US ISP capex rises to $92.6B as Google plans $205B spend

Solmar Insights

US internet service providers spent $92.6 billion on communications infrastructure in 2025, posting a 3.4% year-over-year increase and reaching the third-highest annual capex total since 2003. For comparison, Google is budgeting $205 billion in capital expenditures for 2026, underscoring the widening scale between traditional broadband providers and hyperscalers as investments in data center and AI compute capacity accelerate.

Drivers of rising broadband investment

USTelecom reported that $92.6 billion in capital was deployed by US ISPs in 2025, continuing a long trend of infrastructure investment for fiber, transport, and network upgrades. Since 1996, cumulative industry-wide capital investment is nearing $2.3 trillion, reflecting ongoing efforts to expand high-speed access and modernize backbone networks for higher capacity and reliability.

This increased spending came amid elevated demand for bandwidth and improved performance, both from consumers and from enterprise applications with heavy reliance on cloud platforms. The report cites that fiber is not merely supporting current applications but enabling future technologies, as echoed by USTelecom CEO Jonathan Spalter’s call for regulatory reforms to accelerate deployment timelines.

Permitting and regulatory hurdles remain core issues impacting the pace of fiber rollouts. Industry groups are urging swift action in Congress to implement permitting reforms, aiming to reduce delays and cut the cost of capital-intensive projects as urban densification and rural buildouts gather momentum.

Google’s projected $205B capex and sector context

While US ISPs collectively approach historic capex levels, the scale of capital flowing into digital infrastructure from hyperscalers is more than double any single telecom provider’s spend. Google’s plan to deploy $205 billion for data centers and artificial intelligence compute capacity in 2026 highlights how tech platforms are redefining capex requirements and shifting benchmarks across the infrastructure sector.

Big Tech’s total capital expenditure could reach as high as $800 billion in 2026 when including all major US cloud and platform providers, according to referenced reporting. These investments are allocated primarily for data center development, AI hardware and systems, as well as supporting network fiber and undersea cables that underpin next-generation workloads, from generative AI to edge computing.

This level of spending brings scale advantages to platforms that operate globally, driving demand for new grid connections, renewables procurement, and colocation capacity at a pace that outstrips traditional telecom operators. The shift also signals deeper requirements for backbone robustness and presents competitive challenges for regional ISPs and independent fiber operators.

Industry perspectives and regulatory calls

Leading industry figures stress the foundational importance of fiber for the emerging digital economy. Jonathan Spalter of USTelecom characterized fiber as the critical load-bearing substrate not only for current connectivity but for forthcoming advances in cloud, devices, and AI-native infrastructure.

This outlook links infrastructure buildout directly to US competitiveness in digital innovation and resilient connectivity. Spalter and other industry advocates are pressing policymakers to enact permitting reforms and regulatory adjustments, which they argue are needed to lower deployment risks and costs for the next wave of capital-intensive projects.

The discussion is highly relevant in the context of recent legislative sessions, such as the House advancing the Ratepayer Protection Act and continued debate in California around broadband deployment rules linked to net neutrality. In parallel, leadership changes at major state and federal broadband offices signal further regulatory evolution that could affect carrier and hyperscaler investment strategies.

Implications for data center and energy supply chains

The accelerating capex commitments by both telecom providers and tech platforms create compounding effects for supply chains, particularly in data center power procurement, interconnection queues, and network equipment manufacturing. As Google and peers scale up data center builds, demand for available land with suitable utility service, low-carbon generation sources, and rapid permitting mechanisms intensifies.

This surge in capital also amplifies requirements for power and fiber infrastructure near major metros and secondary hubs. For developers and institutional investors, greater capex flows increase competition in land acquisition, right-of-way negotiations, and secondary market transaction values for operating data center assets.

Rising capital outlays by Big Tech are expected to sustain high utilization rates as new compute-intensive applications, including generative AI and advanced analytics, roll out at scale. This results in pressure on power delivery, project timelines, and coordinating with RTOs and ISOs to manage grid constraints amid rising energy density requirements in hyperscale environments.

Shifting benchmarks for buyers and investors

For institutional buyers, developers, and investors, the dramatic difference in capex between incumbent carriers and hyperscalers shapes market outlooks for digital infrastructure assets and power contracts. The more than $200 billion single-year expenditure by Google sets an aggressive benchmark, with implications for pricing, speed of deployment, and asset lifecycle expectations in the sector.

Buyers now face new norms regarding the cost and timing of securing data center space, fiber routes, and long-term power purchase agreements. Greater capex also reflects confidence in the underlying demand for compute infrastructure, encouraging investors to view both greenfield and brownfield opportunities as essential to supporting hyperscale and telecommunications growth in North America.

Given the compounded growth and feedback between digital and physical infrastructure, institutional decision-makers are compelled to recalibrate risk, value, and competition dynamics, especially in high-demand states and utility service areas that can accommodate large-scale projects in the 2026 to 2028 pipeline.

Reporting via the original publisher