- Zayo intends to build 5,000 miles of new long-haul fiber routes in prime data center locations to support the artificial intelligence (AI) boom
- Lumen is making similar moves, as AI and fiber keep getting more intertwined
- Other telcos want to cash in on AI as well, but it won’t be easy
2024 brought on the rise of artificial intelligence (AI) coupled with increased demand for fiber. That development came as no surprise to Zayo, which recently unveiled plans to build 5,000 new route miles in the next five years to support AI and data center activity.
Bill Long, Zayo’s chief product officer, told Fierce that in the past, Zayo’s average long-haul order ranged from 8 to 12 fibers. That all changed 12-18 months ago, when customers started requesting counts from 144 all the way to 432 fibers.
Windstream Wholesale, another long-haul fiber player, has noted its dark fiber customers are asking for as many as 864 fibers to support GPU capacity for data centers.
Once Zayo’s fiber orders ramped up, Long said the company took on a “bottoms-up” approach to try to understand how much bandwidth is needed for AI – and figure out the most optimal locations to build fiber. Understandably, more data centers are likely to crop up where they will have enough power.
Zayo also considered the number of chips needed to support AI activity. TSMC, which is working with Nvidia to produce AI chips in Arizona, said its fabs are expected to have a production capacity of over 20,000 chip wafers per month.
Lumen, Zayo lead the long-haul fiber charge
Zayo has already seen some fruit ripen from its AI tree. The company said it closed more than $1 billion in AI networking deals in 2024 and has another $3 billion in the pipeline.
Sounds familiar, right? Lumen has also homed in on selling more fiber for data center needs. So far, it’s closed $5 billion worth of hyperscale networking deals, touting big-name customer wins like Amazon Web Services, Microsoft and Meta.
In Zayo’s case, the company “likely has added visibility into the latest trends across the data center and wireless market,” said AvidThink principal Roy Chua.
Zayo is partly owned by DigitalBridge, whose digital infrastructure portfolio includes fiber, towers, small cells as well as regional and edge data centers.
Aside from continuing its middle mile fiber ambitions, Zayo is reportedly the frontrunner to acquire Crown Castle’s fiber and small cell businesses, a deal that could be valued at over $8 billion.
Asked what future AI deals could entail, Long said one “big use-case” is inter-metro AI training and inference. These processes typically eat up a ton of bandwidth, so one power distribution center isn’t going to be enough for data centers undertaking these tasks.
“You’ll have one data center campus on one side of a metro and another data center on another side of a metro served off different power substations that need to have huge bulk dark fiber connecting them,” he explained.
Continued investment in data center infrastructure will keep boosting fiber, Chua told Fierce, even if spend on the former is “slightly moderated going forward due to improvements in model training efficiency.”
Zayo plans to build at least five new long-haul routes: Chicago to Columbus, Las Vegas to Reno, Atlanta to Ashburn, Minneapolis to Chicago and Columbus to Indianapolis. It’s also overbuilding routes to markets that are already data center hot spots, like Atlanta, Dallas and Chicago.
While data center capacity is the “primary use case” for these routes, Long said Zayo will continue to offer its full suite of services for customers using these links, including Ethernet, dark fiber, Dedicated Internet Access (DIA) and wavelengths.
Cashing in on AI won’t be easy for telcos
As companies like Lumen and Zayo are moving along in the AI and data center world, other telcos are just jumping in on the opportunity.
Verizon for instance just launched AI Connect, which will provide customers excess space, power and capacity at the operator’s retrofitted central office (CO) facilities. Ziply Fiber is also making use of its old COs to serve data centers.
It makes sense for operators to use existing assets to bolster AI growth, Gartner analyst Susan Welsh de Grimaldo recently told Fierce, “especially as they are going to bear the costs of supporting growing traffic for AI applications.” However, telcos have their work cut out for them to prepare for the AI coming.
While there’s plenty of opportunity to build long-haul dark fiber and metro networks, Long said “there’s going to be a limited set of network providers [who] are going to be uniquely good at that.”
FiberLight CEO Bill Major has expressed some skepticism about operators aspiring to become AI giants. “When you try to be everything to everyone, you fall short more often than you succeed,” he recently told us.
Telcos do have to beef up their security systems as they delve more into AI training and inferencing, Long added. “It is your most valuable data, you do not want that going over the internet.”