AI demand is raising the cost of fiber and the value carriers attach to routes, and this year’s deals show fiber assets moving to larger or more focused owners.
In sum – what to know:
- Supply is tightening – TrendForce expects spot prices for finished optical fiber to average 2.8 to more than 5 times their 2025 levels, with shortages lasting until at least 2028.
- Value is rising but prices are opaque – Lumen says it has secured nearly $13 billion in private connectivity contracts and Verizon has signed a Google deal worth in excess of $1 billion, but no benchmark tracks what carriers charge to lease fiber.
- Deals are reshaping ownership, but not always because of AI – Four large fiber deals closed this year, and AI is a stated driver in some and not in others.
In July 2026, Verizon secured a deal with Google worth over $1 billion to provide dedicated dark fiber connectivity on several routes for Google’s hyperscale data centers. Disclosing the agreement as part of the carrier’s “AI Connect” initiative, Verizon CEO Dan Schulman remarked how infrastructure the company built for a different era has turned out to be “exactly the right asset for this one”.
Where once fiber was considered a low-margin piece of connectivity infrastructure, AI is helping to drive up the cost of fiber and the value carriers attach to routes. But the evidence differs sharply depending on which part of the chain you look at, whether it’s the glass, the routes or the companies that own them. Lease prices themselves are the hardest part to identify.
A familiar tale
During the telecom boom of the late 1990s, US carriers borrowed and spent heavily on networks, and by 2002 an estimated 95% of the fiber laid sat unused. For years, this dormant fiber sat on balance sheets as a depreciating asset or a sunk cost, although much of it was eventually lit as traffic grew. AI demand is now giving existing fiber a new commercial life. Uniti says nearly 80% of its hyperscaler business uses all or part of its preexisting network, contributing to blended anchor lease-up cash yields of 37%.
Through the looking glass
Demand is also pushing prices up further upstream, in the cost of the glass itself. Research firm TrendForce estimates a global shortfall of 180 million fiber-kilometers in 2026 and expects spot prices for finished optical fiber to average between 2.8 and more than 5 times their 2025 levels, with shortages persisting until at least 2028. AI is one driver in this increase, with TrendForce estimating that data centers will account for roughly 18% to 20% of global fiber demand in 2026, rising to 30% to 35% in 2027. TrendForce says global fiber capacity utilization has climbed to 92% in 2026, with inventories down from four months in 2024 to one, and some leading suppliers already booked into the first quarter of 2027. In response, carriers are locking in supply. Verizon and Corning agreed a multi-year deal in September for more than 80 million miles of optical fiber for delivery between 2027 and 2032, and Zayo inked a similar deal with Corning in August, which it says will secure a significant portion of the fiber it expects to need through the end of the decade.
Route demand
Routes are a separate issue from the glass. As Rick Malone, principal at Vertical Systems Group, told RCR, fiber pricing comes down to availability, cost to light the fiber and route-level competition. Where only one provider has usable capacity on a corridor, prices stay elevated, but they drop once a second or third lights up nearby. On the specific routes that matter most for AI interconnect, the dynamic runs the other way, with demand for higher speeds and fiber counts pushing prices up sharply, even as capacity gets added. Malone also points to the speed tiers providers now have to support, from 100G to 1.6T, as the pressure point on AI-interconnect routes, where prices have risen sharply even as capacity has been added.
Demand for routes is also rising. Zayo says long-haul dark fiber demand doubled between 2024 and 2025, and metro demand rose by up to 20 times in some AI-driven metros. In Q2 2026, Uniti reported record new bookings at its fiber infrastructure business, almost 30% above the previous high, which it attributed to demand from hyperscalers and neocloud providers for both dark and lit wave services. Lumen, meanwhile, says it has secured nearly $13 billion in private connectivity contracts over the past three years, attributed to hyperscaler demand. Money is following that demand. Zayo booked more than $1 billion of AI-related long-haul deals in 2024 with a further $3 billion in its pipeline, and now plans to add 15,000 route miles by 2030, including more than 8,000 miles with NVIDIA.
Route prices are harder to find. The price in the Verizon and Google deal has not been disclosed, and dark fiber is negotiated route by route. What public pricing does exist suggests that how a customer buys matters as much as what it buys, with long-term IRUs priced lower per month than monthly leases. Centennial, Colorado publishes a standard 20-year IRU price of $2,750 per fiber pair per mile upfront, which works out at about $5.73 per fiber strand per mile per month ($11.46 per pair), before maintenance. By comparison, it charges $137 per pair per mile per month for a short-term commercial lease (about $68.50 per strand), and $275 for carriers (about $137.50 per strand). Windstream’s 20-year IRU with a hyperscaler, signed in August 2025, is worth nearly $100 million for 296 strands over about 500 miles, which by our calculation works out at $2.82 per strand-mile per month before maintenance fees. Published lease rates span a wide range. Published utility rate cards and regulatory filings range from roughly $20 per fiber-mile per month in Nebraska to a list price of $490.75 in Palo Alto. None of these figures show how prices have moved, and the Windstream contract, signed in 2025 on existing routes, may not reflect what is now being quoted on the busiest AI corridors.
Who owns the fiber
Four large deals involving fiber assets closed this year, and AI’s role in them varies. AT&T completed its $5.75 billion purchase of Lumen’s mass-market fiber business in February, adding more than 4 million fiber locations, and Verizon completed its roughly $20 billion acquisition of Frontier, taking its footprint to about 30 million fiber passings. As RCR reported in August, neither is an outright AI acquisition. The immediate economics are driven mainly by broadband growth and fixed-mobile convergence, although AI makes the assets more valuable. Zayo’s purchase of Crown Castle’s fiber business, which closed in May, is the clearest AI-framed deal. It adds about 90,000 route miles and 40,000 on-net enterprise locations, and Zayo frames it around AI demand. Charter’s $34.5 billion Cox deal, which closed in August, brought in Cox’s commercial fiber business, but the case Charter has made rests on about $500 million in procurement and overhead savings.
Verizon’s Google deal is harder to place. Verizon says it is using existing fiber and building new routes for AI Connect, and expects margins to match or exceed its existing ones, but it has not said how much new construction the Google routes require or how long the contract runs, so how much of its value comes from AI demand itself is unknown. Further down the chain, as we reported in August with the deal between Virginia-based fiber provider Shentel and an as yet unknown hyperscaler, there may be signs that demand is spilling over from national networks to mid-tier, regional fiber players, as data center owners prioritize proximity to data center sites over outright scale.
What to watch
AI is clearly changing how fiber is valued, and this year’s deals show ownership is changing. The cost of glass and demand are both rising and the biggest buyers are signing long-term deals, but no public benchmark tracks carrier lease prices over time. The public pricing that does exist shows 20-year IRUs, the way the biggest buyers tend to buy, costing far less per month than short leases, while Malone points to speed tiers as the pressure point on the busiest AI routes. Whether that premium reaches long-term contracts is unknown, and it rests on a handful of data points. Verizon expects to announce further hyperscaler deals by the end of the year, and TrendForce expects fiber supply to stay tight until at least 2028, which should show whether higher glass costs reach lease prices.
