12 key takeaways from Capacity Europe 2024

As expected, AI dominated a lot of the conversations at Capacity Europe this year – every keynote prediction shared on stage apart from one focused on it.

But, it’s timelier in some regions than others. Speaking at the Capacity Europe Keynote Chat Show, Colt’s CEO Keri Gilder gave some startling facts on how the AI market is distributed.

The vast majority of AI spend - 90% - makes its way to North America, leaving not much for everybody else – 6% for Asia, 4% for Europe, and just 0.2% for the UK.

Big tech is one reason for this. Another is the regulatory mindset of several European markets - a more cautious attitude to risk is often baked into business and government culture.

There is time for this to change, but for AI to fully advance in Europe, there needs to be an open mind on where the risk is and where it isn’t.

 

Continuing on AI, Didem Ün Ateş, chief executive of Lotus AI, delivered a talk on where AI is heading, what it means for the future of work – and what exactly it means for telcos.

More and more companies are now revealing how exactly they are using AI to help their business – Google published a list of 185 of them this September.

Many generic use cases relate to content generation and customer service streamlining, but Ün Ateş believes that for our industry the focus needs to be on network optimisation and fraud detection, citing these two areas as already having seen a tangible impact in the space.

  

There’s not much point building a fast and widespread network if a hacker can just waltz in and demolish it whenever they feel like it.

Network resilience sometimes lacks headline space compared to route diversity and power supply, but it’s an important topic to the industry, as a panel discussion on working together to ensure network security showed.

For Max Roettgermann from Deutsche Telekom Global Carrier, many of his clients understand protection against distributed denial of service (DDoS) attacks like having breakdown cover for a car - an add-on insurance policy, essentially an afterthought.

However, the shifting nature of cyberthreats means it makes more sense to plan network security when building the network – treating it more like the brakes, to keep the motoring analogy going.

But now companies are almost fully dependent on the Internet for business continuity, that’s not good enough.

“If companies don’t have access to the internet, they don’t have access to their business data, so DDoS protection needs to be there on a global scale. The awareness of the need for DDoS protection is there, but the willingness to pay is not always there”, Roetgermann told delegates.

Quantum communications made it into the list of what we learned at Capacity Europe last year, with a look at BT’s quantum communications network for HSBC in London.

This time, it’s back with a use case on the security side, as shared by Eurofiber’s Eric Kuisch on the network security panel.

His company has been working with the Port of Rotterdam, the largest seaport in Europe, to encrypt its internal network with quantum key distribution, an encryption technique that is currently impossible to break undetected.

Ports are a high-risk area for cybersecurity – they are both a vital cog of the global economy and highly vulnerable to hacks – so expect further quantum adoption in the space.

The GLF Fraud Report is a traditional part of Capacity Europe now. The seventh edition of the work, which surveys leading carriers on their work to combat telecoms fraud, hit the newsstands on the Wednesday, and a key finding was a positive one.

Some 50% of the operators surveyed reported a reduction in the volume and impact of voice fraud, which is a sharp jump from 25% in 2013. This is the highest proportion of operators reporting fraud reduction for six years.

There was also encouraging news on the messaging front. While most operators (55%) reported an increase in messaging fraud, this was still fewer of them than in 2023, when 62% of the carriers surveyed told the GLF messaging fraud was on the rise.

With more carriers than ever reporting that fighting fraud was a top priority in their business, this makes for an interesting anti-fraud landscape – download the full report here for a drilldown into the statistics.

A consistent theme at Capacity Europe this year – not just for data centre builds but for fibre and subsea projects too – was how hard it can be to navigate regulation.

With connectivity such a global sector, the difference between different regions can throw up challenges for those looking to build a coherent strategy across markets. Or as RETN’s Olena Lutsenko put it, “there is too much regulation in the EU and not enough in other regions”.

The difference between countries within Europe was also touched on. Cloud zones are heavily unbalanced across the continent, and on the data centre side, while some markets have grown thanks to favourable regulations, others leg behind.

