Gary Smith, CEO of Ciena, took over the post at the peak of the Internet foam – he now describes that period as the beginning of a 25 year journey full of fluctuations, structural changes, and the increasingly central role of the Internet in the digital economy.

“I just took over as CEO during the foam of the Internet… that was my first stage… basically, it was survival.” Smith said.

That turbulent period not only reshaped Ciena, but also changed the entire telecommunications industry. The initial high-speed growth quickly evolved into what he called the ‘harsh winter of the telecommunications industry’, with revenue plummeting and equipment manufacturers struggling to survive. He said, “Our revenue has dropped from $1.5 billion… to $200 million in four months.”

Looking back, Smith believes that one of the most decisive moments of the past 25 years was the industry’s excessive construction of fiber capacity (i.e. fiber surplus) during that era – painful at the time, but in hindsight, it laid the foundation.

“Without a doubt… it was the biggest decisive moment of the past 25 years, “he said, referring to the mentality of” building before deciding, “which initially did not work.

Despite the collapse caused by the surplus of optical fiber, it also provides conditions for the rise of modern Internet. Smith stated that many digital business models, from e-commerce to ride hailing services, cannot be scaled up without “a significant amount of low-cost bandwidth”.

At the same time, this also redefines the way value is distributed throughout the entire ecosystem. Smith said, “This does determine the value distribution… between operators and content providers.” He added that bandwidth was later seen as “almost free… or close to free.

This imbalance is still shaping the industry today, especially as the internet faces a new wave of demand driven by artificial intelligence.

Not yet prepared for the future

However, Smith also stated that the industry has not fully grasped the upcoming scale. “The capacity required solely to support AI is severely underestimated. ”He said.

In his view, AI is a product of multiple technological changes, such as computing, storage, mobility, and networking, converging on a unified platform. “This is the platform of AI… this is the killer application on it. ”Smith said.

But transforming it into an operational network will bring new constraints. Training large models across multiple data centers, moving data globally, and supporting inference workloads have all put greater pressure on optical infrastructure. AI can only truly enter the operational phase after leaving the data center. ”He said.

The result is a mismatch between supply and demand, and this mismatch is still ongoing. Component supply, manufacturing capabilities, and fiber deployment are all striving to catch up. “We are unable to lay fiber optic cables underground quickly enough, “Smith said.

Reshaping the Industry Landscape and Reflection on 5G

At the same time, the balance of power in telecommunications infrastructure has changed. Previously, telecom operators dominated investments in long-distance and submarine fiber optic cables, but now large-scale cloud providers are taking the lead.

“The largest owner of global submarine cable capacity is now a super large-scale cloud provider… previously, it was all operators, “Smith said.

This transformation is also changing the positioning of operators. Smith pointed out that wholesale models and hosted fiber optic networks are emerging for cloud service providers and emerging “Neoscaler” players focused on AI infrastructure.

“The internet is now a key element… as important as electricity, “he said.

Despite the increasing importance of the internet, Smith speaks frankly about areas where expectations do not align with reality. When asked about the most hyped innovation of the past 25 years, he directly pointed to 5G.

“The promise of 5G… and its economic returns… are both failures. ”He said.

He also questioned the long-standing policy debate, pointing out that net neutrality plays a crucial role in determining the value distribution between infrastructure providers and content platforms.

Looking ahead, Smith expects the pace of change to accelerate rather than stabilize. “The speed of change will exceed our wildest expectations, “he said.

But whether the industry can keep up is still an unresolved issue. In his view, the risk lies not in insufficient demand, but in whether supply can be expanded quickly enough to meet demand.

“The challenge is… how can we scale up as quickly as possible… otherwise we will become a bottleneck ourselves, “he said.

After 25 years of cycles of prosperity and depression, Smith believes that the current moment is different – not another temporary surge, but a transformation closely related to AI’s dependence on networks.

“If you’re not excited about everything we’re facing right now… then I don’t know what else can excite you, “he said.