The Worsening Labor Supply Chain

I’m starting to see situations where a shortage of construction labor is causing problems for some broadband providers. The supply chain issues for materials have largely been solved but the supply chain for construction contractors is a worsening situation for many providers. To give an example, I know a broadband provider with a long history of building networks that recently went to bid for two projects that are being funded by local American Rescue Plan Act (ARPA) grant funding. The provider went to its normal pool of fiber contractors, many that it has worked with for many years, and got zero responses. Nobody was willing to even bid on the projects. The provider called and talked to a lot of contractors and then reissued the bid package a second time. This time the provider got two bids – one that is 50% higher than rates it has been paying for fiber construction and one that was almost double. Not all providers are having a problem. There are many providers who have locked down construction firms for large grant projects or other major upgrades. It seems likely that the biggest providers all have multiyear contracts with contractors and are mostly able to find crews. However, even AT&T cited labor shortages as one of the reasons the company trimmed the planned fiber passings for 2023. The other concern for a lot of providers is the ticking clock of grant timelines. For example, many state grants require that projects get built within two years. The date for finishing ARPA-funded projects will be here in a few years. It’s looking like a lot of providers will be asking for waivers to extend construction timelines – but in many cases where the money was guaranteed by legislation, extensions might not be possible.