2025: Optical transformation, coffee and AI
2025 has been a year of transformation. In February, Nokia and Infinera joined forces – enabling a new world of optical networking innovations and possibilities. As I sat down in December to reflect on where our industry has been and where it’s going, I invited Rob Shore, Head of Optical Networks Marketing, to join me in a virtual conversation over a cup of coffee. For those of you who know Rob, his beverage was actually coffee mixed with hot chocolate. For me, it was a couple of café Roma pods from my Nespresso machine. During our wide-ranging conversation, we shared the things we found most impactful or surprising in 2025. What follows is a summary of our coffee klatch.
Coherent pluggables…wow!
The interest in 800G ZR/ZR+ coherent pluggables has been amazing. This is the first generation of coherent pluggables that is truly multi-haul, able to support full-rate transmission up to 1,700 km and lower-speed transmissions to 5,000 km and beyond. With OIF interoperability demonstrations at OFC and ECOC, router integrations and field trials, the industry is leaning into the footprint, power and cost benefits as well as the deployment flexibility of coherent pluggables. Throughout the year, multiple industry analysts more than doubled their forecasts to reflect the growing demand. Analyst projections now show a rapid ramp – growing from several thousand units in 2025 to more than 100,000 units in 2026 and exceeding 1 million by 2030. Vendors are updating their supply chain, processes and partnerships to deliver the production capacity required to support this rapid growth.
Embracing thin transponders
While many of the cloud and AI providers are embracing an IP-over-DWDM (IPoDWDM) deployment model in which coherent pluggables are deployed directly into routers and switches, this approach doesn’t work for every networking situation. For instance, telecommunication providers that deliver wholesale and enterprise services may need operational consistency throughout their optical network, across both embedded and pluggable optical engines.
In 2025, thin transponders entered networking conversations, providing a path to capitalize on the benefits of pluggables while avoiding the operational challenges of IPoDWDM. A thin transponder in an optical platform can support multiple coherent pluggables per sled or module, enabling operational consistency and incremental features, such as on-sled encryption, while retaining a significant portion of the space, power and cost benefits of IPoDWDM. In conjunction with coherent pluggables, look for accelerating thin transponder demand in 2026.
Introducing DCI’s cousin – “Scale Across” connectivity
We’re all familiar with data center interconnect (DCI), as it remains the fastest-growing part of the network. Inside the data center, the term “scale up” networking is used to describe scaling an individual XPU (multiple interconnects) inside a rack or multiple racks. “Scale out” networking is used in a similar context to describe scaling an XPU cluster (many interconnected XPUs) across multiple racks or an entire data center. In April, xAI’s supercomputer, Colossus, in Memphis, Tennessee, became the world’s largest GPU cluster with 200,000 GPUs. Multiple companies, including OpenAI, have set their sights on building one-million GPU clusters. But the physical space and power of any one data center remain finite. To overcome these limitations, AI and cloud providers are scaling XPU clusters between geographically dispersed data centers. “Scale across” architectures have emerged as a result, enabling efficient connectivity of back-end networks. Scale across will help our industry to break through the one million XPU cluster boundary. It could even happen in 2026.
Optical line systems get some love…and investment
As AI data centers become more capable, with larger and more advanced GPU/XPU clusters, the amount of data required to interconnect data centers is growing rapidly - outstripping the capacity of one or even multiple fiber pairs. The sheer number of fiber pairs being installed was unimaginable even a few years ago. In discussions with telecommunication providers, many tell us they are installing hundreds of fiber pairs per conduit. Cloud and AI providers talk about installing more than 1,000 fiber pairs at a time.
While transponders and optical engines get a lot of attention, optical line systems (OLS) are also critical as the on-off ramps and fueling stations for our optical express highways. To prevent power, space and costs from scaling linearly with the number of fiber pairs utilized, key OLS components, such as in-line amplifiers, have begun to evolve to enable multiple fibers to be supported in the same footprint and power envelope as a single fiber pair today. Multi-fiber or multi-rail OLS was a hot topic in 2025 and is sure to continue into 2026.
AI-enabled network automation heats up
AI-enabled network automation also received a lot of attention this year. AI collaboration, experimentation, and live network deployments are ramping up. Three specific use-cases are often the starting point for telecommunications providers. First, AI-powered operations with natural-language processing are beginning to enhance team member proficiency and automate repetitive tasks. Second, AI-enabled troubleshooting is helping to correlate disparate information to provide recommendations and dashboards to accelerate root cause identification and resolution. Third, AI’s ability to continuously analyze vast amounts of temporal information is helping network operations teams move from reactive post-customer impact toward proactive, predictive network maintenance and capacity expansions before end-users are even aware. One example of AI-enabled automation in action was the live trial conducted between Nokia and du in 2025.
More coffee please
Since we can see the bottom of our coffee cups, we know it’s time to wrap it up. 2025 was a transformational journey. With evolutions in coherent pluggables, thin transponders, optical line systems, scale-across architectures and AI-enabled automation, it’s an incredibly exciting time to be in our industry. Thanks for participating in it with us – we can’t wait to see what comes next.
Happy holidays and Happy New Year.
We look forward to seeing you at a meeting, webinar, or conference in 2026.
Safe Travels.
