- Dark fiber has the high speed and low latency to support applications like AI, 5G and Internet of Things
- Lighting up dark fiber can lower the cost of AI training and inferencing, analyst Roy Chua told us
- Just like the internet and public cloud, AI will take time to make money, DigitalBridge CEO Marc Ganzi said
If the data center is the brain powering artificial intelligence (AI), dark fiber is the central nervous system. So it makes sense that companies are spending big on such a critical piece of the puzzle. Almost $200 billion in capex last year went toward AI, according to DigitalBridge CEO Marc Ganzi, and it’s not just data centers using that chunk of cash.
“Everyone thinks AI capex is just related to big hyperscale data centers – it’s not,” he said at last week’s Goldman Sachs investor conference. “It’s ecosystem investing. One of the great benefactors of that has been fiber.”
DigitalBridge has a hand in various digital infrastructure baskets, such as fiber, enterprise and edge data centers, towers and small cells. It’s invested in DataBank, GD Towers, Surf Internet and Zayo, among other companies.
When it comes to fiber, DigitalBridge has noticed a “tremendous resurgence” on the enterprise side, particularly with dark fiber, which provides high-speed and low latency connectivity required to support AI, 5G, the Internet of Things (IoT), you name it.
“We’re going from hyperscalers purchasing four pairs of dark fiber to 12, 24, 48 [pairs],” Ganzi said. “So they not only want diversity in route selection, but they want more dark fiber.”
The global dark fiber market is projected to reach $13.45 billion by 2030, according to Grand View Research. Increased bandwidth demand is prompting telcos to both buy up available dark fiber and build their own routes.
“There’s a case for metro dark fiber becoming a very key offering for companies that want to take control of their own distribution of AI traffic,” Jim Hintze, SVP for LOGIX Fiber Networks, told Fierce.
LOGIX, a Texas-based provider of business and wholesale fiber, just announced a network expansion to support Austin data centers in AI applications.
Hintze explained in the long-term, the value of metro fiber grows as it connects data centers “directly to the enterprises.” These enterprises, whether they’re manufacturing or healthcare, are going to be generating “terabytes worth of real time data.”
“Similar to what we’ve seen with cloud networking, over the next decade…zero latency is going to be paramount moving forward for this,” he said.
That’s why having that dark fiber connection from core and edge AI data centers to enterprises and municipal areas “will be critical.” Especially for making decisions related to “real time traffic patterns.”
Lighting up dark fiber can lower the cost of AI training and inferencing, AvidThink’s Roy Chua told Fierce by email, by providing “cost-effective routes and capacity to move AI models/computing processes/raw data to where they might be cheapest.”
And having dark fiber capacity allows companies to build new data centers in “favorable locations,” such as where power is cheaper, Chua added.
Don’t count your AI chickens before they’re hatched
Just as Rome wasn’t built in a day, neither has the digital infrastructure space. The internet, public cloud and wireless sectors all took “a lot of time” to make money, Ganzi said.
AI is no different, as he predicted we likely won’t see monetization from AI infrastructure until around 2028-29.
“I tell people, don’t get euphoric about AI and the next great idea. Because for every 10 ideas in AI, eight are going to fail,” Ganzi said.
However, the path for AI monetization isn’t set in stone. DigitalBridge and a handful of other private equity players teamed up with Intel to launch Articul8, a company that will offer a full-stack GenAI platform that can be deployed on any of the three major hyperscale clouds or on-premises.
“We’re getting bookings far faster than we thought,” Ganzi said. “So maybe AI goes a little quicker.”
It certainly appears telcos are jumping onto the AI fast lane. Microsoft recently tapped Lumen, which has scored $5 billion in AI-related contracts, to supply private fiber connectivity between its data centers. Zayo meanwhile is growing its middle mile network in preparation for the AI and broadband boom.
Ganzi said the Lumen deal was “a necessary transaction” for the company, but he admitted, “the structure of it I didn’t love.”
“I wouldn’t sell my network, which is kind of what they did,” he said, noting selling assets in the infrastructure biz is “the last thing you want to do.” Long-haul fiber routes (those spanning over 500 miles) are “really lucrative.”
DigitalBridge’s approach would be to “sit with the customer and we’d say, tell us the diverse routes you need, we’ll tell you where we have network.”
“If you don’t have network, we’ll build it for you,” Ganzi concluded.
