It may not look like much, but the amount of
information that can be transmitted through a strand of fiber the size of a human hair is
astounding. Fundamentally, in like one fiber pair, half of the
humans on earth could be talking to the other half simultaneously. That's how much capacity is
there. And so, it's so much more capable than all the
other alternatives that it's hard to even compare. Fiber-based networks make up the majority of the
internet's backbone. Fiber-optic subsea cables spanning thousands of
miles, connect continents together, exchanging data at nearly the speed of light. Meanwhile, the massive data centers that host all
of our cloud-based applications also rely on fiber connections. Increasingly, fiber connections are
making their way directly into people's homes, providing them with fast, reliable internet. Fiber is future-proof, yes. And it's probably the best broadband technology
in most cases. To understand the technology behind fiber-optic
internet and how the market for fiber products is changing, CNBC visited Corning's optical fiber
and cable manufacturing facilities in North Carolina. Most famous as the maker of Gorilla
Glass for iPhones, Corning is also the world's largest producer of optical fiber by
manufacturing capacity and market share, as well as the largest manufacturer of fiber cable in
North America. We have fibers that were installed at the very
beginning of our industry, almost 50 years ago, they are still running today. Usually, the lifetime of a system is not the
fiber itself, it's the electronics at the end. So the lasers that are transmitting the light or
the amplifiers, those are the ones that will fail well before the glass will fail. From the time that we've invented fiber until now,
there's basically been about 6 billion kilometers of fiber manufactured and installed around the
world, roughly. To put that in perspective, that is enough fiber
to go back and forth to the sun 20 times. But only 43% of U.S. households have access to a fiber internet
connection. In some instances, particularly in rural areas and
very challenging geographies, it can be prohibitively expensive to deploy fiber and it
can be very expensive for households to pay for it. The Bipartisan Infrastructure Law that passed in
November 2021 promises to bridge this digital divide, With $65 billion dedicated to expanding
access to broadband internet to all Americans. Such government support, along with a number of
other factors, have caused a spike in demand for fiber products. Fiber-optic internet is a type of broadband
internet, which the Federal Communications Commission defines as any internet service, which
delivers download speeds of at least 25 megabits per second and upload speeds of at least 3
megabits per second. Though, after seeing the importance that internet
connectivity has played during the pandemic, some argue that this definition needs to be changed. If you've ever shopped around for an internet
service, you may have come across several different broadband connections. DSL or Digital Subscriber Line, delivers internet
over traditional copper telephone lines. Cable services use the same coaxial cable for
internet that customers use to get TV. In more remote areas where DSL or cable are not
available, customers may be able to get wireless or satellite internet. But by far the best internet connection available
today is fiber. Unlike DSL and cable, where data is transmitted
through copper wires in the form of electrical signals, in fiber, data is usually transmitted
through glass, though plastic can also be used, in the form of light pulses. Copper is a metal and that can degrade with time. That doesn't happen with a material like glass. Also, optical fiber is extremely strong material
because it's so thin, it's very flexible. You can make a knot with it and it's not going to
break. It doesn't suffer any interference for
electromagnetic radiation or moisture or water. So it's a more robust material, it's more
reliable and the biggest advantage has much more capacity, much more bandwidth. You can put much, much more data into an optical
fiber than you could put in a copper cable. Fiber-to-the-home can give consumers much higher
speeds, up to one gigabit two gigabits currently, and the sky's the limit. It's limited by software more than hardware. Transmitting data in the form of light is not a
new idea, but early versions of optical fibers had a problem. Impurities in the glass cause the
strength of the signal to progressively get weaker as it traveled down the length of the fiber, a
phenomenon known as attenuation. The British post office came to us with a
challenge and they gave this challenge to a lot of people. And it just happened to be a race that we
won. In 1970, Corning came up with an optical fiber
made of glass so pure that it allowed data to be sent over massive distances with minimal signal
loss. In 1983, New York and Washington, D.C. became the first major cities in the world to be
connected through a long-distance fiber-optic link. The anatomy of a single optical fiber looks
something like this. A core made of ultra-pure glass is surrounded by
a second layer of glass, which reflects the light signal and traps it inside the core as it moves
down the length of the fiber. Both layers of glass are then encased in a
protective coating. Dozens to hundreds of these optical fibers are
then packed together to make a single optical cable. We need a glass that is orders of magnitude more
pure than a glass for a window. So it's a totally synthetic process. What we do, we mix a combination of different
gases in a hot flame, and during that we create a chemical reaction and we generate soot particles. So very tiny little particles of soot glass or
