FCC Allows Broadband to Substitute Router Parts Amid AI-Driven Shortages

On June 9, the FCC granted a partial waiver of its March ban on certain routers. The situation is bureaucratic and messy. While the March order banned “all consumer-grade routers produced in foreign countries” on national security grounds, the June waiver does not lift that ban.

Instead, the waiver allows already-approved domestic routers (approved by the FCC before March) to have certain parts substituted – substrate material and memory – without triggering a full re-certification process. In effect, the FCC is treating these modified designs as the same product, avoiding the need for them to go through a new approval process all over again.

This waiver was in direct response to the NCTA – the Internet & Television Association, which petitioned the FCC on June 2 explaining why it’s so important that their members be allowed to substitute components in their router designs: “unavoidable supply chain shortages in critical substrate material and memory . . . significantly constrain the industry.” The original ban in March had threatened to sharply limit new router imports and sales until approvals or waivers could be secured since the vast majority of waivers are made abroad.

In fact, the substrate and memory shortages are so severe that it would’ve been difficult for the FCC to find a worse time to ban consumer-grade foreign routers. The shortages are hitting broadband operators like NCTA members hard as increasing demand for capacity, driven by the current boom of artificial intelligence, is affecting their ability to serve their customers. Surging demand for AI GPUs has drawn massive production capacity toward high-end AI chips, tightening supplies of traditional everyday components used in broadband. This includes DRAM (Dynamic Random Access Memory) and non-volatile memory. Substrate materials – the foundational layers used for broadband and AI semiconductors – are also in short supply.

As NCTA explained in its petition: “Driven largely by surging demand from AI, manufacturers are shifting production toward DRAM chips used in data centers, and this shift has tightened supply for the widely used DRAM memory components that support everyday technologies like routers . . . [AI] is driving unprecedented demands for substrate materials, leading to a growing shortage of the necessary materials for semiconductor manufacturing.”

The FCC’s waiver provides some immediate relief for NCTA members and other broadband providers. But the FCC can do more. In a June 3 coalition letter, NCTA and other participants urged the FCC to take broader action: “Ease constraints on alternative sourcing and product redesign by offering expedited validation and approvals for regulated products, along with flexibility for necessary hardware, firmware, or software changes . . . Identify and remove regulatory barriers that slow the expansion of memory manufacturing capacity, both domestically and internationally, to increase overall global supply.”

Substrate material and memory supply were a problem long before the FCC’s March routers ban, and these shortages continue to pose real challenges for broadband as telecommunications infrastructure requirements and AI demand keep growing.

Alabama, Louisiana, and Vermont Enact Privacy Laws: The Number of Such States Is Now One Shy of Half

As I noted in an April post to the FSF Blog, the Sooner State, with the enactment of the Oklahoma Consumer Data Privacy Act, became the first in nearly two years to enact a comprehensive data privacy statute. In the intervening months, three more states – Alabama, Louisiana, and Vermont – have followed suit, bringing the total to 24.

As the number of state-specific privacy regimes increases, so, too, do the complexity burdens for consumers seeking to understand their rights and the compliance questions for companies seeking to satisfy their regulatory obligations.

Alabama

Yellowhammer State Governor Kay Ivey signed the Alabama Personal Data Protection Act (APDPA) into law on April 16. It will take effect on May 1, 2027.

"Fun" differentiating fact: the APDPA has a lower applicability bar than most, covering companies that (1) control or process the personal information of just 25,000 Alabama residents, or (2) earn over 25 percent of their gross revenues from the sale of personal data, no matter how many Alabama residents that involves.

Louisiana

Pelican State Governor Jeff Landry signed the Louisiana Data Privacy Act (LDPA) on May 29. It will take effect on January 1, 2027.

"Fun" differentiating fact: the LDPA includes a temporary 30-day cure period that applies before the Attorney General may initiate an investigation; in other states, the cure period typically runs after the investigation but before the commencement of an enforcement action.

Vermont

Green Mountain State Governor Phil Scott signed the Vermont Data Privacy and Online Surveillance Act (VDPOSA) on June 16. It will take effect on January 1, 2028.

