Internet Industry Report for October 2022
Here's a look back at what happened in the internet industry in 2022.
October was a special month for the internet. Not only was it Cybersecurity Awareness Month, but Oct. 29 was also National Internet Day, which celebrates the momentous invention of the internet. Besides these holidays, some events happened in the telecom industry that probably weren’t on your news feed. Here’s a recap of what you might’ve missed in the internet industry in October.
Internet Providers Rebuild After Hurricane Ian Devastation
Hurricane Ian caused a major disruption to internet services in October. In response, internet service providers (ISPs) had to restore and rebuild their services across the state while expanding their network to support increased data usage. The high demand resulted from the influx of recovery teams to Florida and work-from-home arrangements.
Currently, ISPs are increasing their support for the people affected by Hurricane Ian. Verizon announced a $250,000 donation to support small businesses in Florida, while AT&T announced $400,000 for restoration work as a result of the devastation caused by Hurricane Ian. Several other ISPs have also pledged their support for the victims of the disaster.
U.S. Tech Giants Face Increased Pressure from Telecoms in Europe
The battle between European telecom firms and U.S. tech giants reached a fever pitch. The former demanded that major tech companies such as Google and Netflix pay for internet infrastructure development since they consume a massive chunk of the network bandwidth. This request has gathered political support, with top EU officials voicing their sympathies for European telecom operators.
European telecom groups are considering implementing a framework where U.S. tech companies pay a fee to fund the massive growth required to support internet infrastructure requirements. That said, the latter responded that they’re already investing a ton into European internet infrastructure, including submarine cables and data centers, and this should suffice for their share of payment.
Verizon Begins New Cost-Cutting Program
Verizon CFO Matt Ellis shared that the company will start a new cost-cutting program. This announcement came during the Q3 2022 conference call on Oct. 21. According to Ellis, this program will reduce annual costs for the company by $2 billion to $3 billion by 2025. The company has already reduced its headcount from 155,000 in 2017 to 118,000 in 2021. Further layoffs are possible if profits continue to dwindle. The Q3 2022 report for Verizon shows profits fell by 23 percent.
Biden Administration Approves $759 Million for Rural Internet
The U.S. Department of Agriculture approved $759 million to bring high-speed internet access to people living in rural areas across 24 states. The announcement was made on Oct. 27 and is the third round of funding of the ReConnect Loan and Grant Program. The investment in this initiative includes funding from President Biden’s Bipartisan Infrastructure Law, which provides $65 billion to expand high-speed and affordable internet to rural America.
The goal of developing high-speed internet infrastructure in rural America is to improve emergency responder services, tourism opportunities, distance learning education, and telehealth services in the region.
ISPs Grilled Over ACP Implementation
A prominent congressman grilled ISPs over allegations that they’re making it difficult for customers to sign up for broadband plans through the Affordable Connectivity Program (ACP). The ACP launched in early 2022 to offer eligible customers discounts on broadband internet plans.
Letters were sent to Comcast, Verizon, AT&T, and several other ISPs asking them to provide information on the number of ACP customers and if they’ve received complaints about their processes. ISPs were also asked whether they billed any customers enrolled in ACP without applying the discount. The providers had until Nov. 9 to respond to the letters.
Internet Connectivity Worldwide Impacted by Severed Fiber Cables in France
The internet isn’t completely wireless yet – it relies on a network of cables, most of which are underwater fiber-optic cables. A major internet cable in Southern France was severed on Oct. 20, causing worldwide internet disruption. The U.S. and several countries in Asia and Europe were affected by this disruption.
As a result of the severed cable, customers faced website response latency and data packet losses. Initial investigations point to vandalism of the fiber infrastructure as the cause of the disruption. Zscaler, a cloud computing company, made routing adjustments to reduce the impact until the cables were repaired.
Inflation Slows Down Growth of Internet Industry
October wasn’t a great month for the internet industry’s growth. While experts are optimistic about the vast potential of wireless internet and the growing government interest in investing in high speed internet for rural America, the economy poses a few challenges.
According to the Rural Digital Opportunity Fund, inflation has caused the cost of building internet infrastructure to skyrocket. This is fueled by a hike in interest rates and the costs of materials, labor, and gas. As a result, banks are reluctant to lend money to ISPs, which must now rely on other sources of financing. While the worst might be behind us, the costs are unlikely to decrease soon, so ISPs might have to slow their expansion to bridge the digital divide.