The ON Partners team recaps 4 key takeaways on the digital infrastructure business from Metro Connect USA in March 2024
Metro Connect USA stands as the paramount event in the US digital infrastructure realm, where leaders from various sectors converge to shape the industry’s trajectory. This annual gathering brings together stakeholders from metro, lit, dark fiber, long-haul, subsea, fiber to the home, and fixed wireless access sectors, along with data centers, cloud providers, wireless communications infrastructure firms, and investors.
The annual, global event serves as a vital forum for renewing agreements, forging new partnerships, securing financing, and gaining insights into industry trends.
The recent 2024 Metro Connect conference shed light on critical developments in the digital infrastructure landscape, offering pragmatic perspectives on the road ahead.
As sponsors of the event, Co-presidents of ON Partners, Matt Mooney and Tim Conti, along with consultant Alex Peters shed light on a few insights gleaned from the three-day event:
01: Balancing Optimism with Market Realities
Metro Connect 2023 was a bit of a somber affair, coming at a time when the true impact of rapidly rising interest rates was hitting this group hard. Attendees in 2024 expressed a significantly more positive outlook, yet the quest for transactions persists amidst soaring valuations. Despite ample capital, investors are selective, favoring deals with solid valuations and clear strategic objectives. This discernment reflects a maturing market that prioritizes long-term sustainability over speculative ventures. More expensive debt has made bets much riskier, hence the flight to safety and quality.
02: Disruptive Force of AI
Artificial intelligence (AI) is reshaping the data center landscape, driving demand for hyper scale solutions. Multiple infrastructure CEOs emphasized AI’s transformative impact, placing heightened demands on operators and infrastructure. The convergence of AI and data centers is reshaping economic dynamics, necessitating adaptive strategies to accommodate evolving demands. AI will be a huge boost to the data center market, but it comes with a cost that may challenge weaker players.
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03: Cooling Challenges and Technological Innovations
The growth in AI means efficient cooling mechanisms are paramount in data center operations. The rise of direct-to-chip and liquid cooling solutions promises enhanced performance but at increased costs. As operators strive to balance performance and sustainability, innovative power and cooling solutions emerge as crucial enablers of technological advancement. The ESG session tackled this topic and demonstrated that the underlying physics is still challenging.
04: Navigating the Scale Imperative
Scale is paramount in digital infrastructure, posing challenges for smaller operators and PE funds. Several sessions at the conference underscored the importance of scale in navigating the competitive landscape. Smaller funds face an uphill battle in a sector driven by relentless expansion and consolidation, largely fueled by global infrastructure funds.
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In conclusion, Metro Connect USA 2024 offered pragmatic insights into the evolving digital infrastructure landscape. As stakeholders chart the course forward, strategic discernment, technological innovation, and scalability emerge as key determinants of success in a dynamic and competitive market.
