UK networking and comms service providers acknowledge the impact of artificial intelligence (AI) but show more caution than some of their global counterparts about the prospects for the technology to become the primary driver of new revenue.
A global study commissioned by Ciena looked to establish the current landscape and the impact AI-driven network services were having on the channel.
The UK results showed that there was an expectation that high-capacity network services would be a driver of net new revenue, but there was slightly less optimism in the growth prospects and more cloud service providers (CSPs) expressed disagreement with the idea that it would be the dominant driver of growth.
The majority (97%) expected edge-hosted services to be responsible for at least 10% of total enterprise revenue within three years. All of those quizzed agreed that managed optical fibre network (MOFN) services would deliver growth as customers looked for help connecting their AI compute over the same period. A third expected MOFN to be their primary DCI vehicle.
Where AI is clearly having an impact is around upgrading networks to ensure they can cope with the demands of AI. The survey appeared to highlight the reasons for AI revenue caution, with service providers concerned about the state of the readiness of networks across their customer bases.
On a global level, half of the service providers quizzed saw the opportunity to deliver high-capacity AI network services as the primary growth area in the next three to five years. There was also backing for MOFN services delivering opportunities during that period.
The majority of service providers are feeling a sense of urgency to upgrade customer networks to unlock the AI opportunities. Just shy of half said that getting customer infrastructure in a better position was crucial and they were encouraging them to undertake that investment in the next 12 to 18 months.
There was a sense that a routine upgrade would not be sufficient to move the network forward enough to cope with the high-capacity demands that would come with AI.
“The survey findings show that service providers are approaching AI with both optimism and urgency,” said Brodie Gage, chief product and technology officer of Ciena. “Service providers see significant opportunities around AI inference, GPU-as-a-Service, high-capacity network services and quantum-safe encryption, while recognising that many existing networks must evolve to meet new performance demands.”
The findings covered more than just revenue expectations around AI-driven network services, lifting the lid on what was happening more generally across the CSP global community. Among the highlights was an indication that CSPs were looking to deliver reliability as well as bandwidth to make sure that, as customers increased the pressure on networks, they were able to deliver a solid user experience. Many channel players are monetising that approach.
In recognition of customer multicloud environments, service providers are moving towards offering dynamic connectivity models as a revenue driver. Services the channel is offering include connectivity management, consumption-based bandwidth services and additional fixed-capacity options.
“The message is clear: AI is creating new sources of revenue, and success will depend on having the network foundation to support them,” said Gage.
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