AI Buildout Worsening Supply Costs, Permit Worries, ISPs Say
Lumen said it was laying middle mile fiber next to strands reserved by hyperscalers
Aug. 18, 2026 – Broadband providers are running into rising supply chain costs and permitting delays as they race to expand their networks, two major providers said Tuesday at the Technology Policy Institute's Aspen Forum in Colorado.
They worried the simultaneous AI buildout being undertaken by hyperscalers could exacerbate those issues.
“The costs of the supply chain are skyrocketing,” said Giulia McHenry, AT&T's vice president of public policy. “A large data center will use as much fiber as we lay in a year.”
AT&T laid enough fiber to pass an additional 3.1 million rural locations over the course of 2025, according to its financial filings.
McHenry said that the wireless carrier was trying to manage with longer-term contracts, and that because of its size the company was “better positioned than a lot” of other providers.
“We really were pretty early in inking these agreements, so we were able to do some things with longer-term contracts early on,” said Melissa Mann, Lumen’s chief policy officer. “But we, like everyone else, are feeling the impact of the higher cost.”
Smaller ISPs that win grants in the Broadband Equity, Access, and Deployment program have also reported rising costs recently, and saw fiber orders disrupted earlier this year. Some state broadband heads said at Mountain Connect last week that they would support some waiver requests to increase support and prevent projects from falling through.
Harold Feld, senior vice president at Public Knowledge, said the supply pressure might reach a point where policymakers had to decide whether to hold BEAD winners to their contract timelines.
U.S. fiber manufacturers have insisted they have ability to meet BEAD demand, which they say will only 5 percent of their production capacity at its peak. Arielle Roth, head of the Commerce Agency managing BEAD, told lawmakers this summer that she did not plan on issuing a waiver of BEAD’s requirement that funded fiber be American-made.
Lumen and AT&T are in part looking to lay more fiber to prepare for increased demand from expanded AI use, both among consumers and enterprises. Lumen recently sold its consumer assets to AT&T to focus on providing services to companies and hyperscalers, like high-speed connectivity between data centers.
McHenry said AT&T had seen 15 percent increases in data traffic each of the last three years. That’s not all attributable to AI use, she said, but the company thinks “quite a bit of it is related to AI.”
“In the next three years, we’re expecting that data traffic to double,” she said.
Mann said Lumen was seeing “a significant amount” of east-west traffic, meaning traffic between data centers within the same cloud system. Much of it is related to training or using AI and machine learning models.
He said Lumen was aiming to handle that, and lower latency to support more use cases. Lumen recently acquired a software company that it’s hoping will make it easier for its business customers to manage their data and network use across different cloud systems.
On the permitting front, Mann said multiple times delays from permitting agencies was an issue the company wanted to see addressed. It’s a frequent complaint of ISPs, who say long wait times can stall projects.
Responding to an audience question from Steve DelBianco, CEO of tech industry group NetChoice, Mann said the company was thinking about the possibility of data center opponents trying to quash new network developments in the local permitting process.
More than 60 percent of Americans oppose data center construction near them, according to an August survey from the University of Pennsylvania.
“We have not seen something stopped because of this concern around data center development today, but the chatter is increasing,” Mann said. “It’s something we’re monitoring very closely.”
McHenry said AT&T was monitoring various anti-data center bills and rules across the country, fearful that broad definitions could be read to encompass already deployed network gear.
Open fiber agreements
Mountain Connect panelists talked last week about hyperscalers pushing for contract clauses that would prevent their fiber connectivity partners from allowing nearby towns to use the infrastructure, Fierce Network reported.
Some of those prohibitions also blocked additional conduit next to the hyperscaler’s gear, according to Fierce. Many data centers are being put in rural areas where people could benefit from the extra connectivity.
Mann said that in Lumen’s case, the company was laying its own additional fiber along the reserved routes it was deploying for hyperscalers.
“That fiber can easily be utilized as backhaul or middle mile for these smaller communities to interconnect in order to expand that broadband access,” she said.
