Fiber news

Shortage of fiber optic cables threatens global digital connectivity

Consumers face a struggle to stay connected around the world. /David Gannon/AFP

Consumers face a struggle to stay connected around the world. /David Gannon/AFP

European businesses, governments and individual consumers who want faster, more reliable internet speeds face a bumpy race due to a global shortage of fiber optic cables.

Prices have soared in Europe thanks to a shortage of key components such as helium – compounded by rising delivery costs and a sticky labor market – at a time when demand for broadband continues to rise, especially during the pandemic.

Prices have more than doubled from record highs in January 2021 in Europe, according to market research firm Cru Group, and that has huge consequences for everyone.

“The most significant impact for consumers is longer delivery times,” said Michael Finch, principal analyst at Cru. “Current lead times for optical cables used in our broadband or fibre-to-the-home (FTTH) networks can now be up to a year in many areas. cables now.”

Obstruct public access

Finch warns that this will impact delivery times not only for broadband providers, but also for authorities committed to improving public digital access.

“This increased lead time and increasingly delayed network construction projects mean that government and private targets for the number of homes spent with FTTH will slip,” he said.

“It’s not great given the promised best levels of connectivity in the country. The overall inflationary environment and rising costs for things like power, construction and oil are also an issue.

“The most significant impact for governments comes from the total cost of deploying optical cable in the ground. This has almost doubled in many key telecommunications countries. This is what could act more significantly to limit demand over the next 12 to 18 months.”

The price of optical fiber has more than doubled in Europe since January 2021

The price of optical fiber has more than doubled in Europe since January 2021

Governments have set themselves ambitious plans to roll out 5G, with the European Commission setting a target to cover all populated areas by 2030. Multinational companies such as Meta, Google and Amazon are also desperate to meet digital demand on their platforms. All this requires an optical cable laid under the ocean or underground.

Finch describes the many “headwinds” that impede these goals.

“The biggest or most pervasive problem is raw material scarcity or supply constraints that drive up prices,” he says. “Helium prices have more than doubled in the past two years due to major outages at plants in the United States and Russia. Silicon tetrachloride prices also increased by 40%. These two elements are integral to the production of bare optical fiber.

“Lack of skilled labor is also a big issue. This has a big impact on the slowdown in cable rollouts in the US and France right now.”

Faster internet speeds have been strongly linked to economic growth and over the past 20 years, with a wide disparity in delivery rates around the world, there has been growing concern about the ‘digital divide’.

Online connectivity is “integral” to growing economies, says Finch.

“If we look at the United States for example, there are many communities without internet fast enough to run even the most basic applications in today’s post-COVID-19 world. Connecting these regions is so important .”

Digital connectivity is crucial to helping economies grow, says Cru’s Michael Finch. /APC

Digital connectivity is crucial to helping economies grow, says Cru’s Michael Finch. /APC

The Cru group estimates that total cable consumption increased by 8.1% in the first half of the year compared to the same period last year. China accounted for 46% of this total. North America is the fastest growing region, at 15% year-over-year.

Is this catastrophic for consumers and digital providers?

“When raw material supply gets back on track, that should ease pressures in the fiber optic and fiber optic cable markets,” Finch said.

“I think the helium shortages will soon resolve, other inflationary pressures will start to normalize over the next 12 months and lead times will improve as more capacity comes online.

“But while there is currently enough global capacity, regional bottlenecks will need to be addressed in the medium term. These are the labor issues that I consider the most difficult to overcome and I would put the more effort to solve this problem.”