US telecom groups warn of network construction delays from chip shortagesUS telecom groups warn of network construction delays from chip shortages
'The minimum delay reported by members was generally three to four weeks,' NTCA told the FCC. Some network operators report 'not being able to obtain the equipment for the 2021 construction season.'
June 11, 2021
Amid growing consensus that the US government should pour billions of dollars into the development of broadband across the country, a number of telecom industry trade groups are warning that the ongoing global chip shortage is delaying or completely impeding the construction of networks this year.
"The minimum delay reported by members was generally three to four weeks, with some members reporting a delay of greater than 12 weeks and, in some instances, not being able to obtain the equipment for the 2021 construction season," wrote NTCA in a filing to the FCC.
The trade group – which represents hundreds of smaller network operators all over the country – made its filing in response to an FCC proceeding looking at the effect of the chip shortage on the US telecommunications industry. The shortage – which traces its origins to a number of factors including the COVID-19 pandemic – has been loudly discussed by players throughout the electronics industry. In telecommunications specifically, a number of major companies from Apple to Infinera have warned that the situation will cost them several billion dollars collectively in the coming months.
"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 delay appears to have begun soon after the onset of the COVID-19 pandemic and has escalated since then," NTCA warned. "These concerns continue to the present, and if anything, have grown more significant over the past year."
"The global semiconductor shortage, combined with residual impacts from the COVID-19 pandemic, is significantly affecting the telecommunications supply chain and the broader ICT [information communication technology] supply chain. USTelecom members are seeing extended and uncertain lead times from suppliers, as well as shipping delays," the trade group told the FCC.
Specifically, USTelecom warned that broadband providers have had to make purchase orders up to 15 months in advance, instead of the typical 1-3 months. The group added that vendors are now requiring purchase orders to be placed six months in advance, "and are expected to increase that timeline to a year in advance."
Added USTelecom: "Broadband providers have had to delay customer turn up in some cases. In addition, providers find themselves having to seek multiple customer-premises equipment (CPE) sources to mitigate impacts to their customers. This drives providers to incur additional costs, which may be passed onto consumers."
However, US government officials have acknowledged there's not much anyone can do in the near term to alleviate the situation. After all, chips are manufactured in giant, expensive fabrication facilities, and constructing new ones takes years. Although TSMC, Intel and others have pledged to expand their manufacturing capabilities in Arizona and elsewhere, such efforts likely won't bear fruit for years.
As a result, some telecom equipment suppliers are hunkering down for the duration. "The supply chain issues will stay with us through, from what I can see, at least through the end of this calendar year," Cisco's Scott Herren said recently.
Others are struggling to adjust to the new reality. "You just basically put more money on the table and you get the necessary products you need," Viavi CEO Oleg Khaykin said recently of the issue. As a result, he said the company was "able to meet all our customer demands and not miss any of our deliveries."
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