How AI is changing the global telecoms industry – and the risks for insurers are growing.

The rapid rise of artificial intelligence (AI) is reshaping the landscape of the telecommunications, media and technology industries. The release of ChatGPT and other major language models has accelerated the use of AI applications.

However, the popularity of AI has led to higher energy requirements, especially for AI-focused data centers, which require significantly more power than traditional ones. At the same time, telecom companies face challenges in scaling up networks to support AI, which requires significant investment in fiber optics and infrastructure.

“The increase in energy consumption for an AI-intensive data center is huge – as much as a small city,” said George Hetsch (pictured right), technology, media and telecommunications industry division leader at WTW.

“This is significantly higher than typical data centers in the past. Big AI providers like Microsoft, Apple and Google need to pivot quickly to have more capacity to support the use of tools that They are introducing

Demand for energy and telecom infrastructure is increasing.

The issue has sparked renewed interest in nuclear energy as a viable power source, Haitsch said, with small mobile nuclear reactors now being discussed to meet the enormous energy needs of these facilities. Focus is on.

Experts have noted concerns that telecom companies may struggle to keep up amid growing demand for AI and machine learning technologies.

Firms are leveraging solutions like network slicing and edge computing to bridge the gap, but according to Jose Mercado (pictured left), telecommunications subsector leader for North America and Latin America at WTW, companies’ capital The level of work varies.

“Telecom companies are working diligently to address these issues, and are focusing on expanding their networks to support advanced technologies,” Mercado told Insurance Business. “This includes upgrading transport networks, expanding fiber-optic infrastructure, and integrating high-tech systems to meet growing needs.”

“Current solutions exist, but their effectiveness depends largely on each carrier’s business model,” noted Mercardo.

For example, he said, network slicing protocols allow carriers to separate their networks for different services and markets. Additionally, edge computing and cloud-based services help bridge the capacity gap.

Many carriers are also partnering with major cloud providers to expand their capabilities. Edge computing is particularly valuable for supporting the Internet of Things (IoT) because it provides reliable computing resources.

Risks and exposures as telecom firms expand to meet the demands of AI use.

This rapid proliferation involves substantial costs and increases various responsibilities for telecom firms to meet the growing demand posed by AI. Mercado emphasized the importance of proper network management and investments to fill the gap, in which insurance can play a role.

“As liabilities for telecom companies grow exponentially, cyber risk is a critical concern,” said Mercado. “As they expand into remote or dangerous areas, insurance can help manage these risks. Business disruption is also a concern, as it can greatly affect profitability and earnings, making this particular Critical to capital-intensive telecom operations.

Despite the challenges, there is a sense of excitement and active investment in the sector.

“Industry is clearly excited about the opportunities AI presents,” Haitsch said. “It is aggressively expanding its capacity, moving from 3G and 4G to 5G and now looking at 6G.”

In the US, the Broadband Equity and Deployment (BEAD) program introduced a $42 billion investment to expand high-speed Internet to underserved areas. The move, which WTW is actively collaborating with Insurance and Surety Solutions, underscores the telecom industry and government’s joint commitment to advancing communications infrastructure and bridging the digital divide.

Haitsch further highlighted “growth opportunities” and the role of insurance in facilitating telecom investment.

“Insurance is a hedge, a risk financing tool, that can help smooth the edges and ensure that (telecom firms) can move forward with confidence in investing and building. That’s what’s needed,” Hetish said. “We are excited to be a partner of the telecommunications industry, and we see a lot of interaction and enthusiasm to take on the challenges.”

What are your thoughts on the rise in telecom infrastructure and energy demand due to AI? Please sound off in the comments.