Lumen Technologies is betting big on an artificial intelligence (AI)-infused networking future that will demand significantly higher throughput and lower latency than what is being provided today and will drive what CTO Dave Ward said will be “the largest expansion of the internet in our lifetime.”

The long-standing networking and service provider signed a deal with optical fiber manufacturing giant Corning, which reserves Lumen 10% of Corning’s global fiber production capacity over the next two years. The deal represents Lumen’s largest-ever cable purchase, with Ward reiterating that the deal involves all of the vendor’s “global manufacturing capabilities, including all of their data center and all of their other cable facilities.”

Corning has been busy boosting its production capabilities, including a move early last year in opening a new optical cable manufacturing plant in Hickory, North Carolina, designed to help accelerate the availability of passive optical fiber to support broadband expansion. The vendor said the expansion would add “hundreds of jobs” to Corning’s existing North Carolina workforce of more than 5,000 employees and builds on other recent investments by the vendor to expand production.

Ward explained that Corning was the only manufacturer that could provide cabling to meet Lumen’s needs.

“They're the only manufacturer of this type of fiber, at this size, at this density, and with these attenuation and optical characteristics,” Ward said, adding that Lumen’s requirements included a fill-rate percentage “with a certain amount of density of fiber capability.”

“We're really focused on getting access to this most modern fiber because we don't have to dig across the nation, we have this conduit available,” Ward said. “We believe we can meet the demand with the conduit capacity that we have, and that's fundamentally what separates us from the other providers.”

The Corning deal came just a week after Lumen struck a deal with Microsoft that will see Lumen use Microsoft’s Azure cloud to boost its digital transformation efforts and in turn Microsoft will use Lumen’s infrastructure to expand its network capacity. This last piece will use Lumen’s Private Connectivity Fabric, which Ward explained is focused on AI workloads.

“We're going to have an immense amount of fiber and wave capacity available to be able to light the waves and Ethernet and IP on demand inside that dark fiber … and we can groom waves onto dark fiber, groom waves out of dark fiber into our national backbone,” Ward said. “What this allows us to do is as we have AI data centers that we've built into, they can use the entire Lumen topology with waves on demand to have enterprises connect into those data centers. It's a fundamentally different architecture than legacy point-to-point waves or point-to-point topologies that are coming out of it, and it allows us to then utilize the entire topology toward these outcomes.”

Lumen spending on AI growth opportunities

Lumen’s investments are geared toward supporting what the vendor said is a standing $5 billion in aggregate sales it has already booked and the opportunity toward an additional $7 billion in sales pipeline.

Lumen CEO Kate Johnson told investors during the vendor’s latest earnings call that the $5 billion in aggregate sales is from “hyperscalers, it’s social platforms, it’s huge technology companies, it’s a cloud company.”

Johnson said she expects the next “tranche of demand” to come from the “AI model inference phase, probably with forward-thinking enterprises who see AI as a way to transform their businesses. Think financial services, health care, and retailers to start.”

Ward explained that this AI inference push will also spill over into hybrid architectures that will see data held on-premises and using inference models associated with trained models in the cloud. “Massive amounts of bandwidth and super tight latency requirements for that,” Ward said.

This opportunity is significant for Lumen as the company’s most recent earnings results were down across the board. Lumen’s management did highlight its recent ability to refinance debt, secure new liquidity, and plans to squeeze $1 billion in cost reductions by the end of 2027.

Gimmie Credit financial analyst Dave Novosel noted in a report that the $5 billion in secured deals will provide much-needed upfront cash flow for Lumen, but that revenues will be recognized over several years.

“The new deals are tremendously valuable to Lumen,” Novosel wrote. “Yet revenue will be recognized over a long period, and we won’t know the profitability of them until well into the future. Free cash flow will improve in the near term, but again, future cash flows remain uncertain depending on capital spending requirements.”

Ward said he sees Lumen’s investment as the basis for the unprecedented internet expansion.

“This is the largest expansion of the internet in our lifetime, including bigger than the late 90s, including the 2010s, including the move to cloud before the pandemic,” Ward said. “This one, over the next three to five years, is the largest expansion of the internet, full stop.”