The European telecommunications market has been a global trailblazer in terms of innovation, affordability of service, and infrastructure deployment. Few markets in the world have seen comparable levels of investment and competition.
Europe also crucially interconnects regions, providing key hubs for traffic exchange and access to content for Africa, Asia, and the Middle East.
The 2024 Capacity Europe conference in London highlighted the industry's progress and the challenges that lie ahead in the near and medium term. TeleGeography was there, not only with submarine cable maps in hand but also moderating panels on subsea cable route diversity and discussing current market trends with the industry’s leading experts.
So what did we learn?
Connecting AI Hubs: 400 Gbps and Beyond
One opportunity Capacity Europe presents is to gather high-level views from senior executives on how emerging technology is transforming network and capacity requirements.
During the program’s Keynote Chat Show session, Colt’s CEO Keri Gilder shared that AI buildouts, with all their expectations for connectivity demand, have been thus far centered in North America. She shared that 90% of AI spend has been in North America, 6% in Asia, and 4% in Europe.
The development of LLMs and supercompute centers is happening primarily where cloud and AI companies have an existing footprint. Beyond this natural gravitation to starting where you are, limitations on available land and power, in addition to regulatory constraints, are holding back a broader distribution worldwide.
The need to connect these AI data centers has heightened demand for 400G wavelength transport on terrestrial routes in North America.
The need to connect these AI data centers has heightened demand for 400G wavelength transport on terrestrial routes in North America. Where in 2023 carriers were selling tens of 400 Gbps circuits, now those numbers have reached the triple digits. One interviewee said, “capacity requests in the U.S. are unreal.”
The transition from 100 Gbps wavelength transport to 400 Gbps is truly on, at least in fulfilling the needs of AI and cloud. Networks in Europe are capable, but further data center expansion may be necessary to drive similar demand in the region.
One interesting observation in the AI space is that compute clusters may or may not be at customary hubs. AI clusters are gravitating toward geographies where land and power are available, prioritizing that over traditional connectivity hubs. For example, xAI’s supercomputer cluster in Memphis, Tennessee is just 1.2 miles away from the nearest power plant and has a full 150 MW power commitment.
This is a trend, not a coincidence. Requirements for connections between these types of sites will drive new fiber builds and deployment of higher capacity circuits, such as 800 Gbps and potentially 1.6 Tbps.
Geopolitics and Establishing New Paths
Given Europe’s critical role as an interconnection point for other regions, we’d be remiss not to mention the industry's challenges regarding cable outages and geopolitics.
This isn’t a new problem, but the efforts to find new paths around the Red Sea for Europe to Gulf-India-Asia destinations and ways to quickly provide restoration for cable faults are top of mind.
While projects such as SeaMeWe-6, IEX, Raman, and 2Africa continue to be delayed due to uncertainties in Yemen, transit paths from Europe via Turkey and Iraq, or via Saudi Arabia are being developed. Infrastructure investment and commercial terms are being negotiated to make these alternatives truly viable.
Furthermore, a case can be made that availability and resiliency are now as important as latency. This gives support for considering new project routes, whether it be Europe to Asia via the Arctic, or from Africa to India and Australia.
Regarding outages, one thing that is clear is that network planning saved the day. We’ve long talked about how multi-path diversity for backbone connectivity is essential, but when outages on WACS and ACE happened in early 2024, Equiano was in place to provide restoration. Carriers worked together to quickly turn up circuits and restore connectivity.
Diversity can be attained by supplier, by cable, by path, and even by the direction around the earth. With the extreme pressure for an alternative Red Sea path, it’s crucial to consider that uptime is paramount.
NaaS: More than just a new delivery platform?
Dynamic provisioning of network services has become a differentiator among carriers, with some carriers enabling customers to turn their network on and off, or even up and down, within minutes.
As operators consider the pros and cons of upgrading and as requirements become more bursty, the network must transform to be consumed in a dynamic, automated, assured manner. Network-as-a-Service (NaaS) offers the ability to do just that.
As operators consider the pros and cons of upgrading and as requirements become more bursty, the network must transform to be consumed in a dynamic, automated, assured manner. Network-as-a-Service (NaaS) offers the ability to do just that.
AI workloads such as model training and inference are not always on, so the network that supports it needs to be flexible. Ideally, NaaS can give visibility into service catalogs, inventory availability (including address discovery), quoting, circuit delivery, and circuit performance. Removing manual processes and expediting “quote to cash,” it is more than just SDN between PoPs and single pane of glass portals.
To be successful, NaaS requires collaboration between global and regional carriers to deliver end-to-end automated solutions through interoperable APIs. While there are challenges for NaaS to become a widespread reality, there is substantial demand and effort stimulating its development.
Juggling the complexities of business in the European telecommunications market is a true balancing act. In order for AI, Quantum security, and NaaS platforms to thrive, it is imperative to have reliable, resilient, and available underlying connectivity infrastructure.
Collaboration between all players, and even competitors, is proving to be mutually beneficial and even necessary. And why take on the juggling act alone? In the words of Orange’s SVP Franck Morales, “Alone you go faster, together you go further.”
Pssst... We’re adding a NaaS module to our Network Pricing Database.
This pricing app will allow users to simulate market pricing for NaaS deployments, customized to their unique connectivity requirements. It will also include an in-depth market analysis that takes a deep dive into what NaaS is, the services being offered by NaaS providers, and trends in NaaS pricing around the world.
Stay tuned; this new offering is coming soon!
Rob Schult
Robert Schult is a Research Director at TeleGeography and manages the company’s wholesale pricing and enterprise network research groups. His areas of expertise include telecom service pricing, corporate WAN technologies, and Cloud service integration.