silica glass, those particles are deposited into a rod. From there, the resulting rod, known as a preform,
is placed into a consolidation furnace where the white, porous material is transformed into an
extremely pure, transparent glass. The newly formed glass is then heated and
stretched into a hair thin strand, becoming the core of the optical fiber. Then steps one and two are basically repeated at
a bigger scale to create the second layer of glass that's used to trap the light signal. Finally, a protective layer is added to insulate
the glass before the optical fiber is wound into large spools. The finished optical fiber is either shipped out
to customers or transferred to one of Corning's other facilities, where it's bundled into a cable
before it is installed. The telecom boom of the late 1990 and early 2000
created demand for fiber products as providers sought faster voice and data transmissions. But this demand quickly dried up with the burst
of the dotcom bubble. When the internet bubble burst, which you could
see, is that we had too much glass in the ground relative to what the demand was. And so then that led to a relatively bleak demand
outlook. But now demand for fiber optic connectivity is
picking up again. In Q2 2022, Corning disclosed that the optical
communications business was its largest segment by revenue, reaching sales of $1.3 billion, a 22%
increase year-over-year. Meanwhile, experts estimate that the global fiber
optics market will reach $11.18 billion by 2030. If you look back over time, we've actually been
riding a curve here in fiber optics where we're growing at a compound annual growth rate into
double digits. Corning says that the government push for fiber
expansion will likely add between 10 to 20% of the company's demand for fiber-optic products. Demand is so high that it's even caused a global
shortage of fiber-optic cable. The biggest economic challenge to deploying
fiber-optic cables right now is the continuing supply chain disruptions as a result of the Covid
pandemic. And that affects everything on the line from
manufacturing, to transport, to actually having the resources to deploy systems. And so we're seeing that projects that would have
taken a matter of months may take a couple of years now in order to fully deploy. Corning is also feeling the crunch. Can Corning currently keep up with demand for both
optical fiber and fiber cable? The answer on fiber is yes. The answer on cable is not yet, but we're working
on it. So on the cable side, it's a regional business
and with all the increased demand that we've seen, the entire industry is constrained. We saw that coming a couple of years ago. And in fact, the factory you're sitting in right
now is evidence that we're acting on that right now. We have one phase of expansion underway and
up and running. And you're sitting here today seeing that. Across the street, we have our next phase that
was just announced back in September. It'll be ramping up towards the end of this year
and into the beginning of next year. The company has also said it will open an optical
fiber plant in Poland sometime this year to service the European market. Experts point to several factors feeding this
demand. The first is the pandemic, which made it clear
that having reliable internet is a matter of social equity providing access to education,
health care and employment opportunities. Typically, internet traffic grows about 25% per
year, and during the pandemic, at least the first year of the pandemic, we saw it double to 50% for
that first year. The expansion of 5G is also driving demand for
optical products. Many rural customers are turning to wireless
technology in areas where fiber-to-the-home is not available. To achieve the quality of service demanded by 5G,
there need to be up to ten times more antennas, and every single one of those antennas has to be
fed with fiber to achieve the bandwidth that's required. While telecom providers like Verizon, AT&T and
Comcast have been the traditional customers of fiber-optic products, big tech companies,
including Google, Meta, Amazon and Microsoft are increasingly buying a bigger share. If you look at a hyperscale data center, which is
basically what they do to run cloud-based applications, the amount of fiber in just one
campus of a hyperscale data center is more than what it would take to do fiber-to-the-home
through the whole Washington, DC metro area. In recent years, tech giants like Google, Meta,
Amazon and Microsoft have also heavily invested in building their own subsea fiber-optic networks. Subsea fiber-optic networks were traditionally
built and owned by governments or a consortium of companies, usually telecom providers like AT&T
and BT. These companies would then lease bandwidth to the
likes of Google and Meta, but as the cost to rent capacity on existing networks rose and the tech
giants needed more and more bandwidth, some decided it makes more sense to build their own. Experts say that the majority of long-haul
network connections are already fiber based. In the case of subsea fiber cables, which connect
continents together, installing a single cable can cost hundreds of millions of dollars and take
years to complete. The process requires surveying vessels and
specialized cable-laying ships, which gently lay the cable along the sea floor. As the cable approaches the shore, it's buried in
the sea floor so it doesn't get in the way of human activities. Most long-haul terrestrial fiber cables, which
connect major cities, are also buried underground. But some connections, especially last mile
