The United States' Infrastructure Investment and Jobs Act is set to include around $65 billion that targets bridging the digital divide by improving the nation’s broadband capabilities. It will rely heavily on expanding the reach of optical fiber infrastructure, so industry onlookers expect telecom equipment vendors will particularly benefit from the investments.

“The big winners are the whole fiber universe,” including fiber manufacture and management companies as well as civil engineering companies that dig the trenches and install fiber cables, said Roger Entner, founder and analyst at Recon Analytics.

Broadband equipment suppliers like Adtran, Calix, and Nokia; fixed wireless internet vendors such as Casa Systems, Cambium, and Ubiquiti Networks; and fiber and related equipment companies including Corning and Clearfield will also benefit from the investment, Dell’Oro Group VP Jeff Heynen said.

He added that the vendors are doing a good job of educating their current clients, prospects, and engineering firms based on their experience during the original broadband stimulus bill from the Obama administration to the first and second versions of Connect America Fund (CAF).

Cisco and Ciena Take Actions Now

Jonathan Davidson, EVP and GM of Cisco's mass-scale infrastructure group, echoed the importance of education. Cisco plans to help rural service providers, various communities, and its partners that work with local governments better understand how to leverage the infrastructure bill once it's approved, he said.

“When you talk about infrastructure or critical infrastructure, people think about roads and highways, people think about water, people think about power,” Davidson said. “And I think finally they're starting to think about the internet as a critical resource that everyone needs to have access to. It's a human right to have connectivity, and where you have connectivity, you have the opportunity to educate yourself.”

Cisco recently opened its Rural Broadband Innovation Center in North Carolina. An initial $20 million investment for the effort was funded by Cisco’s Country Digital Acceleration Program, the vendor’s vehicle for investment and co-development that’s spawned more than 1,000 active or completed projects in at least 40 countries that are home to about 60% of the world’s population.

Davidson explained that along with offering resources through initiatives like the innovation center, Cisco is also looking to reduce internet costs.

Cisco used its Acacia acquisition to create an architecture called routed optical networking, which puts pluggable coherent optics in routers and switches. Through a reduction in power and space use, this can lower total cost of ownership by up to 50%, Davidson claimed. “This is going to create a faster time to new services for the end consumer, and also make it easier to deploy more critical infrastructure, provide more connectivity services,” he added.

Telecom networking supplier Ciena also continues to invest heavily in research and development efforts to make networks more efficient and adaptive, Ciena SVP and CTO Steve Alexander wrote in response to questions.

“We are helping service providers lower the cost of deploying and managing their networks, so that they can more rapidly bring coverage to those that need it the most,” he said. “To really solve the digital divide, it takes the entire telecom ecosystem. And, it will require optical, wireless, and satellite innovations.”

The current shift to more adaptive, software-centric, and open networks will help drive down the cost of scaling networks into underserved areas. “Networks built in this way can respond dynamically to rapid changes in bandwidth requirements from residential and business users, making them much more cost-effective to operate,” Alexander added.

He noted that programmable and adaptive infrastructure incorporating analytics driven by hard data and intelligent automation can help reduce cost and expand coverage as well.

In addition to investing in R&D, Ciena created the Digital Inclusion initiative to support underserved students, which committed $10 million over five years to expand digital connectivity for 100,000 students around the world. These programs also work with operators such as Verizon, the Bharti Foundation, and Spark to deliver free learning devices and network subscriptions to students.

Fiber Vendors Strengthen Presence in the US

Meanwhile, fiber vendors based in other countries are actively expanding and strengthening their presence in the U.S.

Adtran recently announced an agreement to acquire German telecommunications equipment vendor and rival ADVA Optical Networking in a deal valued at $931.1 million.

“Our combination will make us one of the largest Western suppliers for the markets we serve,” Adtran Chairman and CEO Thomas Stanton said at the time. “Government subsidies in the U.S. for building out fiber infrastructure are expected to be more than double in the upcoming years, including funding as part of the infrastructure bill, Rural Digital Opportunity Fund, and a growing base of state-level funding here in the U.S.”

The deal expands ADVA’s presence in North America and Adtran’s ability to reach the European market more effectively, LightCounting analyst John Lively told SDxCentral.

