Connectivity in 2026: 7 areas to watch

The financial underpinnings of AI buildout are attracting increasing scrutiny from investors and analysts, as well as the mainstream media. The scale of capital required for AI infrastructure is unprecedented in recent times, and the returns remain largely unproven at scale, both for connectivity providers themselves and for the organisations in the wider economy using AI-powered solutions.

Compounding that unease is the opaque nature of some funding structures – unease which is gradually making its way into public consciousness through increased media coverage of a potential AI bubble.

As a result, 2026 could see capital markets become more cautious about where the trillions are going, asking more questions about sustainability, timelines to profitability and the downstream impact on those supplying the underlying infrastructure. For telcos and connectivity providers, this uncertainty matters: AI-driven demand is a core justification for fresh fibre, subsea and data centre investment, and any wobble in confidence risks slowing decision-making across the ecosystem.

The main AI challenge for telcos is building out the required infrastructure – but just like any other company, there is the questions of how telcos can use AI themselves to polish internal operations.

 By 2026, AI-driven automation will continue embedding itself into network operations, customer service, fraud detection and service assurance, with an exciting range of new products and services making their way into the telco arsenal.

The promise is twofold. Firstly, AI offers a route to meaningful efficiency gains at a time when margins remain under pressure. Secondly, it enables the creation of new, more dynamic products, from AI-as-a-service to real-time network performance feedback, that were previously difficult to operationalise. This internal use of AI is distinct from the role telcos play in enabling AI workloads for others, but it will be just as critical in determining which operators emerge leaner, faster and more competitive.

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Historically, data centres clustered around dense fibre routes and major metros. Now, with more data centres being built than at any point in the history of telecommunications, there is simply not enough power to go round – so the availability of power now largely dictates where new facilities are built.

For telcos and fibre providers, this reverses a long-standing assumption. Instead of data centres coming to the network, the network must now chase data centres. Ensuring sufficient, diverse and scalable fibre connectivity to often remote power-rich locations is becoming a critical challenge. In 2026, the success of many AI-ready data centres will hinge not just on megawatts, but on how quickly and reliably they can be integrated into national and international fibre backbones.

As an asset class, telecoms often has an image problem. Returns from 5G investment fell short of expectations in many markets, leaving some investors wary of committing fresh capital to large-scale network upgrades, and the ‘dumb pipe’ analogy keeps sticking. That is a problem when there is mounting pressure to invest again – in terrestrial and subsea fibre, in 6G, and particularly in delivering AI-ready infrastructure.

This means telcos must put forward a clear, credible investment narrative that links new infrastructure spend to sustainable returns. In 2026, operators who can show clear monetisation paths – whether as a utility or as a value-added service provider – are likely to be the ones that retain investor confidence.

As data volumes grow and AI workloads proliferate, data sovereignty is becoming impossible to ignore. Telcos now need to navigate an increasingly fragmented regulatory landscape, shaped by national security concerns, privacy laws, cultural attitudes to data storage, and geopolitical tensions – with often dramatic variations even between countries sharing borders.

For telcos, this requires more than technical compliance. Stitching together different requirements needs high-level strategic planning, engagement with regulators and governments, and clear communication with customers and partners. In 2026, expect data sovereignty to move out of the legal department and into the boardroom.

Finally, while demand for new subsea capacity continues to rise, delivery is becoming more complex. A shortage of cable-laying vessels is creating bottlenecks, and geopolitical risks, from sabotage to regional instability, are adding new layers of uncertainty.

This is nothing new for the subsea world – but multiple risks landing at once is. This means coordination between the people involved in the subsea world – telcos, hyperscalers, equipment providers, governments and regulators – is more important than ever.