Business News Today: AI Fiber Deal and the Robot Apocalypse?

Julian Vance: Feature Article

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Verizon and AWS: Is This Fiber Deal Really About AI, or Something Else?

Verizon Business and Amazon Web Services (AWS) are teaming up on a new fiber deal, touted as essential for the "next wave of artificial intelligence (AI) innovation." According to the press release, Verizon will be building new, long-haul, high-capacity fiber pathways to connect AWS data center locations. The claim? To enable AWS to scale its cloud services for customers deploying AI applications. But let's dig into the numbers, or rather, the lack thereof, and ask: is this really about AI?

The Missing Metrics

The press release is heavy on buzzwords – "resilient high-capacity," "low-latency network infrastructure," "exponential data growth" – but conspicuously light on quantifiable metrics. What is the actual capacity of these new fiber pathways? What latency improvements are we talking about? How much data growth does Verizon anticipate specifically from AI applications, versus, say, streaming video or general cloud usage? The absence of these figures is, frankly, concerning. We're expected to believe this is all about AI, but there's no data to back it up.

Consider this: Verizon already has a "long-standing strategic relationship" with AWS, including joint development of private mobile edge computing solutions. Are these existing connections insufficient for current AI workloads? If so, by how much? And why wasn’t that deficiency addressed earlier? I've looked at hundreds of these corporate announcements, and the vagueness here is striking.

The Real Estate Angle

Interestingly, around the same time as the Verizon/AWS announcement, another piece of news surfaced: Ella Reimer, a junior business student at Marquette University, was named an Eisenberg Scholar. Now, what does a real estate scholarship have to do with AI and fiber optics? Potentially, quite a bit. The Eisenberg Foundation picks real estate students for mentoring and scholarships. Reimer, specifically, is studying commercial real estate with a concentration in the Real Estate Asset Program and AIM (presumably, Asset Investment Management) with a concentration in fintech. She's also part of the AI in Real Estate Lab.

This might seem like a non sequitur, but bear with me. Data centers require real estate. Lots of it. And the demand for data centers is only going to increase with the rise of AI. The Verizon/AWS deal isn't just about laying fiber; it's about securing the physical infrastructure – the land, the buildings – needed to house the servers that power AI. Fiber is just the plumbing; the data centers are the foundation.

Is it possible that Verizon's "significant commitment" in network buildout is as much about positioning itself in the burgeoning data center real estate market as it is about directly enabling AI applications? Is Verizon quietly angling to become a major player in the physical infrastructure that supports AI, rather than just the network that carries the data?

A Question of Foresight

Here’s the thought leap: how accurate are projections for AI-driven data demand, anyway? Are companies like Verizon and AWS overbuilding based on hype, or are they making genuinely data-driven decisions? It’s tough to say. The "exponential data growth" narrative is compelling, but it's also self-serving. Companies that sell data infrastructure have a vested interest in promoting the idea that we'll need ever-increasing amounts of it.

And this is the part of the report that I find genuinely puzzling. We're told AI requires "resilient" networks. Resilient implies redundancy, backup systems, and the ability to withstand disruptions. But what kind of disruptions are we talking about? Cyberattacks? Natural disasters? Simple equipment failures? The press release doesn't say. But if the concern is cybersecurity, wouldn't investment in enhanced encryption and intrusion detection systems be a more direct solution than laying more fiber? (The acquisition cost was substantial (reported at $2.1 billion).)

A Fiber-Optic Land Grab?

Ultimately, the Verizon/AWS deal may well boost AI capabilities. But based on the available information – or rather, the lack of specific information – it seems just as likely that this is a strategic move to secure a foothold in the increasingly valuable data center real estate market. The fiber is important, of course, but it's the land underneath that could be the real prize. It's about 30% bigger than I expected - to be more exact, 33%.

So, What's the Real Story?

The official narrative is AI. The underlying reality? Probably a canny play for data center dominance.