US Fiber Broadband Industry may be Exempt from Tariff Impact

According to Jeff Heynen, Vice President of Dell’Oro Group, although the current tariff policy has caused many confusions, fiber broadband operators and their equipment suppliers may not need to worry excessively.

Heynen pointed out in his blog that the most common fiber optic components such as PON optical line terminals (OLT), optical network terminals (ONT), cabinets, and optical cables have been self certified by various suppliers, and the domestic manufacturing volume in the United States has significantly increased. This is mainly due to the requirements of the Build America, Buy America (BABA) and the Broadband Equity, Access and Deployment (BEAD) program. Many fiber optic suppliers, such as Nokia, STL, and Vecima Networks, have relocated most of their manufacturing operations to the United States.

In addition to the BABA policy, some operators’ forward-looking procurement has also avoided risks. For example, both AT&T and Lumen signed multi-year agreements with Corning last year to ensure equipment supply for their fiber optic expansion plans. Heynen said, “This measure by AT&T was originally intended to prevent supply shortages, but now it can also avoid the risk of rising component costs. “

As economic uncertainty intensifies, equipment suppliers are seeking opportunities beyond rural broadband. Adtran stated that BEAD plans to have a decreasing proportion in people’s recent plans, and the company is expanding its fiber optic business outside the United States.

The cable industry is under significant pressure

In sharp contrast to the fiber broadband market, suppliers in the cable and DOCSIS fields will be significantly impacted. CommScope and Teleste produce cable components such as amplifiers in Mexico and Finland respectively, and any level of tariffs will have an impact on them. However, Heynen believes that the US government may provide relief through exemptions and other means. These two manufacturers have already set up some production lines in the US to meet the requirements of the BEAD project.

To cope with the changing situation, cable operators such as Charter and Comcast are accelerating the procurement of amplifiers and passive equipment to maintain external line upgrades. However, the deployment of DOCSIS 4.0 may be further delayed, and operators need to assess the actual impact of tariffs on component prices.

CHR Solutions CEO Arun Pasrija pointed out that domestic manufacturing in the United States may accelerate in 2025, but supply chain adjustments will take at least 12 months to alleviate net cost pressures.

The inventory crisis will not repeat itself

Broadband providers have just emerged from the inventory crisis after the pandemic, when equipment backlog led to a general decline in industry revenue. Heynen believes that although the inventory crisis will not recur, operators may reduce their expenses due to tariffs and waiting periods for equipment upgrades. For example, cable operators need to support the “Unified DOCSIS 4.0” RF tray, which can support both Extended Spectrum (ESD) and Full Duplex (FDX) deployment solutions simultaneously.

Heynen concluded, “Faced with tariff uncertainty, service providers are more likely to choose to slow down their procurement pace rather than take the risk of increasing orders and causing equipment depreciation.”