- There were several big news announcements in 2024 about AI driving demand for fiber broadband
- The biggest news item was Lumen’s win of a fiber broadband contract with Microsoft
- It’s likely we’ll see a lot more activity in 2025 to serve the insatiable needs of AI
The editors at Fierce Network first began gleaning that there would be a symbiotic relationship between fiber and artificial intelligence (AI) in 2023 when executives from Corning and Zayo said they were seeing an increased demand for fiber, driven by AI.
It turns out that they were spot on because the year 2024 was notable for the boom in AI and the associated demand for fiber. And the wave that built over the past year is poised to crest in 2025.
But let’s rewind for a minute. In March 2024, Light Source Communications said it was building a fiber middle-mile network in the Phoenix metro, covering nine cities.
Debra Freitas, CEO of Light Source Communications, said, “AI happens to be blowing up our industry, as you know. It’s really in response to the amount of data that AI is demanding.”
But what really caught our attention was the announcement in July that Microsoft was tapping Lumen Technologies to provide high-bandwidth connectivity between its growing number of data centers. Lumen’s CMO Ryan Asdourian told Fierce that demand for fiber was increasing at an incredible rate. “I think what Microsoft was finding and what others are finding is that that demand for fiber and the routes and the network capacity and capabilities, that’s becoming the scarce resource right now,” said Asourian.
Then in August, Lumen said it was seeing so much demand for long-haul transport due to AI advances that it was locking down a big supply of fiber optical cable from Corning for the next two years.
Fierce had the opportunity to speak with Dave Ward, Lumen’s CTO, who said the demand for fiber was creating “the largest expansion of the internet in our lifetime.”
Since then, Lumen has won more long-haul fiber contracts to connect AI data centers. Lumen’s CEO Kate Johnson said recently on the company’s third quarter earnings that it had now won more than $8 billion in new fiber connectivity contracts in 2024 with more billions in the pipeline.
Another telling sign that AI is infusing life into the fiber broadband ecosystem was when Nokia’s CEO Pekka Lundmark said in October that telco is no longer the top growth market for the Finnish vendor. Instead, the company has turned its focus for growth to data centers.
Lundmark’s comments came after Nokia won a big contract with the AI hyperscaler CoreWeave, which selected Nokia to deploy its IP routing and optical transport equipment globally as part of its extensive backbone build-out, with immediate roll-out across its data centers in the U.S. and Europe.
Similarly, Ciena’s CEO Gary Smith told Fierce Network this month that AI is bringing Ciena new business from service providers as well as cloud providers. “Our business is linked heavily into the growth of bandwidth around the world,” Smith said.
Even telecom system integrators are getting in on the AI action. Executives from Tech Mahindra, Accenture and Infosys Consulting said their companies are working with major U.S. service providers as they look to extend fiber broadband more ubiquitously to serve the AI boom.
There was also an interesting bit of technical news at the end of 2024 related to AI and fiber optics. IBM said it’s created a breakthrough in optics technology that could dramatically improve how data centers train and run generative AI models. Its new co-packaged optics tech basically brings the power of fiber optics onto a chip to enable connectivity within data centers at the speed of light. So, fiber will not only be critical to connect data centers, but it will also become critical within data centers, as well.
Within data centers, there are front-end networks, which are used to connect general purpose servers, and back-end networks, which connect accelerated servers like those used for AI. Dell’Oro Group predicted AI back-end networks will grow at more than 50% CAGR over the next five years to surpass $20 B by 2028.
“AI back-end networks represent a rapidly growing and highly attractive net new market opportunity,” Dell’Oro VP Sameh Boujelbene recently told Fierce. “Additionally, they are driving new requirements, which in turn pave the way for significant innovation and disruption. This dynamic is further amplified by the substantial funding and investment flowing into the sector.”
The takeaway? With the acceleration of news related to AI and fiber in 2024, we’re bound to see more interesting stories on the topic in 2025.
