Interconnection bandwidth demand outstripping public Internet: Equinix

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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)
2016 2017 2018 2019 2020 CAGR
Region
US 472 654 913 1,275 1,795 40%
EU 335 473 681 987 1,451 44%
AP 246 355 519 759 1,120 46%
LATAM 92 154 249 395 626 62%
Total 1,144 1,636 2,363 3,417 4,991 45%
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%
By Industry      
Banking & Insurance 144 230 367 590 958 61%
Telecommunications 319 409 523 662 826 27%
Cloud & IT Services 221 314 445 607 820 39%

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