Lumen CTO, Partner Leader Dish on 'AI Fabric' Pitch to Partners

CF: What would you say is the gap in the fiber footprint required to power these GPU capabilities? What sort of connectivity is needed as a foundation?

DW: The thing that hasn't been discussed that we are building is how you get your data to the GPUs [and] How you get your data to the AI data centers. Those pipes were not discussed in any of the AI economy, and that's what we're bringing to the table, and that's what the AI fabric is: how to get your data to the GPUs. We now are selling dark fiber, both in the metro as well as nationally. We're working toward enabling waves on demand, and we're having customers come to us to acquire hundreds of 400 Gig waves at a time. And also, with our Lumen digital portfolio, we can do Ethernet on demand and IP on demand and connect AI data centers to CSPs, to other private data centers where data is being stored and massive storage volumes, S3 buckets, Snowflake buckets — on and on and on.

I say this because the AI fabric that we're building is really to some specific data center sites that have emerged in this economy. And these are often places that are not in NFL cities, because AI data centers follow where power is available. Often this is in places like Nevada, or it's an Iowa or it's in Texas or it's in other areas that aren't the New York metropolitan area because the power is not available there and the space isn't available there. We believe we can out compete our competition, because we already have a national backbone that's larger than anybody else's, and we're right now in the midst of the largest expansion of the internet, and the largest construction of additional bandwidth and new bandwidth for the internet for this purpose. That's what our partnership with Corning is all about.

CF: Would it be fair to say that in the past, the mentality of a fiber builder/provider did not put the data center as a key priority in geographical coverage?

DW: That's right. Extremely astute observation. The way I describe it is that data centers in the past have not been first-class citizens on the internet. And our goal is to make data centers (and AI data centers in particular conversation we're having) first-class constructs and firs- class citizens. We are the only telco service provider out there building specifically for this data center fabric and for this AI fabric.

CF: Was there a point in the timeline of fiber buildout where providers started to focus on these [data center-adjacent] areas?

DW: It goes back to the discussion that we had as an industry 10-12 years ago about hybrid cloud architectures. Data centers used to be on-prem at the enterprise, and then they moved into the colo space. That's Equinix, DRT, Flexential, QTS, Coresite, Cologix, etc. — those are basically big colo spaces, and they've been selling compute, bare metal and power racks and space for a long time. That was the hybrid architecture that we talked about 12 years ago. Then we started talking about a multicloud architecture, which was, "We need connectivity between the enterprise, the colo and the CSP." Now we're to the point where it's those plus the AI data centers. This gives rise to a new architectural construct, which we're calling the private connectivity fabric, which is a mesh architecture available on demand between the partners that an enterprise has selected for colos, for cloud, for AI, for storage, and they can build on-demand the fabric that's necessary to run their business in their it.

For a channel partner, it's seeing that new solution and that new architecture being available in the industry and realizing that we're years and years ahead by having the conduit fiber, etc., in the ground, and now we've got Lumen Digital on top and a digital experience to be able to create these private connectivity fabrics between the partners that an enterprise is choosing to base their digital IT on and transform toward. That's what's emerged now. We've been underway for 15 years through the hybrid cloud, multicloud, etc., transition, and now it's turned into a full-fledged architecture that can be built in.

Breanna Kuhl: As you can imagine from a channel perspective – a giant telco channel like the one Lumen has today and which my team manages on a daily basis – that's an enormous feat to change the way they do business. They're not used to is having this discussion. What they're not used to is changing the narrative of their normal day-to-day pitch. Back in the day – let's be honest – they were slinging hardware. And that's what they know; that's what they like. A few $1,000 deals here and there, and they're good. Now it's bringing the value into the channel ... because they're not used to actually selling value. If you think about it, we don't really think of the telco channel as a value-added reseller at all. They don't add that value. But they're now changing that narrative a little bit, which is outside of their normal day-to-day. And it's working, because now they can come to the table with a slightly different story for their customer and provide different outcomes that they normally haven't done before. These guys aren't used to outcome selling, but now they have to be because this is how the game is changing... We're starting to get that traction.

