Connect (X) 2023
Artificial Intelligence (AI) is the most rapidly advancing sector of the infrastructure ecosystem today and the wireless industry should take notice, Marc Ganzi, DigitalBridge CEO, told an audience at the Connectivity Expo 2023, held last week in New Orleans.
“If we think back, in the last 10 years, what we’ve been doing in terms of how we proliferate data and how we ultimately consume data and how we move data is we have been building the public cloud. $5 trillion was invested into the public cloud,” Ganzi said. “We’re going to spend $6 to $7 trillion building out AI, which requires 3x more compute.”
Building out 5G is job number one at DigitalBridge, Ganzi said, but it is also looking closely at the opportunities of building out AI infrastructure and how it will have a direct impact on 5G.
“You need two things to make AI work. You need high-powered compute and you need a delivery mechanism to put it actually on a manufacturing floor, to put it at an airport check-in window, to put it in an office building,” Ganzi said. “Ultimately, we believe the most powerful delivery mechanism for AI will be mobile, which is what impacts this industry and impacts our trade show.”
The growth of AI may also have an impact on edge compute. Deploying AI in a low-latency environment, according to Ganzi, will require putting the network infrastructure on the edge. “Whether it’s a small data center in the suburbs, at a tower or in a secondary and tertiary market, these workloads are absolutely moving to the periphery of the network,” he said.
Ganzi spoke to other important trends in the telecom market in his keynote at the Ernest N. Morial Convention Center. He warned the audience against underestimating private 5G networks and their role in the telecom ecosystem. “You’re gonna see more about private networks in the future. This is a big opportunity for our trade show and for the industry,” he said.
DigitalBridge invests in digital infrastructure, which consists of its flagship digital equity funds, plus DigitalBridge Credit, and Liquid Strategies. It actively manages 27 portfolio and affiliated companies, spanning data centers, cell towers, fiber networks, small cells, and edge infrastructure.
“We had to figure out a different way to play in this interesting and growing marketplace,” Ganzi said. “At the end of the day, what we’re doing is we’re investing across that entire landscape.”
Ganzi began his career in the tower business and today DigitalBridge owns and operates 81,000 towers on a global basis, second only to American Tower Corporation among U.S. companies. DigitalBridge invests through nine separate tower companies around the globe, including Vertical Bridge in the U.S.
Ganzi discussed several fundamentals that he follows to successfully invest in digital infrastructure. He stressed the need to be customer centered, and the need to be disciplined in underwriting. He followed that by listing his investment “don’ts,” as in don’t invest in inexperienced management teams, because of their high percentage of failure. Also, he warned against entering a market that you don’t understand. There are certain tower markets that DigitalBridge has avoided, such as India, he noted, which American Tower is contemplating exiting.
“If you don’t understand the local dynamics of a market, you don’t understand the zoning, you don’t understand the real estate laws that underpin the fundamental notion of title and holding fee, you can’t build a tower,” Ganzi said.
Forming capital is one of the most important things a telecom executive does, Ganzi said, which allows a tower company to attain the scale needed to “show up and perform for a customer anywhere, anytime.”
“If you have capital, you win,” he said. “With capital, you can take advantage of once in a decade opportunities, and you’re gonna see opportunities over the next two years that you’ve never seen in the last 10 to 15 years of investing in digital infrastructure.”
To that end, DigitalBridge has scale. Along with owning and operating 81,000 towers, its platform manages nearly $69 billion on behalf of its limited partners and shareholders and is focused on identifying global investment opportunities within digital infrastructure.
“What we suggested to people about three or four years ago is that perhaps you could own digital infrastructure in a different format, which is using other people’s capital, institutional third-party capital, to buy great companies, back great management teams,” Ganzi said. “We are putting our money, side by side, with those management teams to go build best-in-class companies.”
By J. Sharpe Smith, Inside Towers Technology Editor