"Fun" differentiating fact: Vermont residents whose "personal data were processed for the purposes of profiling in furtherance of any automated decision" may "question the result of such profiling."

All three statutes assign enforcement authority to the state attorney general. The Louisiana and Vermont laws expressly exclude a private right of action while the Alabama law is silent on the topic.

*    *    *

A comprehensive federal regime could take the "fun" out of data privacy and put in its place a single, straightforward set of consumer rights and corporate responsibilities that apply nationwide.

Which brings us to the Securing and Ensuring Consumer Uniform Rights and Enforcement over Data Act (SECURE Data Act), legislation introduced by a group of House Republicans on April 21.

As noted by Free State Foundation Adjunct Senior Fellow Michael O'Rielly in "The House Builds a Sound Privacy Bill," a May Perspectives from FSF Scholars, The SECURE Data Act (1) embraces "strong federal preemption that recognizes the interstate nature of data collection and consumption" and (2) rejects a private right of action in favor of exclusive enforcement by the FTC and state attorneys general, thereby "prevent[ing] abusive class-action lawsuits by trial attorneys that have plagued many other sectors of our economy."

The House Energy and Commerce Committee's Subcommittee on Commerce, Manufacturing, and Trade held a hearing on the SECURE Data act on June 3. The Press Release included the following quote from Subcommittee Chairman Gus Bilirakis (R-FL): "Americans, regardless of political affiliation, share a fundamental expectation that their personal data be protected and secure…. The productive dialogue during today's hearing represents an important step toward creating a framework that puts constituents back in control of their personal information while holding bad actors accountable."

Louisiana Becomes the First State to Complete NEPA Approvals for the BEAD Program

This week Louisiana became the first state to obtain approvals under the National Environmental Policy Act (NEPA) for all its projects under the Broadband Equity Access and Deployment (BEAD) program, encompassing nearly 25,000 serviceable projects. This accomplishment marks significant progress toward bringing high-speed Internet to all communities across the state. According to the Executive Director of ConnectLA, the state is on track to eliminate the "digital divide" by 2028.

This is not a minor accomplishment. Under NEPA, federal law requires agencies to assess any reasonably foreseeable environmental impacts of major federal action. It is one of two federal statutes requiring significant action, the other one being the National Historical Preservation Act (NHPA). A recent NERA study commissioned by CTIA finds that the combined requirements cost $7.5 billion in lost value over ten years. 

The Louisiana Office of Broadband Development and Connectivity (ConnectLA) leads the state’s efforts to expand high-speed Internet access. It works with federal, state, and local stakeholders to identify and implement strategies for expanding coverage. ConnectLA oversees the state’s GUMBO 2.0 Project backed by the federal BEAD awards. Louisiana is to be commended for its focused efforts to make the most of BEAD funding.

However, much remains to be done. This is especially true given that states face a deadline for completing projects with federal money. States need to move forward as quickly as possible, working closely with other involved agencies to develop joint strategies for building out the network.

Two changes in policies could make a difference in advancing broadband deployment. As long advocated by FSF scholars, implementing permitting reforms could significantly reduce the time required for obtaining state and local approvals for BEAD deployments. Second, the Department of Commerce could allow some part of BEAD’s non-deployment money ($21 billion) to pay for measures required to be implemented by state and local officials to speed deployments and for other actions such as quickly resolving pole attachment disputes.

 

Is California Leveraging the Clock to Extract More Concessions From Charter and Cox?

In a March post to the FSF Blog regarding the merger between Charter Communications, Inc., and Charter Holdings, LLC (collectively, Charter) and Cox Enterprises, Inc. (Cox), I identified the California Public Utilities Commission (CPUC) as "the final, time-sensitive hurdle preventing the formation of a combined company better able to compete in broadband, mobile, and video." In recent days that time-sensitive hurdle has grown substantially.

In a video conference that took place on June 15 described in a June 18 notice of ex parte communication, representatives from Charter reiterated its concerns that the CPUC's timeline for action "would not sufficiently account for unforeseen or unanticipated delays that may occur, and that failure to complete the Transaction review prior to the [Hart-Scott-Rodino Act (HSR)] expiration would jeopardize the Transaction and the consumer benefits it would produce."

