It turns out U.S. operators aren’t the only ones gearing up for the $42.5 billion Broadband Equity, Access and Deployment (BEAD) Program. Equipment players aside, it seems another cohort of foreign companies is eyeing the burgeoning broadband opportunity in the U.S.: construction companies.
Stefaan Vanhastel, VP of marketing and innovation for Nokia Fixed Networks, told Fierce Telecom that overseas construction vendors have begun testing the waters and gauging interest at broadband conferences in 2023.
“I’ve noticed that at previous events in the U.S. this year that I suddenly saw some construction partners from other countries where the fiber rollout is nearing completion,” he said in a conversation with Fierce ahead of this week’s Fiber Connect conference in Florida. Vanhastel pointed to an unnamed South African construction firm by way of example. “They see this huge construction ramp up coming in the U.S. and they’re seeing if they can bring their equipment, their expertise to the U.S.”
But don’t just take his word for it. Joshua Broder, CEO of U.S. network construction giant Tilson, told Fierce he, too, has noticed growing interest from foreign-based competition.
“Foreign fiber construction companies are interested in the U.S. market for the same reasons foreign infrastructure funds are investing in new infrastructure in the U.S. market,” Broder said. “There is still a decade of runway on fiber to the home construction left, with strong private and public investment behind it, and significant tech/hyperscale sector fueled growth in fiber to the data center.”
Broder added that in addition to the home broadband push, hyperscalers are driving demand to upgrade “old fiber” transport routes and run new ones.
Hurdles
The CEO said construction companies looking to enter the U.S. face an uphill climb when it comes to “getting proven local leaders and a skilled workforce.” To work around this, he said new entrants are generally looking to buy rather than build these muscles.
Thus far, Broder said the M&A activity in this space hasn’t materially changed the number of competitors. And in any event “there is still more organic demand for design build services than there is design build capacity, and this hasn’t changed that equation much,” he concluded.
Sean McDevitt, partner at telecom consulting firm Arthur D. Little, told Fierce Telecom that as far as design and engineering work is concerned “there’s no reason that the insights and tools from the EU and other build areas cannot be leveraged into the U.S. market” in part because they’re heavily software-oriented.
But he said he’s more skeptical project management, construction and installation and certification skills will transfer easily. That’s because permitting is more of a patchwork of local, state and federal processes than it is abroad. And in many regions across the country “understanding culture and [having] experienced U.S. hands is often critical in highly localized environments.”
Not just construction
Of course, construction companies aren’t the only telecom vendors eyeing the opportunity to move to the U.S. For example, European network planning services company Yungo – which is based in the Czech Republic – is looking to make the leap across the pond.
CEO Wilfred de Wildt told Fierce Telecom that the company started seven years ago when fiber to the home (FTTH) began to boom in Europe. “We needed high-skilled people with an education in telecommunications to speed up the network building process,” he said of the time.
Now, its team of around 90 engineers is looking to do the same for Tier 1 operators in the U.S. Perhaps luckily for Yungo, some experts have suggested looking abroad for skilled workers to stock the broadband workforce that’s needed imminently.
De Wildt sees entering the U.S. market as a win-win for the company and its employees, many of whom have master’s degrees, as fiber builds cool off in its other markets.
“The main reason that we [enter the U.S. market] now is to make sure my people have a sustainable future in our company,” he said. “And of course, because the market here is really ready to boom, if it's not already been booming, with all these funds being poured in.”
Land of opportunity
The strategy for entering the U.S. market will be similar to how Yungo got its successful start in Europe: first, forming relationships with software companies to help their customers implement network planning tools and second, catering to bigger construction companies that already have engineering departments but need to scale up.
Partnering with telcos is also an end goal, but De Wildt said Yungo will have to have “more flesh on its bones to be taken seriously” by those companies.
Yungo will have to assimilate to the U.S. industry, including learning its different materials and permitting processes. “There are a lot of changes, so I would love to start with a small project, to first prove that we can work with it, before somebody asks me to do one with thousands of locations,” De Wildt said.
Another hurdle in its way is the Buy American requirements associated with federal broadband funding in the U.S. “So that’s a risk we’ll have to overcome, but the good part is we are not manufacturing anything. It's offering a service,” he added.
In all, De Wildt is confident Yungo will stand out in the U.S. market and noted it plans to spend a year testing the waters. “If after one year we are not successful then of course we are going to say ‘no, we are not the company for America.’ So, let's find out,” De Wildt said. Already it’s found a small measure of success, striking a partnership deal with TeraFiber earlier this month.
“I'm not afraid of competition,” he concluded. “I don't need 100% of the market. If could have a small piece in the next coming years, it will be fine by me.”