Amazon, Google, Meta and Microsoft collectively laid off tens of thousands of employees in recent months. While that might understandably lead one to believe they’re also planning to cut back on infrastructure spending, vendors including Lumen Technologies, Zayo Group and Windstream told Silverlinings that’s not the case.
“They’re making a lot of investments still in their newer cloud plays in big data analytics and AI capabilities, which ultimately impacts the network part of the equation,” Todd Geneser, director of product management for Lumen’s Core Network Services Group, told Silverlinings. “Last year they were going gangbusters [on] both data center expansions and edge and we haven’t seen any signals that they’re slowing down.”
Lumen, Windstream and Zayo all indicated hyperscalers are interested in two main types of connectivity infrastructure: dark fiber and wavelengths. Dark fiber refers to built but unused – or unlit, if you will – fiber infrastructure, which is typically available for purchase via a 15- to 25-year indefeasible right of use agreement. With dark fiber, customers can add their own optics (frickin’ laser beams!) and essentially “own” their own network. Wavelengths, by contrast, offer dedicated channel capacity – 100G, 400G, etc. – over shared fiber infrastructure owned by the vendor.
Geneser said the top-tier hyperscalers tend to favor dark fiber, but decisions around what technology is used really depend on who is using it and where. For connectivity between existing core data centers or in a metro area, dark fiber is usually the winner. Wavelengths, however, are useful in new markets where hyperscalers are trying to spin up new data centers quickly, he said.
No signs of slowing
Zayo's VP of Wavelengths Brandon Gouin told Silverlinings what while hyperscaler customers are more closely scrutinizing their capital and operating expenditures, demand has remained strong for connectivity infrastructure. Windstream Wholesale SVP of Business Development John Nishimoto similarly pointed to an insatiable appetite for connectivity among hyperscalers. Ditto for Geneser.
“We have a pretty large-scale dark fiber construction project to the new cable landing station in Myrtle Beach which is being driven by the hyperscalers and the associated subsea cable(s),” Nishimoto said.
Gouin, meanwhile, said Zayo is seeing “strong demand” for long-haul dark fiber due to a need for diverse routes between new and existing markets and data centers.
On the wavelength side, Gouin and Geneser said while 400G capacity is available on their networks, the majority of waves being sold today are 100G. But Geneser and Nishimoto added Lumen and Windstream are beginning to see demand for 400G waves rise.
Nishimoto stated there’s still “good demand for 100G or Nx100G services from all of our verticals” but noted early 400G services are being driven by a range of “different verticals including hyperscaler/content providers, carriers and financials.”
Already, Nishimoto said Windstream has “sold several long-haul 400G circuits across various routes in the U.S.” Likewise, Geneser said Lumen has sold over 50TB of 400G wavelength services, but he added the demand there isn’t necessarily being driven by hyperscalers. Rather it’s wholesale customers and upper echelon enterprises, the latter of which are seeking direct connections into cloud data centers.
It’s worth noting that Lumen, Windstream and Zayo have all been working recently to deploy 400G capabilities across their long-haul fiber assets, and Zayo in particular recently told FierceTelecom it has also focused on building new fiber routes to meet customer demand. In December, Lumen unveiled plans to build 6 million miles of fresh long-haul fiber infrastructure by 2026.
Optics vendors including Infinera, Ciena and Cisco have all come out with products capable of supporting 800G and 1TB+ speeds. But it seems the transition from 100G to 400G is still in its early stages and few are looking beyond that at this point.