Industry executives and experts share their predictions for 2024. Read them in this 16th annual VMblog.com series exclusive.
Predicting Trends in the Internet Service and Data Center Industry
By John Nolan, Chief Development Officer, Bluebird
Network
As we step into 2024, the landscape of the internet,
connectivity and data center service industry is poised to deliver an exciting
- and challenging - year ahead. With a surge in government investment and an
unprecedented flow of funds, the industry finds itself at a unique crossroads.
However, not all companies will navigate this transformative phase with the
same level of success. The following insights are derived from our observations
at Bluebird
Network, a communications
infrastructure provider and operator of two data centers and more than 11,000
miles of fiber, providing a glimpse into the trends that will shape the sector
in the coming year.
The industry is witnessing a flurry of government-funded
investments going toward building out digital infrastructure. The Broadband Equity, Access, and Deployment (BEAD) Program has been instrumental in allocating funds from
the $65 billion earmarked by the
government via the Infrastructure, Investments, and Jobs Act to go toward ensuring widespread access to
high-speed broadband for citizens in rural areas. This allows for a wealth of
opportunities in 2024 to springboard service expansion into hard-to-reach
areas, but it is a double-edged sword.
ISPs and network developers will need to exercise foresight supported by a
strong business plan and the ability to
execute these plans in order to not overextend themselves in the process.
For example, one Northeast ISP invested $100 million
across various cities but is now grappling with the financial challenges of not
"owning" those markets and fighting
uphill to sell within them. The lesson learned here is the importance of
measured growth; companies must not bite off more than they can chew. A nuanced
and strategic approach in the face of heightened competition is needed as we
see more of this type of construction in the coming year. Regional variations,
as seen in Phoenix, AZ, with several Fiber-to-the-Home (FTTH) providers vying
for a significant market share, highlight the need for realistic market
expectations. Not all providers can claim a substantial portion of the market
and because of simple math, some of them are going to fail. There needs to be a
focus on specialization and identifying unique strengths.
These programs offer significant incentives to growing
companies because of the difficulty in securing debt as a consequence of the
Federal Reserve's proactive measures to control economic growth. As interest
rates remain high in 2024, companies must be judicious in their spending. The
winners in this challenging environment will be those spending wisely, making
informed financial decisions, and maintaining access to a steady stream of
cash.
Embracing new ideas and technologies is always a pathway
to keeping an eye on growth. The industry will witness experimentation, with a
focus on edge computing, ever-increasing bandwidth, and continued interest in
alternatives to SD-WAN. Artificial Intelligence (AI) and quantum computing are
set to drive substantial shifts, reshaping server room operating environments
and demand for more bandwidth.
When it comes to the evolution of data center services
over the next year, we will see a shift in enterprise preferences. The largest
companies are increasingly leaning towards private clouds while some will look
into bare metal servers - the middle ground between cloud and data center
colocation. Cloud services, once viewed as the pinnacle for data storage, are
beginning to encounter budgetary challenges, which will continue to grow in
2024 and beyond. Many enterprises find themselves exceeding their projected
budgets due to unexpected costs associated with cloud services, which has led
to a trend of businesses seeking more cost-effective alternatives such as
colocation services and private cloud access.
The internet service and data center industry in 2024
promises both unparalleled opportunities and complex challenges. Companies that
navigate this landscape successfully will be those that embrace innovation,
spend judiciously, and adapt to the evolving needs of enterprises. The coming
year presents a unique moment where strategic decisions will shape the
trajectory of the industry for years to come.
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ABOUT
THE AUTHOR
John
Nolan, Chief Development Officer, Bluebird Network
John Nolan joined Bluebird Network in April
of 2023 as Chief Development Officer. Nolan is a telecommunications veteran
with experience transforming large spend and supplier ecosystems while leading
expansive, global teams during his 20+ years in the industry. As CDO he is
responsible for all aspects of corporate development, including M&A,
business development, corporate strategy and innovation.
In his recent position as Vice President of
Global Connections & Alliance Management with AT&T, Nolan was
responsible for the company's voice, data and performance relationships with
other telecommunications providers in support of AT&T's wireless and
wireline business objectives around the world. Prior to that position, Nolan
led the Wholesale Operations Center of Excellence including regulatory
operations and various sales units responsible for more than one billion
dollars in revenue.
Nolan earned his MBA from Saint Louis
University and an undergraduate degree in Finance from the University of
Missouri - Columbia. He served as Vice-Chairman of the Board for Capacity
Media's Global Leaders Forum and on the MEF Board of Directors. He has also
served on the Advisory Board for the Robert J. Trulaske Sr. School of Business
at the University of Missouri and in various capacities supporting United Way
of Dallas and the Boy Scouts of America Circle 10 Council.