Now don't get me wrong. We're also standing up more value-added resellers at traditional VARs, and we're doing large SIs, boutique SIs, regionalized SIs and ISVs and all that. That adds a different value. It's the channel partners that are now bringing that value on top of their discussions, which is key. And I'm not sure who else is doing that to be honest.

CF: Is part of that opportunity for them to take more at-bats with larger customers who want something more bespoke?

BK: I hope so. That's the plan. Don't get me wrong; there's a need for every type of customer that comes through the channel. Obviously, it's up to Lumen to figure out how we want to own that kind of space, but we want to drive a little bit more value within the channel somehow. I don't want it to make it too complex, because frankly, I don't want them to [say], "Oh my gosh, this is too complex for my brain. I'm gonna go sell a different competitor." We've got to make sure that story is there and that we're setting them up for success with that story so that they can go up-market and it's easy for them to make sure that they they can relay the value there.

CF: Some of these wireless providers will share with us about their private 5G networks and tell an exciting story. But then we dig into the use cases and ask, "OK, who is selling this? Who can sell this/" And lot of it is just direct sales to large, large enterprises. Maybe maybe the agents aren't used to selling it, or maybe it's so bespoke that the carrier prefers to cut out the middleman. Would you say the door is open for these partners?

BK: The door is open. And not everybody is going to attack this particular new new product, new market and new story, if you will, but there are going to be enough. The big distributors – the large Telaruses, the Arrows, the Avants – it's going to be a really interesting dynamic, because we're going to get all of the training. It's my job and my team's job to make sure that we set our partners – our agents, our subagents and our [technology services distributors] up for success. But we do that also from the top down from their TSDs whom they're contracted with. It's a very delicate scenario because we don't want to lose any subagents because of complex complexity. Because like I said, they can easily just hang up the phone and [say], "Well, I don't know if I really grasped that value. So I'm going to go back to my comfort zone, and I'm going to sell what I know."

DW: Let me give an example. When we've got a partner we're working with, whether it's an agent or SI, and they're working with an enterprise who says, "Hey, my boss just gave me this AI project. We need to go do X, Y and Z, and I need to get to this data center. What do I do?" This is no longer just selling point-to-point circuits like might have been done in the past. You can now answer the question, "Do you have latency requirements? How much bandwidth you're talking about? How fast do you want to move it? How fast do you want an answer?" It does become more, as Bre was saying, an outcome-based sale. And also responding as Lumen, you now can get waves on demand; you now can get Ethernet; you can now can get IP. And instead of just realizing, "Oh my gosh, my data is on-prem," or, "My data is in S3," "I'm going to run my AI in switch," and "I need the outcome to go to my analytics and big query over in Google," that is a fabric. And again, an agent and our channel partner could say, "Here's how you go about solving that problem of doing your AI project."

BK: It's nice because internally at Lumen we have those specialized people to help that discussion. So it's not like we're just leaving this up to the channel to go and do by themselves. We have now a complete, specialized team in place, and we're growing that team to make sure that these discussions have consistently the right narrative. Because we realized that it might be changing a little bit more than what they're probably used to. But it's working. So far it's working. They're having the discussions. They're bringing their customers forward. It's really working. It's exciting.

CF: For those who prefer to focus on point-to-point circuits, do you feel like that's always going to be there?

BK: I feel like if they want to continue doing what they're doing, they'll continue doing what they're doing and that's OK. They'll get those customers. I've been here for months, and every conversation I have with partners, there's this element of, "What products [should we focus on]? Should we do an industry focus?" All of this parsing out a different story to try to market ourselves in a different way. Which is great, because I think every company needs to do that. Surely we need to have some industry focus, solutions, outcomes and whatnot.

