At a webinar on the morning of May 9th, fiber industry executives expressed cautious confidence in the state of the fiber supply chain compared to last year. But they also warned that with the implementation of the $42.5 billion Broadband Fair Access and Deployment plan starting next year, delivery times will be extended.
This webinar is hosted by the Fiber Broadband Association (FBA) and led by supply chain working group members from Corning, OFS, Calix, Shentel, and Graybar. Shortly before this meeting, the FBA updated the white paper on “Strategies to Mitigate Bottlenecks in the Current Fiber Broadband Supply Chain”. The new data in the white paper indicates that the supply chain issues in the fiber to the home (FTTH) field have been significantly alleviated. In the summer of 2022, when the first white paper was released, the delivery time for key components without contractual commitments ranged from 15-20 weeks for Conduit to 52-60 weeks for optical cables.
As of September 2022, there is no contractual commitment for the delivery time of key components. (Source: FBA)
However, according to the white paper, these bottlenecks have now been shortened to 3-7 weeks for fiber optic pipelines and 4-10 weeks for fiber optic cables. At the same time, the delivery times for other materials such as semiconductors and fiber optic bases are still longer. Jerry Cederlund, Senior Vice President of Customer Supply and Fulfillment at Calix, said, “We still find that the production cycles of some components remain at 42 to 50 weeks, and in some cases even longer.
As of March 2023, there is no contractual commitment to the delivery time of components.
The working group members cautioned the industry not to be satisfied with shorter delivery times, as BEAD funds flowing to each state will increase the demand for materials.
Scott Jackson, Chairman of the Working Group and National Broadband Market Manager at Graybar, said, “The Supply Chain Committee predicts that once funding is allocated, delivery times will increase, but not to the level we see in 2022.” This is partly due to the efforts of companies such as Corning and OFS, both of which participated in the webinar and invested in the fiber manufacturing industry in the United States.
Joe Jensen, the head of market development at Corning, said, “We have increased investment by approximately $500 million to increase our production capacity to help us meet the demand for fiber optic cables.” This year, Corning announced that it will build new fiber optic manufacturing plants in North Carolina and Arizona.
In order to alleviate the expected supply bottleneck in advance, the working group proposed a series of strategies, including establishing relationships with suppliers, diversifying suppliers, expanding production capacity and “nearshore outsourcing”, using more intelligent technologies such as artificial intelligence for supply chain monitoring, and – crucially – early planning. The organization pointed out that early planning is crucial for preparing suppliers for project requirements and ensuring that contract manufacturers are in place to complete this task.
Jeff Manning, Vice President of Operations at Shentel, said, “We all know the importance of forecasting in the material world, so we have been trying to communicate with contract manufacturers – let them know, ‘Hey, this is a work roadmap’… so that they don’t switch to another company after the project ends. We are trying to provide them with a great channel for activities to participate in our project.
At the time of the release of this white paper, the federal government of the United States is revising the rules on how to apply the “Buy American” clause to BEAD and fund broadband funding through the American Rescue Plan.
Last month, as reported by Broadband Breakfast, the National Telecommunications and Information Administration (NTIA) of the United States announced a long-awaited limited exemption from last year’s first proposed $1 billion “Middle Mile” funding plan. In its final decision on this matter, NTIA included routing and switching equipment, microwave backhaul, fiber optic transmission equipment, and submarine cable equipment in the exemption scope of the “Buy American” rule, but it deleted the fiber optic cable on the grounds of sufficient domestic supply in the United States. Middle Mile funds are expected to be disbursed this spring and summer.
It remains to be seen how ‘Buy American’ can be applied to the BEAD program, which focuses on fiber optics. The Office of Management and Budget (OMB) in the United States is conducting a review and will issue further guidance to determine how NTIA defines limited exemptions for BEAD. Many industry insiders have warned that the ‘Buy American’ policy will slow down the plan.
Graybar’s Jackson, speaking on behalf of the Federal Bureau of Investigation (FBA) in the United States, stated that the organization had submitted an opinion to the OMB stating that the United States had sufficient fiber optic cables, but other components were “currently unavailable for procurement from the United States, let alone in sufficient quantities”. These components include optoelectronics, optical circuits and network terminals, fiber optic connectors, and fiber optic enclosures.
Earlier this year, NTIA stated that “manufacturers have time to return to shore for production or expand their business,” but it is “carefully monitoring administrative measures such as OMB’s new US manufacturing policy to ensure we meet our obligations.