My big New Year’s resolution for 2025 is: Don’t make any predictions! Why? The telecom industry is too dynamic for anybody to know what’s coming next. It is interesting, though, to look at some of what’s trending and the general direction of the digital infrastructure business.
Wireless CapEx on The Rise
U.S. wireless capital expenditure is on the rise, albeit, at a measured pace. The MNOs still have a lot of spectrum licenses, especially in high-value mid-band, to be activated, particularly in suburban and rural markets to meet growing mobile data demand. This means more cell sites on existing towers and new tower builds. Expect a low- to mid-single digit CAGR over the next 3-4 years.
AI is Everywhere
We are still at the early stages of artificial intelligence. Billions are going into large hyperscale data centers, now dubbed AI factories, for training on large language models then using those models for inferencing (read, analyzing and predicting) in a wide variety of applications. Over time, AI workloads will move out from data centers to where applications are actually taking place, even down to the device level. The implication is that the entire digital infrastructure ecosystem – data centers, fiber, towers, edge infrastructure – needs to expand to deliver AI workloads closer to where they are needed.
Fiber is Ripe for a Roll Up
There are a lot of fiber projects underway to connect data centers within markets and between cities, and for broadband connectivity to businesses and households. And that’s before the BEAD money starts flowing in 2025. Planning and deploying fiber is a capital- and labor-intensive activity; a lot of smaller fibercos are not going to survive. Expect more M&A and investment activity, with national and large regional fiber operators, and MNOs, buying up smaller fibercos in both the transport and access space.
O-RAN Suppliers: Better to Join ‘em than Fight ‘em
Open RAN advocates from the early days touted their commercial off the shelf (COTS) radio designs as a way for MNOs to lower radio up front and operating costs while giving them options and flexibility to escape the clutches of “proprietary” designs from incumbent equipment manufacturers. How’d that work out? MNOs don’t buy COTS radios, and they need a prime vendor to integrate their networks from end-to-end. MNOs are gradually embracing O-RAN architecture but mainly through their prime vendor, who then is bringing smaller O-RAN players for specific network applications. Kumbaya!
Private Networks Are Growing but It’s Lumpy
Private networks were supposed to be a 5G killer app. Some industries like mines, oil and gas, and utilities that own spectrum have built their own networks. Other Enterprises have relied on MNOs to carve out a portion of the public network for private network use. But private networks have not turned out to be the shooting star that was envisaged. The reason is that every company has different operating needs and requirements, different facilities to be interconnected and a different capacity to invest. Keep an eye on private network developments, nonetheless.
Hyperscalers to Buy MNOs
Could Google, Amazon or Microsoft buy a mobile network? On paper, they could. And they could hire people who know how to run those networks. But doing so might limit their ability to sell their high-value cloud and AI services to multiple MNOs. It’s an interesting push-pull discussion that keeps coming up in various forums.
Satellites Replacing Cell Towers?
Satellites serve an important role in providing broadband and direct-to-cell connectivity in areas where terrestrial mobile service is poor or non-existent. Some satellites companies are planning very large constellations that cover the entire earth. But replace cell towers? Not likely. Although improving, it’s difficult for a satellite to match the bandwidth and reliability of a terrestrial connection, at comparable prices. Rather, MNOs can use satellite connectivity to augment their terrestrial networks with new services to a select group of customers.
So, there you have it. A little food for thought as we look forward to 2025. It will no doubt be interesting, challenging and, hopefully, rewarding.
Best wishes to you and your families for a happy holiday season!
By John Celentano, Inside Towers Business Editor
Reader Interactions