The Role of Telco Operators in Building AI Infrastructure

Telecom operators have long provided the infrastructure to power communication and connect people. Now they are poised to take on a new role: building the AI infrastructure that enables enterprises, governments, and consumers to unlock AI’s full potential.

But finding the sweet spot to capture meaningful revenue and renewed success will require speed and precision amid complex market dynamics, uncertain demand, and significant competitive headwinds. Delays or missteps may heighten operators’ risk of falling further behind hyperscalers and other new market entrants, which have been the primary beneficiaries of growing data consumption over the last decade while telco revenues remained largely stagnant.

Market Dynamics and Opportunities

Telcos that can move quickly may have an edge in the marketplace. Their vast footprint, geographical reach, and ability to manage large-scale networks and variable demand position them to meet the rising need for high-performance compute and connectivity driven by gen AI and agentic AI applications. By 2030, data center demand could more than triple, with capacity expanding into new markets.

Pathways to Growth

There are four main paths telcos could pursue to capitalize on the AI infrastructure opportunity:

1. Connecting New Data Centers with Fiber

Global colocation companies and hyperscalers are expected to operate nearly 11,000 data centers worldwide by the early 2030s. Telcos can leverage their existing infrastructure to connect these data centers with fiber, creating a significant global market opportunity.

2. Enabling High-Performance Cloud Access with Intelligent Network Services

Enterprises running AI workloads on the cloud will require intelligent network services for flexibility and control. Telcos can shift to a value-based pricing model and offer services to help enterprises manage cloud data transfer fees effectively.

3. Turning Unused Space and Power into Revenue

Telcos can monetize underutilized data center space by offering it to hyperscalers, colocation providers, and large enterprises in need of immediate access to data center facilities. This can provide a practical path to join the AI compute value chain.

4. Building a New GPUaaS Business

GPUaaS offerings allow organizations to access high-performance GPUs without upfront investment. Telcos can capitalize on the growing demand for GPU compute by offering flexible pricing models and partnering with GPUaaS players.

Transitioning to a New Operating Model

As telcos pursue these growth opportunities, they will need to adjust their operating models in four key areas: sales strategies, partnerships, financial evaluations, and communications. These shifts will be essential to fully capitalize on the AI infrastructure opportunity.

Recommendations for Telco Leaders

• Develop a dedicated sales organization to cater to specific AI infrastructure services.
• Forge strategic partnerships with key industry players to accelerate time-to-market.
• Conduct thorough financial evaluations to assess the viability of different paths.
• Proactively communicate the value proposition of AI infrastructure offerings to stakeholders.

FAQ

Q: What are the key paths telcos can pursue to capitalize on the AI infrastructure opportunity?

A: Telcos can focus on connecting new data centers with fiber, enabling high-performance cloud access with intelligent network services, turning unused space and power into revenue, and building a new GPUaaS business.

Q: How can telcos adjust their operating models to succeed in the AI infrastructure space?

A: Telcos should revamp their sales strategies, form strategic partnerships, conduct thorough financial evaluations, and communicate effectively to fully capitalize on the AI infrastructure opportunity.

Conclusion

With the growing demand for AI infrastructure, telcos have a significant opportunity to play a pivotal role in the AI era. By acting decisively, balancing ambition with pragmatism, and embracing new operating models, telcos can position themselves for success in the evolving landscape of AI infrastructure.