‘You’ve got to have a big fat network in order to serve customers in in the multi-cloud AI world … I think it’s a new day for the capabilities that we’re bringing to the market, which means there is a new way to bring value to customers. We see a direct correlation with our pivoted growth to be not just channel friendly, but channel forward, and that’s probably different than what the channel has heard traditionally from Lumen,’ the service provider’s CEO, Kate Johnson, tells CRN.
Kate Johnson has been at the helm of Lumen Technologies, the company formerly known as CenturyLink, since late 2022 and she’s spent her 2.5-year tenure carrying out a massive revamp of the service provider giant. But unlike her peers in the telecom industry returning to their telecom roots and leaning into core connectivity and legacy services, Lumen under the direction of Johnson is pulling away.
Instead, the tech veteran is betting big on strategic networking services and AI as a path to growth. Lumen has been carving out a niche for itself as a next-generation service provider at a time when the telecom industry is suffering from “friction-filled limitations” of physical telecom infrastructure. Businesses, meanwhile, according to Lumen President and CEO Johnson, have become accustomed to flexible, cloud-based IT services that can be purchased on a consumption basis. That’s what they are looking for and have come to expect from their technology partners, and that’s what Lumen is poised to deliver with the help of its partners, she added.
And speaking of technology partners, relationships with some of the world’s largest cloud and tech players, such as Amazon Web Services, Google, and IBM, are another very important part of Lumen’s growth strategy. This year, the company has revealed a swath of new partnerships with hyperscalers and vendors alike as it works to expand the internet to handle the traffic demands of tomorrow.
And then there’s AI. Lumen in 2024 announced that it wasn’t here to find revenue growth in legacy telco, but rather would be betting big on serving customers interested in transforming their companies with AI. Lumen, in particular, believes it is the right provider for the job of building the backbone for the AI economy.
Johnson sat down with CRN for an exclusive interview to share her ambitious turnaround plans for the legacy telecom provider, the importance of leading with AI, and how channel partners of all kinds can work best with Lumen and where their help is needed with the 57-year-old service provider.
Here are excerpts from the conversation.
While your peers are leaning into traditional telecom services, Lumen isn’t. Why do you think that’s an important strategy?
I think leaning into where everybody inside of an industry that hasn’t innovated in a long time is skating to is probably the wrong orientation. We are pivoting, and we are maniacally focused on our customer success, and we define our success and our transformation as to whether or not we served the companies that we do business with and helped them be successful. And what we’re hearing from them is that the networks of yesterday don’t serve this multi-cloud, AI-first world. They’re not big enough, they’re not fast enough, they’re not smart enough, they’re not secure enough. So, as we seek to delight those enterprise customers, they’re looking for a couple of things. They’re looking for us to innovate, to bring them new constructs. They’re looking for us to serve them in a way that they’ve grown accustomed in the world of cloud. So, imagine — fire up any port, any service, anytime, anywhere and only pay for what you consume? They’re already used to that with cloud, but they don’t get that from traditional telecom carriers, and so we’re bringing them what not only has gotten used to, but what they really need to be agile and flexible and innovative in a multi-cloud world.
Anchoring ourselves in what customers need and then taking our assets and figuring out how we can innovate to differentiate is how we’re winning, and we’re going to continue to lean into that. And differentiation is inherent in the assets that we started with. We’ve got a great fiber network with great coverage and great routes. But look, that’s table stakes. You’ve got to have a big fat network in order to serve customers in the multi-cloud AI world. What we’ve done is partner with companies like Corning to bring new fiber solutions to bear. We’re partnering with the equipment manufacturers to make sure that we can maximize the capacity of our network. And then, we’re seeing opportunities to partner with hyperscalers and technology companies to create ecosystems to bring more value there. We’ve got those companies directly connected into our fiber. We can bring new constructs, like 400 gig on-ramp with direct fiber access. This is game-changing security-wise, game-changing performance-wise, hugely differentiating from our competitors. We also have this universal coverage of all the use cases. So, it doesn’t matter if you’re you want to go prem to prem, prem to edge, prem to cloud, cloud to cloud, cloud and then back to prem — we do it all, and we’re really the only ones that do that, because it starts with our fiber network, but then building a platform to make it easy to consume and design and change and be agile in those constructs. Again, that’s what the network of tomorrow is, and that’s what we’re building. And then if you think about how partners can help improve the value, layering in their services on top of our architecture with fabric ports and you’ve really got a construct that can demonstrate, I think, superior growth in an industry that’s not used to those words.
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How important are technology partnerships to Lumen’s growth strategy?
