Verizon has touted fibre capacity, compute and acres of “undeveloped land, some… zoned for data center build” to the market as it looks to ride a massive AI investment wave with a new “AI Connect” proposition.
Verizon AI Connect is a “suite of products and solutions designed to manage AI resource-intensive workloads at scale” it said on a Q4 call. Cutting away the buzzwords, it’s largely an opportunity to offer edge data centre capacity and bundle it together with dedicated fibre networks.
Many telcos got out of the data center business over the past decade and are hardly well equipped with large volumes of cutting edge GPUs.
But Verizon also announced a partnership however with “AI Cloud” provider Vultr, which provides GPU capacity in 32 global regions including London: “Vultr will deploy their GPU as a service infrastructure in one of our data centers and tap into our high-capacity fiber network for distribution,” as Verizon Business Group CEO Kyle Malady put it.
“We have facilities across the United States that either have spare power, space and cooling or can be retrofitted. As we sit here today, we have two- to 10-plus megawatts of usable power across many of our sites" – Malady.
Malady boasting to analysts that “Google and Meta have purchased capacity in our network with the intent of using it for their AI workloads.”
New York-headquartered Verizon, which serves 99% of the Fortune 500, emphasised the AI opportunity as it posted Q4 earnings on January 24.
(Revenues were $35.7 billion, net income was $5.1 billion, OpEx was $28.3 billion for the last quarter of the year. Consumer revenue was $27.6 billion, dwarfing its business segment’s revenues of $7.5 billion.)
Malady told analysts that Verizon had a near-term $1 billion AI Connect funnel and saw at least a $40 billion total addressable market (TAM).
Right, mused one analyst; and when will that show up in P&L?
“If you look at the funnel right now, it's basically entirely connectivity for web scalers,” responded Malady. “It's basically lit [active existing cables] services, wave, and dark [unused bookable] fiber.
"That's why we're happy to announce that we're going to add the power space and cooling to the portfolio as well. I see over time that we'll be selling the typical wave and dark fiber to players, but I think we'll also be selling bundles of stuff. So, we'll put power space and cooling together with networking, and we're going to sell it on a project-by-project basis…”
“Essentially,” he added, “we are allowing them [customers] to program their network resources to optimize their operations as they see fit.”
Are telcos looking to build their own “AI factories” really getting in at the right layer? Analysts at Deloitte were sceptical in a Sep 2024 paper.
But with “over 16,000 near-net enterprise locations” and newly named a “Leader” in Gartner’s first Magic Quadrant for private mobile network services, Verizon is clearly bullish on the opportunity.
As Verizon Consumer Group CEO Sowmyanarayan Sampath added: “There are other ways to monetize the network that we've started exploring aggressively. The first one is network slicing. In Q4 '24, we launched our first network slice, and you're going to see us do more of that. And the second is enhanced satellite connectivity… we like our playbook a lot.”