But it dawned on me the other day, "Wow, what people don't understand (or maybe they do) is, we're basically customer-agnostic." Because every single company out there needs AI, needs connectivity and needs edge solutions. To do anything to run their business they need those things. Any customer out there. I suppose you don't need AI to function, but good gosh, that would be silly if you didn't. But it's really customer-agnostic, right? So we started to have these discussions, and the channel can basically test the waters in any narrative they want. It really does solve so many different outcomes that they probably haven't been selling before. So now they can choose their own adventure. Some of those partners are dedicated, and maybe they have a little bit more customers in the financial services industry, or maybe they have a couple of different customers in health care. They just have to tweak the narrative just a little bit to solve a specific outcome that they might not have had before.

CF: Many new appointees to the Lumen senior leadership team have experience outside of telecommunications. CEO Kate Johnson came from Microsoft, Dave spent time with Juniper and Cisco, and Bre was at Vonage. Does some of newness of this conversation with partners have to do with the fact that many of you are bringing a very fresh perspective that maybe you wouldn't call a "legacy telco perspective." Is that fair to say?

DW: One hundred percent. And that's part of the transition we're making going from telco to "techco," which is why Bre's talking so much about outcomes and we're talking about data centers as first-class citizens and moving beyond where we were in the past. One hundred precent, we want to change the legacy telco model. And I'm going to put another point on it, which is that enterprise business services and new enterprise business services haven't been addressed in over a decade. Private 5G networks are not it. No enterprise wakes up and says, "I want to buy a private 5G network today." They wake up and say, "I need to solve a problem, and I need to use this data center. I need to use AI and I need to have storage in the cloud and IT in the cloud and the rest of it." And that fundamentally is why we're creating new architectures and new sales journeys for channel partners and others, as Bre has talked about.

CF: I also tend to wonder if there are economic factors. Like, if they are embracing the "techco" side and new bundles of technologies, but perhaps potential new compensation models are stretching them? That's something I've heard in the case of adopting fixed wireless access.

BK: I do know that we are feeding the channel quite a bit, and we're doing that in several different ways. The most important ways – incentives – we're absolutely leveling the playing field, if not rising above the leveled playing field, so to speak, to make sure that they're driving the right message and that they are getting the right compensation to have those discussions. So we are incentivizing the channel quite a bit. As we all know, they're coin-operated. They don't want Super Bowl tickets; they don't want anything; they just want to be paid. So I get it and duly noted.

Now it's a different conversation with everybody else. If you start thinking about outside of the channel, it's a much different, longer discussion, and it's with a different kind of spin. For example, they love Super Bowl tickets; they don't necessarily need incentives. It's a much different kind of landscape that we're setting up for Lumen that has never been done before, so it's ... exciting. At the same time, though, we have to make sure that we don't change too much of what we know, right? This is the telco channel. You can't just go and expect this massive amount of change. You'll start losing agents, and you don't want that. You've got to be delicate, and you've got to make sure that we're feeding them in the right way and we're incentivizing them in the right way. Otherwise, it will be a mess.

DW: Toward that end, taking Lumen Digital and our on-demand platforms for Ethernet IP and VPNs and things like that and now making them a digital selling experience for the channel means that time to get paid has been reduced to as low as it can get. Because literally they can go in and go from X to Y and [they're done]. The link is up and running, the customer's happy, and you're getting paid. And some of those new commercial motions through digital telco experience, we've built with them Lumen Digital, I think are a fantastic way for the channel to also pivot and move toward faster deal volume, larger deal volume and faster time to get compensated.

CF: Could you talk a little bit more about this idea of making data centers first-class citizens? Bre, my guess would be that you're overseeing those relationships as being in charge of alliances, right?

BK: Well, yes and no. On the direct side, there are some relationships that they're developing, but yes, I own the partner strategy for data centers. There are a few different kinds of routes to market that we're talking about right now. We can sell into data centers. We can also go and actually have a data center be a partner. We're having those discussions. We have a number of different data centers today that we're trying to figure out if they're the right data centers for us to go and partner with. There's a lot of momentum there. There's a lot of interest on our side. Obviously Dave and I are on calls all the time talking about this. It's a new route to market for us, and we're trying to figure out how to monetize it properly. I think it's going to be huge, especially with the PCF and AI areas that we're ... focusing on right now as a company. We're having those discussions now. We're definitely going to have some significant interest in those areas.