Meanwhile, Broadband Breakfast (subscription required) reports that "[s]ome advocacy groups in California want the state to tack on more conditions if it approves Charter's $34.5 billion acquisition of Cox Communications." Any such conditions would be in addition to commitments – including, among other things, a "$275 million investment over three years to upgrade Charter's network to support symmetrical gigabit service across its legacy service areas" – already agreed to in comprehensive settlements with the Public Advocates Office and the California Emerging Technology Fund described in a May 18 notice of ex parte communication.

Coincidence? Who can say.

What we do know is that the parties to this transaction – which has obtained the approval of the FCC, the Department of Justice (DOJ), and every other state within which they operate – repeatedly have warned the CPUC that its failure to sign off on the deal by September 15 at a minimum "would cost the companies $2.5 million in filing fees and require them to wait at least another 30 days for DOJ clearance."

Accordingly, the parties have on numerous occasions urged the CPUC to act "promptly." Most recently, and as described in the June 18 notice of ex parte communication referenced above, Charter explained why CPUC action by August 13, rather than its next meeting scheduled for September 3 (that is, a mere 12 days before HSR clearance expires), is "necessary."

As Free State Foundation President Randolph May and I explained in comments submitted to the FCC, and as every other reviewing body has concluded, the combination of these two companies will benefit competition – and, in turn, consumers.

The time for regulatory arbitrage has run out.

The CPUC should act before the DOJ's HSR clearance runs out, too.

PRESS RELEASE: The USF Doesn't Top 40%

The following may be attributed to Free State Foundation President Randolph May:

“On June 3, I issued a press release stating that the FCC was expected soon to announce that the USF contribution factor (aka the “USF tax”) would top 40% for Q3 2026. Well, I was wrong, and I’m always happy to correct the record. The good news is that on June 12, the FCC issued a Public Notice reporting that the USF contribution factor for Q3 2026 will be only 38.8%. The bad news is that USF tax, at 38.8%, will be near the highest it has ever been, if not the highest. As I said a week ago, the current USF regime is in desperate need of a meaningful market-oriented overhaul that fits today’s market and technological environment."  

The FCC Must Monitor State Regulation of Pole Attachments to Further Broadband Deployment

Pole attachments are attracting increased attention because of their importance to promoting the deployment of broadband facilities, including those financed by the Broadband Equity, Access, and Deployment (BEAD) program. As part of BEAD’s efforts to expand broadband coverage into all unserved and underserved areas, providers will have to obtain approval to work on millions of poles. The time and cost associated with this task will have a large effect on a project’s success in bringing Internet coverage to new households.

Last week the FCC’s Wireless Competition Bureau issued a Public Notice and Press Release regarding state regulation of pole attachments. The Notice informed states of their responsibilities for state regulation. These include:

•     Issuing rules and regulations implementing the state’s regulatory authority.
• Regulating rates, terms, and conditions of pole attachments.
• Establishing procedures for resolving disputes.

The Notice also requested public comments on how the FCC should ensure that state regulation is effective. This includes whether the Commission has a duty to review state certifications to ensure the regulatory regime is adequate to meet the requirements of the Communications Act of 1934. The FCC also seeks comments on what else it can do to ensure that attachers in state-regulated states are not subject to unnecessary costs and delay.

As I wrote in a previous blog, ownership and regulation of poles is not always straightforward. According to one study and analysis, pole regulation is “scattershot” and “highly fragmented.” Poles are owned by a number of different entities including utilities, local exchange companies, and government entities. Poles in many states are regulated by states, not the federal government.

The FCC regulates most poles under Section 224 of the Communications Act of 1934. Its rules lay out processes and timelines for attachers and pole owners when the former seek to attach communications infrastructure to poles. However, the provision gives states the option of “reverse-preemption” by certifying that they will regulate pole attachments in their state. As of now, 23 states and the District of Columbia have taken this option.

The FCC’s Notice is important because pole attachments can have a large impact on project cost and completion. According to the above study, BEAD-funded projects will touch an estimated 3,954,030 utility-owned poles across 2,053 electric utility service territories. Current plans are for aerial fiber to cover 188,287 miles. Pole-related costs for BEAD projects could range from $534 million to $4.63 billion. The authors find that many of the poles involved are not regulated by the FCC. It is clear that the availability of pole attachments on reasonable terms is important to furthering broadband deployment.

