Telecommunications industry outlook

The growth of the internet has made broadband a necessity in the 21^st century. Enabling rapid connectivity across the globe has increased commerce and allows people in the most remote locations to access essential services like education and health care. But to provide broadband access in the most rural and remote areas in their jurisdictions, internet service providers (ISPs) need to work with their governments and leverage available funding and investment opportunities.

America’s telecom networks are facing an unprecedented wave of cyber and physical threats—and the stakes couldn’t be higher. In 2024, U.S. wireless providers were hit with nearly $200 million in fines for failing to protect customer data. At the same time, Chinese state-sponsored hackers infiltrated multiple telecom networks, accessing sensitive political communications and raising fears about national security.

Adding to the danger, physical attacks on global infrastructure—like damaged undersea cables linked to Russian and Chinese vessels—highlight the growing risk of hybrid warfare. With escalating geopolitical tensions, the threat of widespread network disruption is very real.

In response, the FCC has introduced stricter cybersecurity rules, forcing providers to implement and certify risk management plans. But is it enough?

The biggest trend in the telecommunications industry—and the business market as a whole—is artificial intelligence. Even though the hype surrounding AI has been steadily building since ChatGPT was released in late 2022, we are currently in the early stages of the AI computing cycle. If similar patterns from past computing cycles hold true, the first wave of monetization generally involves semiconductors; the second, infrastructure; and finally, software and services associated with the new computing tool.

The largest growth from AI so far has been from the companies that manufacture semiconductors and the AI companies developing the large language models. The next wave should see increased growth in infrastructure, mainly through data centers needed to handle the increase in computing power. The ultimate business model will be the software and services that use the AI models to perform specific tasks that drive efficiency, increase automation and increase production.