The capacity for private interconnection bandwidth between businesses is outpacing the public Internet, growing at nearly twice the rate and comprising nearly six times the volume of global IP traffic by 2020, according to a new market study from Equinix.
The Global Interconnection Index – which analyzes the adoption profile of thousands of carrier-neutral colocation data center providers and ecosystem participants globally – reports that interconnection bandwidth is expected to grow at a 45% CAGR to reach 5,000 Tbps by 2020, dwarfing global IP traffic in both growth (24%) and volume (855 Tbps). It is also growing faster than MPLS, the legacy model of business connectivity, by a factor of 10x (45% to 4%).
The index lists four key macroeconomic, technology and regulatory trends that are impacting interconnection growth:
- Digital technology usage, which forces the need to support real-time interactions requiring more Interconnection Bandwidth. According to Accenture, digital technology use is projected to add $1.36 trillion in additional economic output in the world’s top 10 economies by 2020.
- Urbanization, which is transforming global demographics and creating a proximity need for digital services concentrated across metro centers globally. More than two billion people are expected to migrate to major cites by 2035, creating as many as 50 major urban metro hubs4 requiring dense Interconnection fabrics.
- Cybersecurity risk, which expands Interconnection consumption as firms increasingly shift to private data traffic exchange to bypass the public Internet and mitigate against digital threats. By 2020, an estimated 60% of digital businesses will suffer major service failures5 as breaches permeate across physical and digital platforms.
- Global trade of digitally deliverable services, which ushers in a new era of dynamic business processes and demand for Interconnection. Global digital workflows require a global mesh of Interconnected metros to fulfill demand. According to McKinsey, trade in digitally deliverable services now comprises 50% of total services exports globally, with an expected 9x increase by 2020.
The index also provides insights into regional differences in how interconnection is accelerating in different regions of the world. While the US is forecast to have the largest amount of interconnection bandwidth, it is the most mature region, and other regions are more rapidly provisioning interconnection bandwidth to rival the projected deployment levels in the US.
|Interconnection installed bandwidth capacity (Tbps)|
|Enterprise Use Cases|
|Interconnecting to network providers||372||571||880||1,341||1,986||52%|
|Interconnecting to cloud & IT providers||12||31||80||209||547||160%|
|Interconnecting to supply chain partners||5||9||17||29||45||73%|
|Service Provider Use Cases|
|Interconnecting to network providers||537||703||913||1,167||1,459||28%|
|Interconnecting to cloud & IT providers||30||50||85||145||248||70%|
|Banking & Insurance||144||230||367||590||958||61%|
|Cloud & IT Services||221||314||445||607||820||39%|