It’s really how we shift into the next-gen Lumen, and it’s in so many different ways. The first is we’ve been talking about the two-pronged journey that we’re on [in] building the backbone for the AI economy. We’re doing that in partnership with hyperscalers and cloud companies and expanding the internet at large to ensure that the physical infrastructure is both proximate, big enough and sophisticated enough to handle the traffic of tomorrow.
There’s a second piece, which is, we’re cloudifying the telecom experience by building a digital platform on top of it, making it easy for enterprise customers to consume networking services. The question you just asked about partnerships is really important because we did all this backbone building with all of the deals that we did last year with the largest technology companies on Earth and created an ecosystem in [which] these technology companies have access directly into our fiber. And what that enables is for us to innovate brand new networking architectures that are faster, bigger, more secure and more intelligent. These partnerships are really, really important from that perspective, because we’re talking about Microsoft, AWS, Google, etc. These are the biggest cloud companies on Earth, and having the ability to connect directly with them, bypassing any intermediaries, gives our joint customers the fastest and most sophisticated networking capabilities on Earth. I think [another] piece is as we make it easier and easier to consume these networking services and we cloudify them, we’re going to be building network solutions and making them available in the cloud marketplaces so that other technology companies, whether you’re talking about backup and recovery, cybersecurity, or fill in the blank — any business application, you can go into the cloud and eventually you’ll be able to get network bundled right with it. So, let’s take a step back and think about that. That means that you can buy directly from those technology companies, or you can go into the cloud and buy our solutions there, or you can buy them from our sales force, or you can buy them through the channel. We are getting to a place of maximizing feet on the street and achieving commercial ubiquity, which is pretty great for a traditional telecom company.
Does the biggest opportunity that you see for channel partners lie in wrapping value-added services to the Lumen portfolio?
That question is so important. The breakthrough here is that we have the software platform that enables a port to layer multiple services on it. We call it a fabric port, and that port can have first-party Lumen services [like] an underlay, EOD [Ethernet over DOCSIS] or IOD [Intelligent Optical Distribution Network] plus, Lumen advanced services like Lumen defender or [Lumen] Data Protect or whatever, but it can also have third-party on it, and enabling that infrastructure to be layered in with more and more intellectual property, you’re talking about the ability to scale revenue growth while decreasing marginal cost, and that is what we call cloud economics, which is why this is so exciting.
I think there’s three pieces to any company driving transformation with AI. Individual worker productivity is where it starts. And I think we’ve all got a handle on that. I think the next two pieces are where the next big breakthrough in value is. One is on functional transformation. So, think about sales of the future, finance of the future, operations of the future. And of course, depending on your company, those transformations can be more or less complex, and they’re hard, because so often the people who are brilliantly performing functions of today, they don’t even understand the art of possible, because they’re not AI experts, they’re functional experts. Partners can help us bring expertise to transform those functions in the context of businesses. That’s real value. And then, of course, the pinnacle of transformation, I think is going to be when we start changing business models with AI. And that’s when you say, not just, “What does finance at Lumen look like?” You say: “What is Lumen going to look like in a decade? And how do I imagine the art of the possible and shape this company to serve customers when I’m also trying to figure out what shape they’re taking,” it becomes quite complex. You’ve got to be agile. You have to be wickedly innovative, and you have to be really, really collaborative, so you stay in-sync. I think you also need a vertical orientation because you want to know where the puck is going in any industry, like manufacturing, like financial services, like retail, etc., and you probably can’t master all of it. You’ve got to pick some places to focus on. I think the places where you’ve got this combination of a footprint of business, as well as some innovative thinkers, is probably the best place to go.
As the company evolves, do you see Lumen seeking out relationships with more MSPs as opposed to the traditional telecom agent partners?
I think the first thing is, we’re very focused on making sure that the value propositions of our capabilities are very clear so that any partner wants to do business with us. And right now, kind of creating a hierarchy of needs of which partners when, I like all of the partners that are excited to extend our reach and to bring their intellectual property to improve the value. So, whether that comes from a traditional reseller, if it comes from an MSP that actually can help us solve some of these complex problems in the world of AI, I’ll take them both.
What do you want the channel to know about Lumen right now?
I think it’s a new day for the capabilities that we’re bringing to the market, which means there is a new way to bring value to customers. I will say this management team deeply understands the value of the channel and the reach that it brings us. We see a direct correlation with our pivoted growth to be not just channel friendly, but channel forward, and that’s probably different than what the channel has heard traditionally from Lumen. We’re excited to really get [partners] comfortable with who we are becoming, and I think the future is exciting for them and for us.