The Commission also seeks information on how it can improve the regulation of pole attachments in the states that have chosen to regulate attachments themselves. One way is to ensure that any adjudications are timely and effective. Delays in obtaining permits can have a significant impact on the cost and even viability of broadband deployments, including BEAD projects. This request is timely given the history of the dispute between Comcast and Appalachian Power Company. Appalachian Power sought to charge Comcast for the full replacement cost of damaged poles even when a portion of the damage was caused by third parties. Comcast demurred. The FCC quickly issued a judgment favoring Comcast. However, several months later the dispute is still delaying work. Both parties have filed documents alleging that the other party is not abiding by the judgment. Rulings that come late or that cannot be enforced will do little to address the problem.

Another possibility is to allow non-deployment BEAD funds to be used to give states the resources they need to provide effective permitting. BEAD funding represents a huge increase in the effort to extend Internet coverage. As the FCC notes, increased investment has led to extensive new deployments in recent years, resulting in a significant increase in pole attachment applications for large numbers of utility poles. Many states and localities may lack the personnel and experience needed to deal with this sudden increase in volume.

In conclusion, the FCC is wise to focus on the issue of state regulation. State rules should be essentially equivalent to FCC regulations to ensure that attachers in reverse-preemption states do not experience prolonged delays and unreasonable costs. As the Notice says: “[S]tate pole attachment regulation can either advance [ubiquitous deployment of next-generation broadband] through clear and effective rules or become a roadblock to such deployment if a state adopts a pole attachment regime that is incomplete or unclear or fails to adopt pole attachment regulations in the first instance.”

Broadband availability is closely linked to economic growth in a particular area. It benefits everyone when the regulatory reviews needed to effect deployment speed this benefit rather than delay it.

Adminstrator Roth Discusses NTIA's Plans for the 2.7 GHz Spectrum Band

During the June 4 celebration of the Free State Foundation’s 20^th anniversary, Arielle Roth, currently the Administrator for the National Telecommunications and Information Administration (NTIA), participated in a keynote conversation with former FCC Commissioner and Free State Foundation Adjunct Senior Fellow Michael O’Rielly. Administrator Roth used the occasion to discuss the Administration’s plans for auctioning the 2.7 GHz band of spectrum.

 

NTIA is under a congressional directive to release 500 Megahertz of federal spectrum to be reallocated for commercial licensed use. “The work is on us to get it done in a timely manner and we hope to meet or hopefully exceed our deadlines and targets,” said Administrator Roth.

The Administration is working on the 2.7 GHz band. NTIA “fully agrees” that this band should be devoted to commercial licensed use. A tech panel consisting of the Office of Management and Budget, the Federal Communications Commission, and NTIA recently signed off on spectrum relocation funds so that the incumbent leadership can perform the engineering studies needed to transfer control.

These efforts are currently in the middle of a statutory waiting period of 60 days for notifying Congress of the recommended transfer. This period ends June 30^th after which NTIA can use spectrum relocation funds to conduct the engineering work so that the spectrum can be identified and hopefully auctioned as soon as possible.

Administrator Roth's remarks regarding the progress in getting spectrum in the 2.7 GHz band transferred for private sector commercial use are encouraging.

 

PRESS RELEASE: The USF Tax Breaks the 40% Barrier

The following statement should be attributed to Free State Foundation President Randolph May regarding the anticipated increase in the USF contribution factor:

“According to a report in Communications Daily, the USF contribution factor, a tax really, is expected to hit 42.3% in Q3, the highest ever, based on numbers released. That would be an increase of 5%, up from 37% in Q2. Boom! Breaking 40% is akin to breaking the sound barrier.

It’s crystal clear that the current USF regime is unsustainable because at some point — and the point could come suddenly — the USF tax on telecom services will be too much for consumers, and then policymakers, to bear. Reforming the regime should be a near-term priority for Congress. The focus should be on making available subsidies only upon a clear and convincing showing of need, and a reliance on market forces wherever possible to maximize efficiency and reduce waste and fraud."