​​Lively pointed out that more nations around the world have realized that “government spending is really necessary to push [broadband] into the rural areas where the density is not great enough to provide an incentive for the broadband providers to do it on their own. It’s kind of a race to build out their digital infrastructure to make the country competitive,” which presents a real opportunity for the new Adtran and also its competitors, he added.

Additionally, Italian-based telecom cable vendor Prysmian Group aims to increase its U.S. market share and announced plans to invest $85 million in major equipment and technology upgrades at plants in North America. Prysmian has four fiber and copper cable facilities in the U.S., and the company says it continues to experience strong demand in North America for optical fiber in the telecom sector.

“The funding and support, and especially the $65 billion is crucial,” said Patrick Jacobi, VP of telecom at Prysmian Group North America, referring to the infrastructure bill's broadband investment. He noted that access to fiber broadband is still very limited across the U.S.

“At the end of the day, we are the largest energy and telco provider of cables worldwide,” he claimed. So when the infrastructure bill funding comes through, Prysmian will have more resources to support its customers on projects such as electrification of the grid for electric vehicles and the 5G deployments.

Is Cost the Key Issue Across the Digital Divide?

The bipartisan spending plan will “deliver high-speed Internet to every American home, bringing down the price that people pay now for Internet service,” President Joe Biden said in June. “And they’ll close the American digital divide.”

However, Recon Analytics founder and analyst Roger Entner argues that the bill will “narrow the gap, but it will not close the gap.” The investment is the continuation of government subsidies and a heavier push, he added.

The Federal Communications Commission estimates that it would cost $40 billion to deploy fiber networks to increase the coverage percentage from 85% to 98% of households, and reaching that last 2% would cost another $40 billion.

Currently, more than 30 million Americans live in areas where no broadband infrastructure provides minimally acceptable speeds, especially in the rural communities, according to the White House.

Meanwhile, USTelecom's latest report found that 1 Gb/s service speed internet is available to 85% of households, thanks to more than $1.7 trillion investments in broadband and mobile networks over the last 25 years.

Davidson believes a lot has changed in terms of technology and accessibility. “But we still have a long way to go,” he said. “We just don't have that seamless connectivity. It just needs to be pervasive connectivity for not just humans, but for the things that will drive new use cases in the future.”

Entner pointed out that the key issues are twofold: availability and affordability. “The technology is not the issue, the cost is the issue,” he said. “As we are going further out and out into rural areas, it becomes harder and harder, and more expensive to cover.”

Heynen concurred that if providing 100 Mb/s or higher speeds to “truly eliminate at least the coverage gap of the digital divide,” fiber cable, fixed wireless, and satellite services all can achieve it. “Technology is not the limiting factor,” he added. “It's the cost associated with deploying those technologies.”

However, if Congress approves the infrastructure bill, it will “likely have a number of significant effects on our nation’s access to reliable and high-quality broadband,” Alexander said.

The bill is expected to provide funding to every state across the U.S., prioritizing areas that lack broadband speeds of 25 Mb/s. And, given the scale of the funding, Alexander says it should be enough to fund infrastructure in areas where service providers struggle to generate a return.

In addition, the bill could help lower prices for internet service by requiring funding recipients to offer a low-cost plan and comparison shop options. It also includes subsidies to low-income families and boosts competition in areas where existing providers aren’t providing adequate service.

The Impact of Trained Labor and Supply Chain Shortage

“It’s also a labor and supply chain issue,” Heynen warned. “The U.S. government and individual states are pouring a lot of money towards solving the digital divide problem. But they're just running up against the market realities of a shortage of supply.”

On a larger scale, shortages of trained labor, components, and chips will make closing the digital divide more difficult. The global pandemic and related manufacturing facilities shutdowns, as well as the increase in logistics costs, all contribute to the shortage of fiber, fiber conduit, chips, and other components that comprise the network infrastructure, he said.

In addition, “it's really gonna be critical to make sure that the industry strikes while the iron is hot,” Heynen said. “And that means making sure that there's enough trained labor to get these networks built out.”

His biggest concern is with “all the money that's out there through these programs, that the actual project deployments will be delayed because of the lack of trained and skilled workers to actually put these networks into place.”

However, some industry organizations like the Fiber Broadband Association along with smaller and rural telco representation groups have been pooling their resources to set up training programs, Heynen said.