Looking Ahead to 2025 In Telecom and Internet Infrastructure

As years go, 2024 was a bit surreal on lots of fronts, but not here. In telecom and internet infrastructure it was pretty smooth. Growth has been largely organic, layoffs haven’t been a thing, investments have been sane and plentiful, and technology has continued to advance. This smoothness makes the job of a prognosticator more difficult, but there’s always next year!  So what does 2025 hold for us? Hmmm, let’s make some guesses, topic by topic:

Artificial Intelligence — Nothing has been more top of mind than AI over the past year, with what seems like an endless stream of resources pouring into infrastructure to support the AI revolution. There’s no reason to think this will stop, but I think the initial blush is off the rose. In 2025 we will see a desire for fewer promises and more results when it comes to the benefits of new AI technologies. The need to start proving things will mean the buyers of AI-focused infrastructure will have to start justifying all that investment, and that’s always something that takes longer and is far more complicated than the early buzz anticipates. The reality of the AI revolution will struggle to live up to the hype. That’s not a criticism of the advancements in AI, but rather it is the nature of the hype cycle. And it could lead to some projects being re-thought.

Quantum — Is it ready to be the next buzzword? Honestly, with the exception of applications in secure communications, no. Quantum Computing is really cool, but the best we can say about commercial viability is that it’s probably closer than nuclear fusion. But that doesn’t mean it won’t be the next buzzword. Because in 2025 we’re going to be hearing it more and more.

Other Technology — When you get past software, where all attention is on AI, where is technology going? In one sense, where it always has: more bandwidth for less. But the bottleneck is cooling and power, which don’t obey the same scaling laws no matter how much ESG a corporation might invest in. That is where the effort is going and where we will see all the action in 2025.  The industry will start bringing more generation in-house, or perhaps next door, than ever before, finding ways to depend on traditional energy utilities less or at least influence them more.

M&A — Inorganic activity in the sector continues to be driven by the cycles of investment from the private equity and infrastructure fund entities in the market. But we may be approaching another roll up when it comes to FTTH. There are so many players in this space taking on buildouts in so many markets around the country, it is inevitable that some will do better than others. Someone out there will feel they have the platform to scale it beyond the local and regional level in a big way. It’s not yet clear who that will be, but we aren’t talking about the same environment as the beginnings of the metro fiber rollup about 15 years ago. Then the assets involved and the business models needed to make them work were not well understood. FTTH assets and business models are not a mystery.

Security — If one goes back and looks at the environment in any given year, everyone is always worried about security. The threats are always rising, and too many people are always too complacent. So when I say 2025 will be a year of unique security challenges, I feel like a broken record. But it does feel unique this year. Threats from state actors and rogue individuals seem closer to reality in a world that seems increasingly fractured and unable to work together politically. Whether it’s the physical security of subsea cables or the difficulties in securing all the endpoints of an IoT world where everything is connected or the persistent threats of ransomware from the criminal underground, everything seems closer to the surface than ever.  In a world where technology objectively takes us closer to utopia, why do we also seem closer to dystopia?

That’s my take. Yes, it’s fairly general this year, but I’m finding specifics hard to discern through the mists at the moment. What’s your prediction?

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Categories: Artificial Intelligence · Energy · Mergers and Acquisitions · Quantum · Security