Interview with Jonathan Adelstein of DigitalBridge
Episode 7: Today, Dr. Omar Ayyash, President and CEO of the World Trade Center Kentucky interviews Jonathan Adelstein, Managing Director and Head of Global Policy and Investment for DigitalBridge Group, Inc. We recorded this episode in Dubai, during the 2023 Dubai Trade Mission, which was sponsored by the World Trade Center Kentucky.
Meet Jonathan Adelstein
DigitalBridge is an investment management, private equity firm. They manage $72 billion in global assets. The focus on digital infrastructure such as cell towers, data centers, fiber, etc.
Jonathan was the Commissioner of the Federal Communications Commission (FCC) from 2002-2009. He later ran the Rural Utility Service under the Obama administration, developing rural telecom, electric and water infrastructure.
Overview of Digital Infrastructure
Jonathan estimates that DigitalBridge is the largest investor in the digital infrastructure sector. The telecoms and other large “hyper-scalers” need the right partner when it comes to addressing the special needs of data centers and related infrastructure.
These companies need investment capital to build the cell towers and other pieces of the digital ecosphere. There is a tremendous need to have the proper resources to both manage and store the vast streams of data. The demand for data and improved flow is only increasing. This provides an interesting market opportunity for investment and revenue generation.
Jonathan explains that artificial intelligence (AI) is going to drive a significant increase in data demand and usage. The energy required to power these large data centers in astonishing. Years ago, an order for 40 megawatts of power was one of the largest. Jonathan discusses how they are seeing orders for 200-500 megawatt orders. AI is driving this surge. The chips needed to support AI consume a tremendous amount of power. As a result, the servers are consuming much more power than in years past.
Large companies which are leveraging the power of AI are quickly acquiring as much of the existing data center capacity as possible. This is a finite resource, so they are grabbing up as much as they can in anticipation of future needs and usage.
Many of these companies are also requiring renewable power as part of the overall system. That in itself is also a limited resource. This serves to put more demand-side pressure on companies that are focused on building and expanding the global, digital infrastructure. DigitalBridge is at the heart of this rapidly-evolving sector.
Jonathan focuses on both the location (“siting”) of these data centers, power centers and transmission lines, as well as the policies directly impacting the development of these resources.
Supply Chain Challenges
Jonathan describes some of the current challenges in sourcing chips specifically for AI applications. Nvidia is a leader in manufacturing these types of chips. Originally, they were being used for computer game graphics, but then the industry realized the chips were suited for the high demands of AI. They are increasing their manufacturing capacity, but because of the constraints, the value of this company has quickly achieved the trillion-dollar level as revenues and profits surged.
In the long run, other competitors will be able to contribute to the supply of AI-chips. This may help the prices to come down, but for now, it’s an expensive component of the digital infrastructure. Jonathan comments that the Inflation Reduction Act included incentives for US-based chip manufacturing.
AI in Business
Dr. Ayyash asks for some basic examples of how businesses can and do leverage AI for basic business transactions. Jonathan explains that the range of possibilities impact virtually every US industry segment. Some of the industries are highly-regulated, which includes the use of data.
We are recording from Dubai, in the United Arab Emirates (UAE). The Middle East regions, such as the UAE, are very focused on data sovereignty. They want to control the use and flow of data and information. This is very similar to what a financial institution wants to have. Companies that create data need to have a way to protect it from open AI networks.
One of the big challenges is enabling a company to leverage generative-AI for its internal use. Some countries are actually ahead of the US in regulating AI. Privacy concerns, political speech and a myriad of other issues combine to make this area of regulation very delicate, but increasingly important. Data privacy and data security are unique challenges that require companies to think through how their data is use and protected at the same time.
GITEX is the world’s largest technology conference. Dr. Ayyash asks Jonathan for his comments about this event and the opportunities. The World Trade Center Kentucky delegation attended a kick-off event hosted by AmCham Dubai. The US Ambassador to the UAE attended and actually asked for a copy of Jonathan’s keynote presentation, especially the influence of AI and what it means for the future.
Jonathan discusses how the demand for data center capacity is growing rapidly in the US. He also comments about the increasing demand for enterprise-level fiber networks.
The Demand is Growing
AI is currently being trained in the cloud. Large data facilities are experiencing huge levels of demand, but AI-demand still relatively small when compared to Netflix or YouTube video capacity needs. However, AI-driven demand will continue to increase rapidly. All of this is going to place greater focus on the need for digital infrastructure capacity.
DigitalBridge is already well-positioned in the data center sector, but this digital capacity will push deeper into the entire system at the core-level. AI will drive it. This is going to transform every industry, in Jonathan’s expert opinion.
Dr. Ayyash and Jonathan are going to plan a keynote presentation at one of the 2024 Global Executive Forum events, hosted by the World Trade Center Kentucky.
To Learn More About Jonathan Adelstein:
Website: DigitalBridge Group, Inc.
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