Jeff Heynen at Dell’Oro Group in a blog post has revealed recent changes in U.S. trade policy, including new tariffs and selective rollbacks, have created uncertainty in global broadband markets.
The current average tariff rate on U.S. imports has risen to 27 percent, the highest since the early 1900s. Temporary exemptions for products like smartphones, consumer electronics, and GPUs have added complexity and made it difficult to predict the impact on broadband infrastructure and related equipment demand in the short term.
In the U.S., tariffs are expected to have minimal impact on most fiber broadband equipment pricing and deployments. Key equipment providers have already relocated much of their assembly and manufacturing operations to the U.S. to comply with the BABA (Build America, Buy America) waiver under the NTIA’s BEAD (Broadband Equity, Access, and Deployment) program.
While not all broadband access network products have been fully onshored, core components such as PON OLTs, ONTs, cabinets, and fiber-optic cable have been self-certified by vendors and now benefit from a significant increase in domestic manufacturing.
Additionally, major operators have secured multi-year purchase agreements to shield themselves from potential tariff-related cost increases on raw materials like silica. For instance, in 2024, AT&T signed a $1 billion multi-year deal with Corning to maintain a reliable supply of fiber cable and connectivity solutions — a move originally intended to prevent supply shortages but which now also helps offset the risk of rising component costs.
Unlike FTTH deployments, cable outside plant upgrades supporting DOCSIS 4.0 are likely to be significantly affected by tariffs.
Commscope, which produces amplifiers and other outside plant components in Mexico, and Teleste, which manufactures amplifiers in Finland, will both face tariff-related challenges. These manufacturers are expected to either relocate production to the U.S. or seek waivers to meet increasing demand from major operators such as Comcast, Charter, and Cox. However, relocating manufacturing is a complex process that could lead to shipment delays once current inventories are depleted. This delay highlights the rationale for a phased approach to tariff implementation rather than abrupt enforcement.
Additionally, Vecima Networks, which supplies GAP nodes to U.S. operators, has indicated that tariffs will have a material financial impact regardless of the level imposed. As a result, cable operators advancing DOCSIS 4.0 will likely face higher equipment costs and extended deployment timelines.
Residential Wi-Fi routers are expected to be affected by tariffs, despite a recent exemption. As Wi-Fi vendors prepare for broader adoption of Wi-Fi 7 in homes and businesses, tariffs at any level could raise retail prices for even the most popular brands by 5 to 15 percent.
Most of these devices are manufactured in China, Taiwan, and Vietnam, and although they were temporarily exempted from tariffs as of Friday night, the likelihood that these exemptions will remain in place is considered low.
Telecom service providers, who overbought equipment in 2022 and early 2023, have been focused on reducing inventory, which pressured vendors during the slowdown in spending. Just as the industry was poised to stabilize and return to steady purchasing patterns, the introduction of new tariffs has complicated the recovery.
In January 2025, forecasts for North American broadband equipment spending were already revised downward from July 2024 expectations to reflect anticipated tariff increases of 15–30 percent on electronics, semiconductors, and other components from China. However, the new and broader scope of tariffs — now affecting imports from Vietnam and India as well — goes beyond those initial projections, adding further uncertainty to the market outlook.
The impact of tariffs and the resulting costs passed on to end customers contributes only modestly to recent forecast changes. A more significant factor is the anticipated review and delay of the BEAD program, which has led to reduced expectations for fiber project initiations. While only a small portion of BEAD funds was expected to reach broadband equipment providers in 2025, some spending was anticipated in the fourth quarter. That spending is now expected to shift into 2026, with little to no funds likely to be used for OLTs or ONTs this year.
A larger concern entering 2025 is the uncertainty surrounding the new administration’s policies and their potential effects on spending and investment behavior. After enduring two years of persistent inflation and elevated interest rates, U.S. consumer confidence was already weakening. Rising consumer debt and high mortgage rates have suppressed home purchases and refinancing activity. Given that consumer spending accounts for approximately 68 percent of U.S. GDP, any further erosion in confidence could result in reduced consumer spending, amplifying the overall economic impact.
Consumer uncertainty is expected to lead many households to either maintain their current broadband service levels or downgrade to lower-cost plans to manage monthly expenses. This behavior, combined with fewer new home purchases and reduced residential mobility, will make it difficult for broadband providers to grow residential ARPU.
The stagnation in ARPU could delay some planned technology upgrades, such as transitions from GPON to XGS-PON or from DOCSIS 3.1 to DOCSIS 4.0. However, it will not halt the broader fiber network expansion in greenfield and overbuild areas, as these are viewed as long-term investments with multi-decade returns.
Even if tariffs raise the cost of passing and connecting homes, major operators like AT&T, Frontier, and Lumen remain committed to their fiber strategies. In response to market pressures, bundling of broadband and mobile services is expected to accelerate, with telco and cable operators offering aggressive pricing and mobile incentives to lock in subscribers early. While this tactic may reduce ARPU in the short term, service providers are prioritizing subscriber growth with the expectation that market conditions will stabilize in the future.
Jeff Heynen at Dell’Oro Group