For example, Czech copyright laws mean there are barely any data centres in the country at all, and panellists took aim at local government positions on data centres in Southern Europe in particular.

One point that emerged from this was that it’s not just policies that are important – in their hearts, do governments and people want data centres in their country?

The society-wide attitude to the benefits of digital infra helps explain its success in Spain, Portugal and the Nordic countries, and the new British government’s designation of data centres as critical infrastructure marks a whole mindset shift in the country, especially when combined with dramatic loosening of planning restrictions.

However, a business mindset rooted in local culture is not a bad thing. It has been clear for a while that the data infrastructure industry – particularly data centres – have work to do in promoting the positive benefits of what they do for society at large, helping to combat the headlines about slurping power capacity and not employing enough people.

According to Zayo Europe's Colman Deegan, one easy way to do this in Europe could be to lean into the ‘European way’ of doing business – using a strong focus on data privacy and a more socially-rooted mindset.

 

Whether they want to build data centres or not, governments are (mostly) now fully aware of the importance of digital infrastructure to their economies and societies.

This is having benefits in terms of investment flows, according to the panel discussing current appetite for investment in digital infrastructure.

Legislators are now seeing the space as more strategic rather than just another sector to be taxed and regulated, resulting in higher funding for areas like liquid cooling and quantum initiatives that maybe would have struggled for public cash five years ago.

Another example given was potential national involvement in submarine cables, for example the Italian government’s latest bid for Sparkle. With internet access now essentially a utility for the wider population, there is more scope for government investment in the assets that deliver it.

 

In the Keynote Chat Show, Exa Infrastructure’s Jim Fagan put it like this: “In the US, (data centre) operators are chasing power in the middle of nowhere”. Across the board, power availability is driving digital infra location decisions in a way that hasn’t happened before.

This especially applies to renewable energy. As we heard in a panel on the emerging data centre hubs of Europe, hubs such as northern Spain are growing in importance thanks to their favourable energy mixes, joining established alternative hubs like Finland and Norway.

But there are other considerations too, and speakers warned of the danger of fixating on power at the expense of the other pieces of the jigsaw. “Having data centres without the fibre and connectivity is like having cars without highways," in the words of Meta’s Ilona Koprowska.

On the topic of data centre power, Microsoft, Google and most recently Amazon have all recently turned to nuclear fuel to provide reliable, non-carbon-generating power. But there was by no means a consensus that nuclear = green.

Verne’s Kim Gunnelius told audiences that “Nuclear can definitely be part of the mix in the future – but what we see from fintech and pharma they always require green energy”. Meta’s Ilona Koprowska agreed that from the company’s point of view, nuclear is not a fully sustainable fuel.

The conclusion from this? ‘Green’ has to mean more than ‘doesn’t emit CO2’.

 

One interesting point that came from the keynote chatshow was uncertainty on exactly how big AI-driven demand is going to be. Most predictions and reports on AI have demand going stratospheric – but not everyone agrees on this.

Telefonica’s Gustavo Carvalho told the Capacity delegates he expects AI-related demand to more or less track the 20-30% growth he has seen on the company’s networks in previous years. On the bullish side, Didem Ün Ateş has it that 30% of all worked hours across the economy will be AI-powered by 2030.

But, there were also bearish predictions heard on the Capacity Europe stages. Both BT’s Mark Tonan and AWS’s Ashutosh Pateriya shared scepticism on the benefits of AI to date for telcos, citing the lack of large-scale valuable use cases for the technology and the imbalance between investment and results.

Edge computing has long been in the planning. But there was a danger edge computing would become another data point on the hype cycle – as recently as 2022, only 7% of telcos had launched an edge service at all.

However, two years on there is a solid bank of case studies where telcos have partnered across the economy to deliver real benefits via edge deployment, and we heard about a few at Capacity Europe this year, including VR for tourism, video feed analysis for automated supermarket checkouts, smart meter monitoring, and more.