But you know what's interesting? I've had a number of discussions with very different types of partners, like real estate. The commercial real estate companies are coming after us, asking us to get involved at an early stage data center build for their clients, which are data centers looking for space. So it becomes these, like, bizarre, new emerging partners coming out of the woodworks. Who'd have thought that a commercial real estate firm would be interested? And it's not just one; it's several of them. They're [saying], "Hey, I have clients who are really looking for this giant warehousing type of space that we're trying to find for them." Their data centers said, 'Let's get you involved first; let's get you involved in the build." That's a different opportunity that we're attacking today. We're hitting the data centers from all angles.

DW: ... The reseller motion is changing as well. That entire partnership that partner community of those that are straight up reselling using a digital platform with APIs and creating marketplaces, as well as, as Bre just mentioned, the real estate developer who owns the property. You can now think of this as multi-office buildings and the rest of it, as well as virtual studios. I mean, it's really running across multiple segments of the economy, that instead of building large lots or owning large buildings or running large data centers yourself, you can partner with somebody who actually is going to be reselling your connectivity at an extreme pace.

CF: How adjacent is the network-as-a-service (NaaS) conversation to what you're talking about with PCF and fiber for AI?

BK: We have a bunch of incentives that are out to the channel today that we're hoping gain momentum in the NaaS area. We want to really push them in digital. We want to push the "cloudifying" of all of the products. We want to push that narrative. It's kind of the same narrative as the AI or PCF. It's spinning th outcome ever so slightly to be able to explain to a customer why perhaps NaaS would be better than the alternative, and why going as-a-service is better than the alternative. It's an adjustment that we're making internally, that we're incentivizing our channel managers and our direct sellers to start having those discussions. And especially on my side, it has been working. We've had a big push over the last six months at least from the very minute I got on board and have had a lot of incentives to try to get our sellers and our channel managers to close a NaaS deal with through their partner. And it's working. It's not working as fast as I'd like it to work, of course, but it's working enough to say that there's a "there" there. This is working. We're going to push now. Now all my sellers, all of my channel managers, and all my partners know that narrative and how it's important to us to make sure that we continue that.

It is kind of a universal shift in how we talk to our customer. Not necessarily what we talk to our customer about, but it's how we talk to our customer about solving their immediate needs. And a lot of that would be solved by AI through network as a service, through security, through edge solutions. There could be a need for bundles. We're going to be talking bundles at some point soon. That's going to be on the radar too. It's about making sure that our channel is prepared and armed with those right tools and resources to make sure that they can have that confident story told to their customer. That's all new, and that's all happening as we speak right now.

CF: How adjacent is the network-as-a-service (NaaS) conversation to what you're talking about with PCF and fiber for AI?

BK: We have a bunch of incentives that are out to the channel today that we're hoping gain momentum in the NaaS area. We want to really push them in digital. We want to push the "cloudifying" of all of the products. We want to push that narrative. It's kind of the same narrative as the AI or PCF. It's spinning th outcome ever so slightly to be able to explain to a customer why perhaps NaaS would be better than the alternative, and why going as-a-service is better than the alternative. It's an adjustment that we're making internally, that we're incentivizing our channel managers and our direct sellers to start having those discussions. And especially on my side, it has been working. We've had a big push over the last six months at least from the very minute I got on board and have had a lot of incentives to try to get our sellers and our channel managers to close a NaaS deal with through their partner. And it's working. It's not working as fast as I'd like it to work, of course, but it's working enough to say that there's a "there" there. This is working. We're going to push now. Now all my sellers, all of my channel managers, and all my partners know that narrative and how it's important to us to make sure that we continue that.

It is kind of a universal shift in how we talk to our customer. Not necessarily what we talk to our customer about, but it's how we talk to our customer about solving their immediate needs. And a lot of that would be solved by AI through network as a service, through security, through edge solutions. There could be a need for bundles. We're going to be talking bundles at some point soon. That's going to be on the radar too. It's about making sure that our channel is prepared and armed with those right tools and resources to make sure that they can have that confident story told to their customer. That's all new, and that's all happening as we speak right now.