Dear Fiber Broadband Association Members,
With the passage of the pro-investment tax policies included in the One Big Beautiful Bill Act (OBBBA), connecting every American to a better future with fiber broadband becomes more attainable. As we discussed at Fiber Connect 2025, our members’ private CapEx investment is leading the way to help ensure that every community, every home and every business is connected as we build out the critical fiber broadband infrastructure for our nation’s future. While the fiber broadband industry is in the midst of the largest CapEx investment cycle in history, Congress and the Trump Administration has injected a significant shot of adrenaline into the economy with the implementation of tax policy that will result in a step function uplift in fiber broadband deployment and investment.
AT&T continues to lead the way with private CapEx investment in fiber deployment, passing a major milestone this month with 30 million locations passed with fiber, on their way toward their goal of passing 60 million locations with fiber by the end of the decade. With the passage of the OBBBA, AT&T has announced that the pro-investment policies will result in increased investment of 1 million fiber customer locations annually beginning in 2026.
As industry analyst Jeff Heynen, Dell’Oro explained to me, under the previous law, the bonus depreciation rate was 40% and disappears entirely by 2027. The new tax policy flips that equation completely and instead allows operators to depreciate 100% of select equipment purchases and capital expenditures. The net result of the change is a potentially significant increase in cash flow for most operators, especially when you consider that the largest operators in the country spent around $80 billion in combined CapEx in 2024. ISPs investing in fiber benefit from both higher absolute CapEx levels and more straightforward asset categorization. The IRS life for fiber optic cable is 24 years, though companies typically use depreciation schedules ranging from 24 to 40 years for fiber assets, with electronics typically depreciated over 7 to 10 years. Immediate expensing eliminates the timing mismatch between capital deployment and tax recovery.
I followed up with Wall Street Analyst, John Hodulik, UBS who has analyzed how OBBBA will provide bonus depreciation Free Cash Flow (FCF) annual benefits to network operators, such as AT&T, Verizon, Comcast, and Charter. According to John, these operators combined FCF benefit could be in the range of $9.2B in 2026 and $11.3B in 2027. UBS anticipates the incremental funding could be used to accelerate existing fiber deployment plans or add incremental passings to longer term targets. Assuming $1.2K cost per fiber passing, UBS estimates every $1B of incremental spend on fiber equates to ~830K homes or nearly 10% uplift to their expectation for new fiber homes constructed each year.
To correlate this information, I checked in with our strategic research partner Mike Render, RVA. Mike explained that when 100% bonus depreciation was introduced back in 2017 (TCJA), analysts reported that 20% of the FCF benefit ISPs realized was invested back into fiber broadband deployment. While AT&T’s recent announcement is in the 20% range, Mike believes 15% will be a more typical fiber investment metric for other broadband service providers, which could result in an increase in private fiber broadband CapEx investment in the range of $4.2B per year.
On the FTTH equipment side, Jeff Heynen said based on the OBBBA passage, he has increased his forecast for service provider spending on PON OLTs and ONTs in North America, raising it from flat Y/Y to an increase of 3% Y/Y, thanks in part to the expectation that service providers will take advantage of the new depreciation provision to accelerate their fiber homes passed goals.
This pro-investment tax policy could not have come at a better time, given the urgency for our nation to build out its critical fiber broadband infrastructure to regain our nation’s global competitiveness with robust and secure fixed and mobile communications. A critical infrastructure required to usher in a new age of emerging next-generation applications such as artificial intelligence and quantum networking, support for needed telehealth programs to create better health outcomes and allow our population to age-in-place and stay connected, precision agriculture improvements to secure our food supply, and support the growth of autonomous vehicles, as well as improve rural GDP, and dozens of other improvements to how we live, work and play.
We urge policymakers to continue supporting this momentum by keeping fiber-first infrastructure at the forefront of American economic policy. This is a once-in-a-generation opportunity to transform our nation’s digital foundation and we’re proud that fiber broadband providers are leading the charge. The market has spoken, and now has the economic policy to ensure it can move forward at light speed.
Sincerely,