connections leading directly into people's homes, can also be installed aerially on poles, which is
a cheaper option. Internet service providers are usually in charge
of installing their own fiber, and it's these last-mile connections that have been especially
slow to deploy, particularly in more rural areas where the addressable market is small and doesn't
justify the high cost of installation for the provider. When you get to these more rural applications, at
least in the past, there hasn't been a business case for private industry to invest in those
kinds of areas. And so I think government stepping in and having
a hand and providing the right incentives in the right way for companies like Corning and all of
our carrier partners and other alternative carrier partners to build the network that everyone
really needs. Experts say the biggest cost in deploying fiber is
not the materials, but rather the installation itself. Anywhere between 60 and 80% of the cost of a
network is just installing it. You need labor. You need to have the ability to go in and shut
down roads for a period of time. The sector also faces labor shortages. It's projected by 2025 to do all the broadband
deployments that we'd like to. There's a need for 1.5 million installers. Currently, the industry has 650,000, so that's a
gap of 850,000. To help bridge this gap, Corning, along with AT&T,
are launching a program to train technicians and network specialists. Meanwhile, others like Meta are working on
automated ways to deploy fiber. Despite recent investment in fiber deployment, the
U.S. Still trails other areas of the world in fiber
internet adoption. Fiber adoption in North America and particularly
in the United States, we found, was much lower than in markets such as Europe and Asia Pacific
when taking on a regional basis. Overall, Europe and Asia, we have seen over 50%
of households have adopted fiber. By comparison, only about 21% of U.S households
subscribe to fiber internet. The majority subscribed to cable internet, which
is often bundled with phone and TV packages. Early adoption of cable TV and cable broadband
technologies in the United States have played a key role in the lagging of fiber deployments and
the adoption of fiber services by consumers. Since early days, consumers in the United States
have associated TV with cable and cable companies were very quick in rolling out their networks
nationwide, particularly almost everywhere in major cities. And they were also one of the first
to offer advanced high-speed broadband solutions. Jurkevic says that part of the delay in U.S. fiber deployment stems from the strong political
influence of incumbent internet providers. About 18 states have some kind of hurdles for
municipalities to lay their own broadband networks and offer services. Some of these restrictions can include pricing,
so municipal networks cannot set service prices that are lower than incumbents' prices. So there is no incentives for consumers to be
switching in that scenario. Or, for example, in some areas, if there is even
a single internet provider, a municipality cannot offer their own services. And that single provider could be a very, very
slow and very costly satellite service. In contrast, Europe has leveraged municipal
broadband, and there are many examples, particularly across the Nordic countries Sweden,
Denmark, Finland, Norway. Another factor contributing to the low fiber
broadband adoption rates in the U.S. may be the sheer size and geography of the
country. It's much easier to connect Singapore, which is a
size of medium city in the United States and most people live in an apartment buildings compared to
connecting an entirety of Texas. Despite the challenges, experts believe that fiber
deployment is ultimately worth it when compared to some of the other solutions available because the
service is so much better. If you look at one example of recent development
with the StarLink system, it costs about $30 Billion to develop, and peak capacity on this
entire system is roughly ten terabits per second. That's covering the globe. If you look at just one fiber-optic cable, for
example the Dunant cable, which was recently launched transatlantic, that cable has 250
terabits per second of capacity, multiples higher than the entire Starlink system. And when you look at the cost, the entire cost
estimate for all subsea cables to be deployed within the next two years is a fraction of the
cost of the Starlink system. So satellite is terrific for reaching these
pockets that are unserved. But the impetus to get fiber to everyone has
always been there because it is so much ultimately more cost effective and so much better in terms
of throughput and delivering applications to end users. There's no comparison. I think more and more people are realizing that
fiber networks are quite valuable. Eventually, fiber networks are going to be needed
everywhere. And if you're looking at the long term, once you
do install fiber, it has virtually endless capacity. So it's a really valuable asset once
you get your initial payback on investment. For now, many Americans still don't have the
option for fiber connections, but Corning thinks that will change. All the subsea networks are fiber. All the long-distance networks are fiber. All the metro ring networks are fiber. And the last segment of the network to really
replace is the access network from sort of a central point out to everyone. And so over time, we believe, say over the next
ten or 20 years, the entire network will be fiber.
Been waiting 20+ years for "Broadband internet". Never going to see it happen here.
*would if the money provisioned for it was actually used for it.
this is never coming to every american