What’s to come for fiber and electric utility operators in 2025.

Hello everyone and welcome to this edition of Network IQ. My name is Steve Tongish and I'm the Chief Marketing Officer at IQGEO. And this is the time of year when we step back and look into the future and start to think about predictions for the year ahead. And I'm very pleased to have with us today two industry experts that are going to help us with that really difficult challenge. So the first is John D'Agostino, who's the Global Power Industry Lead at ERM. And the second is Vincent Garnier, and he's the Director General for the FTTH Council Europe. And I hope, gentlemen, you're up to the challenge of predicting the future. Definitely. Well, I love challenges, Steve, so thank you to have me today. Good. Well, in fact, both of you joined us at recent IQGeo meetup events. So Vincent presented at our meetup event in Cambridge in the summer. And John joined us in October for a meetup event in Denver. And both of you did a fantastic job of talking to us about the state of the markets. But the challenge today is not to look at what's happened in the past, but to look into the future. So thank you for taking this on. And it's interesting that we have two different industries here. We have the electric utility industry and we have the fiber industry. And clearly there are differences in these industries, but there are also a lot of similarities. Both are going through major changes. The fiber network, a lot of deployment and a lot of adoption is happening right now. And on the electric grid side, there's a huge amount of modernization and update happening. So there's a lot of private and public investment going into these sectors. And this is my first question for you. Where do you expect in 2025 to see this investment resource going? And what does that mean about technology investment for the year ahead? So I can take that one first, Steve, if you'd like. Thank you. Appreciate the opportunity to be here. Regarding the power industry with the utilities, I think one of the major focus areas for investment is going to be in resilient infrastructure. And that is just driven by the fact that there is increasing demand everywhere that's driven by data centers. And what I think one of the areas that's going to be pouring where the money will be going and pouring into is the convergence of hardware and software solutions. You've got an aging grid, so there's hardware needs, but at the same time, technology is also improving. So you're going to see integrated solutions between the hardware and software sides of the business. This is going to be driven by trying to increase accessibility in remote areas, things like adaptable grids and virtual power plants. You're going to see the rise of enhanced network intelligence associated with all of this investment. So the grid is going to be getting smarter or it needs to get smarter. It is. And there's lots of solutions. And IQGeo has got one of the better ones out there that's going to really help advance this. Vincent, what do you think about the fiber side of the business? Where is that going? Because it's quite mature in many respects, isn't it? It is. I wouldn't say this is mature. It's maturing in many countries. It's still with a lot of development in others. But we asked that very same question to a panel responding to our recurring survey on the market sentiment. And interestingly, the short-term mood is relatively stable since last time we asked six months ago. And production are for a continuity of the same level of investment throughout 25. While most respondents are more bullish for the slightly longer term, for the three years period ahead of us, they see an even acceleration of investment in FTTH infrastructure moving ahead. And I think that reflects the fact that after a surge of interest rates, which has reduced a little bit the appetite for investment, we are still with a lot of political, geopolitical uncertainty. And people are a little bit cautious. But the fundamentals are there. And on the longer run, everybody is very much convinced that more investment is needed and will take place in the fiber industry in Europe. You're right about investment and interest rates. Those macroeconomic issues are going to play a big factor, aren't they? Let's think a little bit more now about some of the issues that these organizations will face. We recently did two webinars, one with Energy Central about field deployment. That speaks to the resilience point that John just mentioned. But also we did one with the FTTH Council Europe about fiber fault management. And so there are always problems that are faced by network operators. What do you think will be some of the biggest business, technical, operational challenges that they face in 2025? If you want to turn it around, you can also talk about opportunities. So where do the greatest opportunities lie? And where's the low-hanging fruit that these organizations can harvest? Maybe Vincent, you'd like to go first on that one. Yeah, I think everyone faces operational challenges. And to deploy fast at lower cost with operational excellence requires tools and is everybody's concern. Continuous improvement that takes place at every level of deployment. What is interesting is that in many countries in Europe, this deployment needs to take place in increasingly rural, low-density areas. So one of the important topics that many operators and investors will face is how to deploy in a cost-effective way in low-density areas. That's one. The second one is the fact that many countries still struggle with administrative burden getting permitting. Red tape remains quite high. So that is hot and very high on the agenda of many operators in countries like, let's say, Germany or others. And the third point I would like to mention very briefly, Steve, is the fact that what is very important in Europe is really to accelerate adoption. We have 