Regional fiber providers shoulder big risk building fiber for AI data centers

Regional fiber providers are being pulled deeper into the AI data center boom as data center campuses move off the beaten path. But DQE Communications CEO Mike Sicoli said the economics of building high-capacity fiber routes to hyperscale sites are getting more complicated—and the risk is landing increasingly on the telecommunications operator. Sicoli said hyperscalers initially understood they would need to shoulder much of the cost to get new fiber routes built. But as the market has matured, contract terms have tightened, with customers pushing providers to absorb more exposure if projects run late or cost more than expected. “As time has gone on and the proposition for telecom operators has gotten a little bit more challenging in terms of the risk profile. You have to be really confident that you have scoped it properly and that you have enough cushion for things that could go wrong, both in terms of the cost and the time frame” Sicoli said. “Because most of these contracts put the burden on the telecom provider if you’re late or if it costs more than you thought.”