AI Is Scaling Fast, and So Must Our Networks and Policies

The world is undergoing a profound transformation driven by artificial intelligence (AI) and connected technologies. This transformation also drives a major architectural shift in the networks that connect our nations and businesses. As AI reshapes our lives, it also creates faster, more dynamic, more latency-sensitive, and more complex network traffic.

This shift is creating a growing divide between organizations and nations that are prepared to lead in the digital economy and those falling behind. Yet, the newly released 2025 State of the Digital Decade report shows that the EU remains far from its digital transformation goals, particularly in critical areas like AI and semiconductors. Despite increased efforts by member states, the report underscores the urgent need for greater public and private investment to accelerate infrastructure development.

The readiness of digital infrastructure to meet AI’s demands will determine the ability of organizations and nations to innovate, compete, and thrive in the digital economy. This blog elaborates on the ‘ins’ and ‘outs’ for connectivity readiness and the role of public policy.

The Need for Resilient Networks

New Cisco research highlights the urgency of modernizing connectivity infrastructure to handle the next wave of AI-powered traffic. While 95% of IT leaders stress the importance of resilient networks, 77% have faced major outages caused by congestion, cyberattacks, and misconfigurations, costing $160 billion globally per year from just one severe disruption per business. AI could double the strain, or solve it.

Policymakers have tools to help businesses meet the challenge: they should urgently simplify the EU digital rulebooks, help further leverage market incentives to drive private investments into AI-ready digital infrastructure, and create public-private partnerships to achieve the EU digital decade targets.

Why Policymakers and Businesses Must Prioritize Network Modernization

Modernized networks form the backbone of global competitiveness. AI and digital transformation drive economic growth, improve public services and utilities, boost productivity, transform industries, and enhance quality of life, but only if supported by resilient, secure, scalable, and energy-efficient networks. The numbers don’t lie: 89% of IT leaders see modern infrastructure as a revenue driver, and 93% anticipate cost savings from smarter, more secure, and adaptive networks.

Today’s networks deliver financial value by improving customer experiences (55%), boosting efficiency (52%), and enabling innovation (51%). Yet much of this value is at risk without networks designed for AI and real-time scale. Without low-latency, high-capacity, and secure connectivity, organizations will struggle to meet the demands of AI and the exponential growth in network traffic.

In the European Union, initiatives such as the Digital Decade goals, the review of the EU telecom rulebook (Digital Networks Act) expected in December 2025 and EU Cloud and AI Act emphasize the importance of robust digital infrastructure. Modernizing networks aligns with these priorities, enabling Europe to lead in transformative technologies like AI and cloud while addressing critical gaps in cybersecurity.

The AI Revolution and Its Network Demands

AI is no longer a futuristic concept. It’s transforming industries, from healthcare, to manufacturing, and logistics. Enterprises are deploying AI-powered applications and assistants at scale to enhance efficiency and decision-making. The explosion in AI-driven workflows, coupled with the proliferation of connected devices are driving unprecedented surges in network traffic, placing immense pressure on IT infrastructures to deliver low-latency, secure, and uninterrupted connectivity.

Downtime is costly, disrupting critical operations and eroding trust. While AI is reshaping computing infrastructure, data centers are not yet ready for its demands. Organizations that fail to modernize risk falling behind competitors that harness AI to innovate and optimize operations.

To meet AI’s demands, we need forward-thinking regulatory frameworks and market incentives that accelerate advanced digital infrastructure adoption.

Rethinking Security in a Complex Era

Cybersecurity remains central to EU digital policies, reflecting the fast-evolving threat landscape. The growing adoption of AI and connected devices also expands the attack surface. Sophisticated cyberattacks, leveraging AI and quantum computing demand a new approach to network security. Unsurprisingly, 94% of IT leaders believe secure networks are critical to enhancing cybersecurity.

Traditional measures are insufficient. Instead, networks must integrate advanced, quantum-resistant threat detection and multi-layered security. Embedding security directly into the network fabric ensures resilience against emerging threats while enabling confident innovation.

Public-Private Collaboration: A Path Forward

Achieving digital competitiveness requires close collaboration between governments, businesses, and technology providers. Policymakers play a crucial role by incentivizing the adoption of advanced network technologies and by leading by example as ‘first movers’.

With the imminent EU annual state of the Digital Decade report and a revamp of the targets coming next year, robust infrastructure and modern networks are key enablers to digitalize AI startups, SMEs, schools and public sector, providing essential computing and data capabilities for organizations to thrive. New open public-private partnerships can drive creative, cross-border business models and address broadband needs, ensuring Europe’s digital transformation is future-ready.

Digital Efficiency for Energy and Water

Public utilities face growing challenges, and both businesses and policymakers know it. But AI offers hope too: AI-powered water management and energy-efficient hardware, such as modern data centers and networking equipment can reduce resource consumption while supporting the growth of AI and cloud technologies. The digital infrastructure industry has consistently delivered faster, more energy-efficient solutions.

Connectivity for AI: Time to Act

97% of IT leaders see modernized networks as critical to deploying AI, IoT, and cloud. The new generation of high-capacity, low-latency networking technologies, and quantum-resistant security is critical to addressing exploding traffic, uptime needs, and security threats.

Nations and businesses that embrace modern, AI-ready networks will be the ones to lead in the digital era. Delaying modernization risks falling behind in an interconnected, competitive world. The question is not whether to modernize. It’s how quickly we can seize the opportunities of AI transformation.

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Find out more about how Cisco powers secure infrastructure for the AI era Cisco Powers Secure Infrastructure for the AI Era

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