Interconnection bandwidth to hit 5,000Tbps by 2020, says Equinix Index
16 August 2017 | Jason McGee-Abe
Interconnection bandwidth is expected to grow at a 45% CAGR to reach 5,000Tbps by 2020, dwarfing global IP traffic in both growth (24%) and volume (855Tbps), according to Equinix’s inaugural Global Interconnection Index.
Findings from the Global Interconnection Index, which has analysed the adoption profile of thousands of carrier-neutral colocation data centre providers and ecosystem participants globally, show that the capacity for private data exchange between businesses is forecasted to outpace the public internet by nearly 2-times in growth and 6-times in volume by 2020. It is also growing faster than Multiprotocol Label Switching (MPLS), the legacy model of business connectivity, by a factor of 10 (45% to 4%).
“As the public internet has continued to expand, it has impacted how organisations do business and created opportunities for some of the greatest innovations of this era. This innovation, also described as the Internet of Things has resulted in an unexpected explosion of data which businesses are struggling to analyse and process by relying on the public internet,” said Russell Poole, managing director of Equinix UK.
Equinix’s Index says that there is a radical reinvention of enterprise IT underway: “Interconnection bandwidth is expected to grow at a rapid pace over the next four years with growth across all regions predicted to grow 40% per annum or greater.”
The Index provides significant insight into metropolitan differences in how Interconnection is accelerating in various European cities. Despite Brexit, London will continue to top the global cities leaderboard, tripling its interconnection bandwidth capacity, at a 44% CAGR to 486Tbps. Not only will this put the British capital ahead of all other European cities, but it will outshine the likes of New York and Silicon Valley by a whopping 20% and 48% respectively.
This also puts London significantly ahead of 7th and 8th placed cities Frankfurt (252Tbps) and Amsterdam (242Tbps), the only other two European players scoring in the top ten. However, in a sign that Frankfurt may emerge as a Brexit winner, the German financial centre is poised to overtake Amsterdam, with a jump from 51Tbps (2016) to 252Tbps (2020).
“Interconnection bandwidth growth will dwarf global internet traffic in three years. The survival of the UK’s business industries post-Brexit and the success of the UK’s economy will rely on organisations that adopt an interconnection-first approach as data production grows at a rapid rate. It’s encouraging to see that London will maintain its status as a leading digital economy by 2020,” added Poole.
Globally, the average interconnection bandwidth capacity is 327Tbps in the US, 275Tbps in Europe, 177.5Tbps in APAC and 108.25Tbps in Latam, leading to large regional divides across the globe: US vs Europe (26%), US vs APAC (46%) and Europe vs APAC (35%).
Certain industries will be particularly impacted; the financial services industry, for example, is set for a 58% growth in interconnection bandwidth, with banking and insurance to see a six-fold increase, catapulting it ahead of cloud and IT services while telecommunications is narrowly retaining the lead.
The centricity of digital technology is disrupting how business is done across all industries, forcing companies to invent new, information-centric business models. The Index forecasts the banking and insurance segment will be the largest consumer of interconnection bandwidth, as digitisation is forcing this industry to support new customer engagement models. Telecommunications is projected to be the second largest segment, with the need to provide coverage in many new locations and support the proliferation of connected devices and sensors. The third largest segment is projected to be cloud and IT services as it provides a critical building block for digital enablement. The following table breaks down the projections by industry.
John Abel, head of cloud and technology at Oracle UK, Ireland and Israel, added: “Data is now the lifeblood of organisations today, and businesses in the UK and Ireland are increasingly relying on it to move closer their customers and partners in their respective ecosystems. It is vital that companies, large and small, ensure that they have infrastructure in place, and interconnection bandwidth provisioned, that is safe, secure and robust enough to provide them with access to all of their data sources and allow them to use this information to inform their decisions and drive their businesses forward in a digital world.”
“Enterprise connectivity is undergoing a major transformation as applications and data move to the cloud, and hybrid environments in which on-premise and cloud presences co-exist, are becoming the norm. Such environments drive the need for significant high bandwidth interconnection not just between enterprise locations, but also to the cloud service providers and hybrid colocation presences that are geographically dispersed but are vital in driving application performance and ultimately, user experience,” said Rajiv Datta, CTO at Colt Technology Services.
Further information, such as enterprise and service provider use cases and firmographics, can be found in the Global Interconnection Index.