DIA Connections Are Increasing: Is It Due to AI?DIA Connections Are Increasing: Is It Due to AI?

Dedicated internet access (DIA) is contributing to U.S. Ethernet growth in a big way.

Vertical Systems Group on Wednesday unveiled its 2024 Year-End U.S. Carrier Ethernet Leaderboard, which AT&T led for the third straight year. The brief report, based on share of billable installed retail customer ports, concluded that U.S. Ethernet services grew 2.2% in 2024. And DIA connections are leading the way. This type of connectivity is growing at a "double-digit CAGR" over the next five years, according to VSG.

"Other segments – including access, private lines and metro – are in secular decline,” said Rick Malone, principal of Vertical Systems Group. “The U.S. Ethernet market continues to expand despite its legacy status. We project sustained slow growth through 2029 driven by customer requirements for DIA services.”

The study added that businesses' demands for gigabit speed services are consequently increasing demand for fiber deployments and expansion of the Ethernet market. VSG specifically pointed to a variety of applications that need secure Ethernet connectivity, starting with AI applications. That echoes comments that providers such as Lumen have made about how their infrastructure, including fiber, will play a critical role in powering AI.

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Cloud, data center and SD-WAN/SASE services are also contributing to a rise in Ethernet usage, according to VSG.

Why Is DIA up?

Cloud9 Technology Consulting CEO Andy Torres pointed to a mix of drivers for DIA adoption.

Cloud9's Andy Torres

"The surge in demand for Ethernet dedicated internet access (DIA) is driven by the growing need for high-bandwidth, low-latency connectivity to support AI applications, digital transformation, and hybrid work models," Torres told Channel Futures. "Businesses are prioritizing DIA for its reliability, security and scalability, ensuring robust performance for cloud strategies and data-intensive operations."

Daniel Majure, president of Last Mile Strategies, partly attributed the increase of DIA connections to "the maturity of plant investments by providers."

Last Mile's Daniel Majure

"As these networks reach a more developed state and pricing becomes more competitive, DIA connectivity becomes increasingly accessible," Majure told Channel Futures. "Additionally, the rise in DIA connections, along with the adoption of SD-WAN platforms, is reducing the need for private lines and similar legacy solutions."

Majure said he's skeptical on how much AI is currently contributing to Ethernet demand.

"Let’s be honest, has it really moved the needle in that way? There’s no question that AI tools are surging in adoption, but that doesn’t necessarily translate to a significant increase in connectivity demand beyond what was already present," he said. "Given the localized nature of AI processing, its impact on bandwidth requirements is often overstated. Instead, I’d argue that shifting return-to-office policies and the recentralization of organizational workforces are having a greater influence, driving renewed investment in enterprise connectivity."

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Looking at the reported secular decline of metro, access and private lines, ITBroker.com CEO Max Clark argued that this trend assessment is "only part of the picture." He argued that total speed installed should be taken into account when looking at the state of the Ethernet market.

ITBroker.com's Max Clark

"Shifting workloads to the public cloud and the speed increase plus cost decrease of internet connectivity has contributed to this. The other side we see is clients upgrading to 100 and 400 Gbps metro circuits," Clark told Channel Futures. "4x 10 Gbps transitions into 1x 100 Gbps (fewer ports in the research) and many times better economics to the buyer (not just the cost of the metro circuit but also data center cross connects for TCO)."

Key Ethernet, Dedicated Internet Access Providers

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AT&T is a familiar name at the top of this leaderboard. The leaderboard did not change at all since the 2024 Mid-Year report. Lumen, Spectrum Enterprise, Verizon, Comcast Business and Cox Business continue to trail AT&T, in that order.

"AT&T has been in the market with a strong GPON fiber broadband offer. Speed plus price equals value, and we've seen significant adoption by clients and expect this to continue," Clark said. "Counting fiber ports installed, I am not surprised at all AT&T is at the top of the leaderboard."

Torres said she sees AT&T, Lumen, Cox Business and Spectrum Enterprise leading the U.S. Ethernet market.

Talking to Customers

Torres, Majure and Clark as technology advisors help their business customers vet and buy a variety of technology solutions and services, including connectivity. Clark knows that some of the acronyms discussed in this article might be foreign to customers. Customers are asking more broad, outcome-focused questions, rather than necessarily asking for a certain type of technology.

"Industry terminology is a mixture of insider language and marketing branding. Buyers approach the market with a need for 'internet,' 'private network' or 'cloud connections.' These requirements are shaped into the best tech/brand name available from the service provider," Clark said. "I can count on one hand how many times I've been asked for DIA/HSIA/E-Access/E-Line/EPLS/etc., and that was because they were reading the existing invoice in front of them."