70% of the homes in Europe having potentially access to fiber, but only half of them is effectively taking the service. So for a variety of reasons, moving people effectively on the fiber network is essential. And from that perspective, it's not very much technology. This is more related to public policy. But accelerating the transition towards copper switch-off is a key driver in front of us as an industry. To accelerate adoption and drive even more investment to finish the job in fiber rollout and adoption. So it comes back to people, tools, processes. And your comment about permitting, I think that's something maybe resonates with John as well, because that can be a big thing in the electrical utility industry with grid modernization. What are your thoughts, John? Yeah, I mean, the utility industry is definitely faced with some unique challenges right now. One of the things it's referred to is the industry trilemma. And the three issues that are associated there are how do you manage sustainability, the pressure to decarbonize, while also maintaining resiliency. So you have to maintain the grid, which is aging infrastructure, as well as meet increasing demand. So the challenge here is how do utilities allocate their resources to those three competing demands? With the rise of data centers, it's projected that they're going to be consuming 11% of the energy demand by 2030. And so while you have aging infrastructure, how do you bring efficient solutions through technology to deal with these three issues? So it's not an uncommon problem, but it is one that is very front and center right now. Is the data center issue that you mentioned, is that being fueled by things like AI? And the extra processing power from that, is that one of the factors? Absolutely. And that actually is one of the opportunities that, you know, you referenced opportunities. One of the opportunities here, I think, is that we're going to see is cross-industry collaboration. When you look at the technology industry and the power industry in the U.S., you've seen where some technology companies are partnering up with power companies to basically put their data centers right next to some of their power plants. So that's going to be one of the issues. You know, how do you deal with the storage issue, AI and adaptive technologies? But I think when you're going to, the opportunity here is for these two industries to come together to collaborate and figure out how to provide a solution. Vincent, staying on this question, the issue of AI, how does that play into those opportunities for 2025 on the fiber side? AI is driving demand, driving demand for power. For bandwidth. So that is making, you know, high capacity network absolutely relevant. It is also increasingly used at every stage of rollout, planning, maintenance, service to customer by operators and service provider. And of course, supporting ecosystem of vendors. So we see AI increasing productivity at every step and being implemented in multiple ways. So it's both fueling the industry with demand, but also changing the way the ecosystem is working to satisfy that demand. I mean, certainly from an IQG perspective, AI is an important topic for us as a supplier into the market. Absolutely. Yeah. Let's go into a final question and the hardest one of the three that I'm asking today. Because this one is, what is your headline prediction for 2025? Is there anything that you think we might be surprised about that could be coming our way? Oh, John, please. Yeah. Yeah. I was going to say, I think we're going to be entering squarely into the messy middle. I think we've been seeing a lot of changes come into the industry for a long time. But I think 2025, with all the geopolitical issues that Vincent acknowledged, the rise of technology, we're going, at least in the utility industry, renewables are the future. But I think we're not there yet. And so I think one of the issues is that we're going to have to acknowledge, which makes it the messy middle, is that gas is going to need to be used as a bridge fuel. I think we're going to increasingly see prioritization of projects that are ready to go into the ground that have the funding. So there's going to be a bit of a shifting focus of, okay, how are we actually going to get there? And so I think it's going to be a lot of opportunities for many companies to do and accelerate what they're going to achieve over the coming decade. Okay. So I like it. You've hedged your bets here, John, the messy middle. Well done. Vincent, your thoughts? Yeah, I mean, going back to your first question, we see a good, steady development of FTTH rollout and adoption in Europe. It remains positive. The fundamentals are there. Now, you asked me the question, you know, what could go wrong or what could change that? I think there could be an indirect impact in Europe of the recent election in the U.S. There could be a change in the way fiber deployment is subsidized in the U.S., and that could have a knock-on effect everywhere else. And we don't know exactly what will be that effect, but that's an element of uncontrolled disturbances which could come from your side, John. So watch this space. John, I don't think you'll take responsibility for that, though, which is coming from your direction, isn't it? Yeah. Good. Well, thank you so much for your time, gentlemen. It's always a pleasure to have such prominent industry experts who can join us on Network IQ. Your predictions are really interesting, and let's see how they pan out. We won't hold your feet to the fire, though, but it'll be interesting to see how things evolve in 2025. So thank you so much. And I want to thank our viewers for joining us for Network IQ for this edition. If you're curious about IQGeo and our network management software for the telecom and utility industries, please take a look at our website. And on behalf of John and Vincent, I'd like to wish you all a very happy