US wavers on BEAD buy American rules

The US government has published draft guidelines outlining the equipment that may be purchased from outside the US for use under the BEAD programme.

Kit makers have been waiting for clarity from the the Department of Commerce’s National Telecommunications & Information Administration (NTIA) on the waivers it will likely implement with regard to the ‘buy American’ rules governing the $42.45 billion Broadband Equity, Access and Deployment (BEAD) programme.

The draft rules suggest waivers will be pretty limited, which is not particularly surprising, given that President Joe Biden highlighted the importance of buying American for the various government-funded connectivity projects ongoing in the US in his State of the Union address in January, and the NTIA subsequently reinforced the message, insisting it saw little need for waivers – particularly in the areas of fibre-optic glass and cables – in BEAD. But while the news was largely expected, it will come as a blow to those in the industry who have expressed concerns over difficulties in sourcing American-made equipment and the associated cost.

When it comes to the physical cables, the NTIA is proposing one key waiver: while the fibre optics themselves must be produced in the US, programme participants may source the glass used to clad the fibres from overseas.

“Optical fibre and fibre optic cable are likely to see the highest levels of expenditures compared to any other category of equipment used in BEAD fibre broadband deployments,” the NTIA said in its draft document. “While there is broad agreement across industry stakeholders that domestic production of optical fibre and fibre optic cable exists today, there is concern that there will not be sufficient supply, especially for small- to medium-sized ISPs, during peak demand for construction materials during the rollout of the BEAD programme.”

But it’s the electronics – the “second largest segment of equipment used in BEAD fibre broadband deployments,” according to the NTIA – that many foreign vendors will focus on.

The NTIA notes that these are “almost uniformly manufactured in Southeast Asia,” but notes that it has explored with manufacturers the possibility of moving production of certain components to the US. The outcome of its investigations is the proposal to implement waivers for all electronics, including semiconductors, but excluding four key product areas: Optical Line Terminals (OLTs) and remote OLTs; OLT line cards; optic pluggables; and Optical Network Terminals (ONTs) and Optical Network Units (ONUs).

Some companies clearly saw this coming.

Nokia, for example, earlier this month announced a deal with Sanmina Corporation to manufacture various fibre broadband products at the latter’s facility in Wisconsin in order to comply with BEAD’s buy American objective. The products in question will include OLT cards for modular Access Nodes, a small form factor OLT, OLT optical modules, and an outdoor-hardened ONT, it said. It later detailed a similar partnership that will see it produce multi-rate optical modules at Fabrinet’s facility in California, starting next year.

Meanwhile, Adtran shared plans to expand its US production of OLT equipment at its Alabama plant and revealed that it is preparing to onshore the manufacturing of ONTs, also with a view to getting in on the action with BEAD.

Those are just two examples. There are others and more will likely follow, particularly if the NTIA’s proposed rules on waivers come into force. Interested parties have until 21 September to share their views.

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