- The boost to long-haul transport from AI could help the ailing company
- The Colorado-based company hopes a new deal with Corning will make sure it has enough fiber optical cable to meet the demand from AI
- Lumen says it has the largest intercity network in North America with routes to more than 50 major cities
The story of Lumen Technologies reads like a tragic tale of yet another regional service provider that failed to upgrade its legacy copper plant and, as a result, is dying a slow death. But the company’s massive fiber backbone network, could be its saving grace in light of skyrocketing demand for artificial intelligence (AI).
Lumen is seeing so much demand for long-haul transport due to AI advances that it’s locking down a big supply of fiber optical cable, reserving 10% of Corning’s global fiber capacity for the next two years. This agreement with Corning, announced last week, marks its largest fiber optic cable purchase — ever.
The demand is creating “the largest expansion of the internet in our lifetime,” Dave Ward, Lumen’s CTO, told Fierce Network.
“Lumen is uniquely positioned because we have a national backbone,” added Ward. “There is no other provider in the U.S. that has the capacity of all the infrastructure that Lumen does. The demand for bandwidth to get data in and out and between data centers is what is catalyzing this expansion of the internet.”
Thanks to acquisitions over many years, the company says it has the largest intercity network in North America with routes to more than 50 major cities. Lumen’s network already passes thousands of data centers. However, there are scores of new data centers being built with GPU capacity, which will need to be connected by transport laterals.
These new data centers are not always built in traditional high-density areas. They’re being built in a variety of locations based on the availability of power. “The size of data centers being built are in the hundreds of megawatts,” said Ward. Companies that are building data centers are going to places where the nation’s power grid has been upgraded.
Asked if its long-haul expansion and the new deal with Corning is related to the recent news between Lumen and Microsoft whereby Microsoft will use Lumen to expand its network capacity and capability, Ward confirmed, “Yes, it’s related to Microsoft,” but also to multiple other builds with other customers, he noted.
The Corning connection
Neither Lumen nor Corning would quantify the dollar-value of their deal. However, in early July Corning CEO Wendell Weeks told Squawk Box the company was raising its second quarter guidance to $3.6 billion, compared to its previous guidance of $3.4 billion. And on July 30, Corning did, in fact report core sales of $3.6 billion for Q2. That could imply that the deal is worth as much as $200 million.
For its part, the Broomfield, Colorado-based Lumen reports its Q2 2024 earnings tomorrow. Ward said we may see some numbers related to the value of its long-haul transport opportunities.
Lumen has used Corning as a fiber optic vendor for many years, according to Steve Mitchell, Corning’s SVP of carrier networks. For the deal just announced, Corning will be providing Lumen with optical fibers and the surrounding coating for the cables. He also added that Corning has been working over the last four years on its next-generation fiber optic cables to fit more strands inside the conduit, investing $500 million in fiber and cable capacity.
“The key element of our next-gen fiber and cable is you can get twice the amount of fibers in density compared to our old product, in the same space,” Mitchell said.
At the Fiber Connect show last week, fiber executives bragged that fiber counts within a conduit had increased a lot in recent years and they regularly see counts of 288 and 576 fiber strands.
“There are multiple fiber counts depending on the size of the ducts,” Mitchell commented. “We have three to four different fiber counts, depending on the route and duct space. So they vary, but can go from 864 to 1,728. We’ve doubled the capacity in the same outside diameter compared to the legacy portfolio.”
Ward said Corning’s innovation — the ability to fit as many as 1,728 fibers in a cable — was a “step function” improvement. He said it’s really fortuitous that Corning’s new technology has become available just as the GenAI wave is catalyzing that expansion of the internet.
