How Zayo is trying to keep its cool in an overheating data center market

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(Source: Dmitriy Shironosov/Alamy Stock Photo)

Data centers have become a center of gravity for the telecom-infrastructure economy – one expanding so feverishly that it can evoke an unstable, rapidly growing star that may or may not engulf nearby planets.

Zayo Group is trying to maintain a steady orbit as it develops its infrastructure business and approaches its 20th birthday.

"We've been building for a number of years at this point, so we went through a lot of painful learning over that time," said CTO Troy Lupe in an interview on the sidelines of the SCTE TechExpo conference in Atlanta earlier this month. "You've got to have thorough project management plans, you've got to develop lots of partnerships, and you've got to plan far in advance."

Deals and demand

The Boulder, Colorado, firm inked two notable deals in August, neither with financial terms disclosed: an Nvidia partnership that will support the construction of 8,000-plus miles of fiber, and an agreement with Corning to lock in long-term fiber-optic cable supplies.

Related:Data center physical infrastructure market grows 27% YOY to $14B in 2Q 2026 – Dell'Oro

"Nvidia recognizes that their customers are going to need capacity," Lupe said of the first deal. "The conversation came together pretty quickly as we're working strategically on the overarching ecosystem and what will be required to put all this compute into use."

He characterized the Corning deal as one of multiple moves "to de-risk our entire supply chain" amid resurgent demand for fiber.

"Fiber is cool again, you know?" Lupe commented later. "It's been a long time since fiber was cool."

The staggering scope of data center capital expenditure – the research firm Dell'Oro Group tracked a 92% increase worldwide in Q2 and forecast that global capex will exceed $3 trillion by 2030 – has many observers worried about financial risks too.

"We've got several large institutional investors who are very concerned about those kinds of things," Lupe said before adding that Zayo is working to keep itself grounded.

"We're making bets that make sense," he said. "We're timing capital inflows with outflows; we are not taking much risk in the current ecosystem."

The company does not expect to get a break from this buildout anytime soon. Said Lupe: "For this foreseeable future, we believe we'll continue to be building and augmenting."

Politics and permitting

The data center boom has raised concerns at a local level over the electric and water use of these facilities – and sentiment has swung sufficiently against them for even the likes of Texas Gov. Greg Abbott (R) to order a pause on permitting for new data centers.

Related:Asia's data center boom hits speed bumps

"You definitely see pockets that are getting overwhelmed," Lupe acknowledged.

But while that may shift where data center development happens and how fast it happens, he predicted no shift in the overall direction: "I don't think it stops it from happening."

Part of Zayo's strategy is reminding people that it does more than build data center infrastructure, although he declined to say how much of Zayo's revenue rides on data centers.

"From the digital infrastructure side, we provide a lot more value than just data centers," he said. "We're stepping up to support communities along the way. We're creating a more diverse network for the entire country."

Permitting holdups continue to be a concern, even if data center opposition doesn't fuel them.

"The long pole in the tent is getting the green light to actually put shovels in the ground," he said. "We've got to ensure we're doing it responsibly and in partnership with the cities, counties, states, and right-of-away owners."

Permitting reforms to speed telecom infrastructure buildout have become a popular topic, but Lupe indicated that Zayo hasn't seen many results from those efforts so far.

AI and space

AI has been fueling the data center frenzy, but Zayo is also turning to AI models to help manage the networks it's building out. In September, it announced a new set of agentic monitoring tools, including what it called "the industry's first production Model Context Protocol (MCP) server."

Related:Firmus, CDC end planned $51B Australian AI buildout

Lupe emphasized that Zayo's concept of AI network management does not include displacing human judgment.

"We believe the decision-making still has to be with the humans," he said. "We know we've got to approach this pretty cautiously when it comes to critical infrastructure."

Instead, he sees AI's utility in providing rapid analysis, assessment of a problem and possible fixes for it – reducing a person's need to scramble to get that data and make sense of it.

Lupe offered a measured take about another increasingly hyped shift in telecom that could threaten his own employer's business: space-based data centers, a high-profile project at SpaceX that's also drawn interest from Google and startups dedicated to that concept.

"I look at it as just another part of the ecosystem," he said. "All of that needs to be downlinked."

In the meantime, Zayo has its hands full.

"I've got a lot of building to do," Lupe said. "It's an exciting time for the US and its position in the world from a connectivity and compute perspective."

Editor's note: The writer was a speaker at SCTE TechExpo 26 and his lodging was paid for by the conference organizers.

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