to about 30 million by 2025.