In recent years, as wireless service revenue growth has slowed to single digits, AT&T and Verizon have been seeking new profit growth drivers. Now they may have found the answer—not the mythical disruptive 5G applications, nor even fixed wireless services, but rather data center interconnection.

Both operators have successively issued important announcements regarding data centers. AT&T launched new rapid-deployment 100G and 400G optical wave services last weekend, followed by Verizon’s announcement on Monday that it had reached a significant agreement with AWS to build new high-capacity long-haul fiber optic lines to connect the latter’s data centers.

Verizon’s announcement closely followed Amazon’s disclosure of a $38 billion deal with OpenAI, involving the operation of OpenAI’s AI workloads within Amazon’s facilities.

Specific cooperation content

Verizon’s collaboration with AWS is an extension of its AI Connect service launched in January this year, designed to leverage existing assets to meet data center connectivity needs. As part of the AWS agreement, Verizon will build new fiber segments and provide redundant connectivity paths using AI Connect.

However, beyond this basic information, the press release provides few details. This means the number of segments Verizon plans to build, the scheduled timeline, or the contract value remain undisclosed.

Verizon representatives declined to provide further details but stated, “The network is a key driver of AI’s exponential growth. This initiative represents a significant commitment to supporting the exponential growth of data driven by generative AI and addresses potential ‘hidden bottlenecks’ that may limit AI’s benefits.”

Meanwhile, AT&T is aggressively promoting its new Express Waves product, explicitly targeting customers such as data centers and users running high-bandwidth AI workloads. Notably, hosted service provider Equinix was mentioned in the press release, having integrated AT&T’s 400G optical wave service into its backbone connectivity architecture.

Market Background and Prospects

It is no surprise that AT&T and Verizon have chosen this direction—after all, long-distance fiber providers Lumen and Zayo have been active in the data center network space for over a year and a half. Therefore, it is surprising that AT&T and Verizon, with their extensive fiber backhaul networks, are only now entering this field.

Fortunately for later entrants, the demand for data centers remains robust.

According to Synergy Research Group’s September statistics, there are currently 1,244 hyperscale data centers worldwide, with an additional 527 in planning or under construction. There is no indication that market demand will slow down soon.

Synergy pointed out in its newly released report that corporate spending on cloud infrastructure services saw the largest year-over-year growth in the third quarter, increasing by $7.5 billion to nearly $107 billion. Meanwhile, as these three companies continued to expand their data center scale, the combined capital expenditures of Amazon, Google, and Microsoft reached $93.1 billion in the third quarter.

The capital expenditure figures of all major hyperscale cloud service providers continue to rise. Amazon stated it expects to spend $125 billion in 2025, with even higher expenditures in 2026. Similarly, Alphabet, the parent company of Google Cloud, raised its 2025 capital expenditure guidance from $85 billion to $91-93 billion and warned of a significant surge in spending for 2026.

Baron Fung, Senior Director of Research at Dell’Oro Group, told Fierce that the analysis firm predicts the number of AI accelerators in data centers will surge from 11 million in 2024 to 28 million in 2029. He added that considering recent announcements from cloud service providers and new cloud companies about expanding data center capacity over the next five years, this forecast “might be conservative”.

Regarding what this means for fiber optics, it primarily relates to the demand for backend or horizontally scalable networks. However, Fung pointed out the “potential for horizontal interconnection networks to drive growth in fiber optic demand,” specifically networks connecting different data centers. He noted that these networks “are highly likely to be based on fiber optics”.

All this indicates that the data center sector is not only experiencing active capital flows but also robust growth expectations. As AI workloads increasingly operate across multiple data centers, this means connectivity providers like AT&T and Verizon will play a pivotal role.