Skyrocketing data consumption
The last few years have seen a tremendous amount of change in the mobile data world. Both in the United States and around the globe, data consumption is growing faster than ever before.
The number of internet users continues to rise, from 5.35 billion users in 2024 to an estimated 7.9 billion users in 2029—a 47% increase in just five years, according to Forbes. This has created an explosion in global mobile data traffic set to exceed 403 exabytes per month by 2029, up from an estimated 130 exabytes monthly at the end of 2023, according to the Ericsson Mobility Report. For context, in 2014, that amount was a mere 2.5 exabytes per month (Figure 1).
Figure 1 While some of the skyrocketing demand for data is associated with video conferencing, the vast majority is related to the increased usage of large language models (LLMs) like ChatGPT. Source: Infinite Electronics
A variety of simultaneous technological changes are also helping to drive this rapid increase in data consumption. Video-chat technology that went into wider usage during the pandemic has become a mainstay in office life, while autonomous vehicles and IoT devices continue to grow in variety and prevalence. The biggest sea change, however, has been the rapid integration of generative AI into mainstream culture since the introduction of ChatGPT4 in late 2023. Combined with state-of-the-art technology like Nvidia’s recently announced AI chips, these new innovations are placing an enormous strain on networks to keep up and maintain efficient data transfer.
Transceivers in high-speed data transfer
In response, internet service providers and data centers are hurriedly seeking solutions that enable the most efficient data transfer possible. Transceivers, which essentially provide the bridge between compute/storage systems and the network infrastructure, serve a critical but sometimes overlooked role in enabling high-speed data transfer over fiber or copper cables.
Driven by the need for increased data transfer capabilities, the window between transceiver data-rate upgrades continues to shorten. The 2023 introduction of 800G came roughly six years after its predecessor, 400G, and barely two years later, the latest iteration of optical transceivers, 1.6TB, could take place as soon as Q3 of this year. This so-called “arms race” of technology shifts and data growth creates various layers of concerns for network engineers that include validating new technology, maintaining quality, ensuring interoperability, speeding up implementation to maximize ROI and increasing network uptime. Network upgrades to boost speeds and bandwidth are crucial for staying ahead of competitors and driving new customer acquisition.
Data center power crunch
Unlike telecom sites, the massive power demands on data centers are a major consideration when evaluating upgrades. According to Goldman Sachs, the power demand from data centers is expected to grow 160% by 2030 due to the increased electricity needed to power AI usage. The massive power demands on data centers are even motivating some to build their own electrical substation facilities.
This push for data center upgrades doesn’t just include transceivers and other components, but full rack-level equipment changes as well, and the cost of making these upgrades can be significant. Hyperscalers like Google, Amazon, Microsoft and Facebook are continuously investing in cutting-edge infrastructure to support cloud services, AI, advertising and digital platforms. Despite the high cost, these companies feel compelled to invest in cutting-edge technology to ensure strong user experiences and avoid falling behind competitors. Similarly, enterprise data centers like those run by Equifax or Bloomberg often run their own infrastructure to support specific business operations and invest heavily in technology upgrades.
But in smaller data centers not built by hyperscalers or large enterprises—such as colocation providers, regional service providers, universities, or mid-sized businesses—the cost of transceivers can account for a significant portion of total network hardware spending, sometimes in excess of 50%, according to Cisco. Because these organizations may not upgrade transceivers as frequently, often skipping a generation, each purchasing decision is made with the goal of balancing performance, longevity, and cost.
Additional factors like uptime, reliability, and time to market are also shifting network engineers’ priorities, with a heavy focus on quality products that offer operational flexibility. Some engineers are aligning with vendors that have a strong track record of quality, technical support teams that can be leveraged, and strong financials to ensure that the vendors will be capable of supporting warranties in the future and have parts in inventory to support urgent needs. Network engineers know that lowering the cost of network equipment is crucial for maintaining ROI for their businesses, but they also understand that quality and reliability are vital for business operations by eliminating failures and liabilities due to outages.
Transceiver procurement
These considerations are leading engineers toward the choice of purchasing transceivers from original equipment manufacturers (OEMs) or from third-party vendors. While each option offers its own benefits, as shown in Table 1, there are meaningful differences between the two.
Table 1 The major differences between OEM transceivers and third-party transceivers in key categories. Source: Infinite Electronics
Transceivers from reputable third-party vendors are built to the same MSA (multi-source agreement) standards followed by optics from OEMs, ensuring they have the same electrical and optical capabilities. However, OEM transceivers often carry much higher costs (frequently between 2x and 5x) than equivalent third-party optics. In a data center with thousands of ports, the difference in cost can be significant, reaching hundreds of thousands of dollars.
Transceivers from OEMs come hard-coded to run on one specific platform: Cisco, Sienna, IBM or any of hundreds of others on the market. It’s common for a fiber-optic network to include multiple installations of different OEM equipment, but additional complexity can be created through the acquisition of a company that used transceivers from an entirely different set of vendors. This often forces organizations to maintain separate inventories of backup transceivers coded to each platform in current use. In addition, using optics from one OEM can tie an organization to it indefinitely, reducing its flexibility for future upgrades.
Vendor agnostic functionality
Third-party vendors often offer a wider variety of form factors, connector types, and reach options than brand-name vendors. It’s also possible to get custom-programmed optics for multi-vendor environments where compatibility is an issue. Some vendors are able to code or recode transceivers out in the field in minutes, effectively allowing organizations to cover the same range of operations with less inventory.
Whereas OEM optics tend to have long procurement cycles due to internal processes, certifications, or global supply chain issues, third-party suppliers often offer the ability to ship same day or within days, which can be crucial given the time constraints on maintenance windows and rapid expansion plans.
With data demands forecasted to continue escalating to the end of the decade, data providers will have to make a substantial investment to manage the shifts in technology and keep up with customer needs. To maintain network uptime, it will be increasingly critical to partner with vendors that can provide technical support as well as competitive products that maintain high quality and reliable performance.
Third-party transceiver benefits
For hospitals, banking, retail, and other businesses with employees working from home, connectivity will be essential for executing even the simplest daily tasks. Maintaining a business’s reputation and customer loyalty depends on limiting liability, making it critical to maintain a robust network that is built on uptime.
By providing versatility through shorter lead times and broader compatibility, third-party transceiver solutions help ensure that infrastructure upgrades can keep up with the pace of business needs. In a landscape defined by rapid change, having access to reliable, standards-compliant alternatives can offer organizations a crucial strategic advantage.
For organizations navigating the challenges of scaling their networks while managing costs, third-party transceivers offer a practical path forward, helping ensure that networks remain both resilient and future-ready.
Jason Koshy is Infinite Electronics’ global VP of sales and business development, leading its outside sales team and installations. He brings to this position more than 28 years of experience covering all facets of the business. His previous roles include applications engineer, quality and manufacturing engineer, new acquisition evaluations, regional sales manager, director of sales for North America and, most recently, VP of sales for the Americas and ROW. Jason also participated in the integration of Integra, PolyPhaser and Transtector into the Infinite Electronics brand family. He holds a Bachelor of Science in electrical engineering from the University of South Florida.
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