Lumen Technologies has announced it will receive 10 percent of Corning’s total optical fiber production for a period of two years, to support additional capacity supporting “data center to data center” connections supporting artificial intelligence operations.
The additional fiber is said to double Lumen route miles, but also support an order of magnitude expansion of “inside the data center” optical connections as well. Some might say the new move supports Lumen’s earlier move to emphasize its private connectivity fabric.
And while estimates vary, all observers would note that Lumen is a major provider of public optical networking services in the U.S. market. By some estimates, Lumen is the largest supplier.
Optimists might say the new effort to create capacity connecting AI data centers is “new business.” Skeptics might say it is simply the evolution of the existing business. But Christopher Stansbury, CFO, says the new AI-related deals are “largely all incremental.”
“This isn't cannibalization of legacy at all,” he notes.
Research FirmAI "Data Center to Data Center" Interconnection Services (Capacity) ForecastOverall "Data Center to Data Center" Capacity Market ForecastGartner
The AI "data center to data center" interconnection services market is expected to grow from $4.2 billion in 2023 to $9.1 billion by 2027, a CAGR of 16.8 percent, according to analysts at Gartner.
Gartner also forecasts the overall "data center to data center" capacity market is forecast to grow from $48 billion in 2023 to $72 billion by 2027, a CAGR of 10.6 percent.
According to IDC, the AI-driven "data center to data center" interconnection services will account for 22 percent of the total "data center to data center" capacity market by 2025, up from 15 percent in 2023.
The global "data center to data center" capacity market is projected to reach $64 billion by 2025, growing at a CAGR of 12.7 percent from 2023, IDC also believes.
Forrester researchers believe the market for AI-enabled "data center to data center" interconnection services will grow at a CAGR of 19 percent from 2023 to 2027, reaching $8.5 billion by 2027.
Forrester also estimates the overall "data center to data center" capacity market will grow at a CAGR of 11 percent from 2023 to 2027, reaching $68 billion by 2027.
Markets and Markets predicts the AI "data center to data center" interconnection services market will grow from $4.6 billion in 2023 to $10.2 billion by 2027, at a CAGR of 17.3 percent .The global "data center to data center" capacity market is forecast to grow from $51 billion in 2023 to $78 billion by 2027, at a CAGR of 11.2 percent, the firm says.
Either way, “data center to data center” connections are an important niche or segment of the capacity business, including sales to third party customers as well as captive capacity owned and operated by hyperscalers including Alphabet, Amazon and Meta, which consume much capacity to support their own operations.
Though it is virtually impossible to know with great precision, most estimates of active traffic on global long-haul networks point to the importance of “data center to data center” connections as a percentage of total active connectivity. For example, broad consensus seems to exist that between 30 percent and perhaps as much as half of active capacity now is used to support connections between data centers and other data centers.
By definition, that data center traffic is all enterprise or wholesale, while traffic between internet PoPs might be either retail or wholesale; consumer or enterprise.
The contribution of AI data center interconnection to Lumen financial results remains to be seen. But it is an important segment of the connectivity business and among the largest segments.
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