The Evolving Networks: Building New Highways to Growth

The network service providers that carry the Internet to all corners of everywhere operate under a contradiction.

On one hand, data traffic on the Internet is so heavy and rapidly expanding that demand for network services has never been greater. On the other, experts project flat to negative revenue growth globally for network service providers (NSPs) over the next few years.

Despite the forecast, at Equinix we see opportunity ahead.

In the first post in our “Evolving Networks” series, we examined the roots of the NSPs’ dilemma. It’s basically a relentless demand for more bandwidth, which the market is requiring NSPs to supply and pay for themselves.

This second post aims to summarize why we think solutions can be found within the more flexible and agile network infrastructures that network providers are being compelled to build to stay competitive.

We’ll start by dusting off that 1990s metaphor for the Internet, “the information superhighway.” Today, the need is so great, that NSPs must build a series of ever-expanding information superhighways. Think of today’s 100 gigabyte network as the equivalent of a 10-lane highway.

NSPs can use software defined networks and network functions virtualization to maximize automation for greater performance on these highways, and to minimize the resources and costs of managing them. But once the highways are running as efficiently as they can, NSPs must figure out ways to make more money. Here’s where Equinix can help.

All sorts of companies are making good money on the highways the NSPs have built, and we don’t think there’s any reason they can’t join the fun. But carriers have to evolve from “network service providers” to, simply, “service providers.” That starts with the NSPs identifying what services they can conceivably offer, and then finding ways to monetize them.

A NSP, for instance, may want to explore selling ways to travel its highway to access multi-clouds more safely and quickly. A platform like the Equinix Cloud Exchange can be a major asset here. The Cloud Exchange enables the enterprise to automatically make direct, virtual connections, on demand, to multiple cloud service providers (CSPs). So it can help a carrier provide its customers with fast, easy and safe access to the combination of CSPs it needs to offer enterprise services, such as application acceleration, disaster recovery or security services.

Here’s another example: Some services are inevitably going to be more popular than others. For those enterprises looking for more secure, private connectivity to public cloud services, NSPs inside Equinix can take advantage of direct connect technology between their networks and public cloud services (e.g., IaaS, PaaS and SaaS) to offer improved delivery of those services.

Or to take it a step further, Equinix can also help NSPs and their partners leverage “hybrid cloud service hubs” that interconnect enterprises to multiple cloud services. Enterprises looking to build hybrid clouds by connecting their private clouds to any number of CSPs (there are more than 450 inside Equinix) can take advantage of a variety of cloud services capabilities and avoid vendor lock-in.

We think the current environment is actually conducive for service growth for NSPs. As the enterprise increasingly shifts IT from their own buildings to the cloud, they’re moving right into the NSP’s terrain. Who else knows the best routes to wherever enterprises are trying to go? Who has better relationships with the partners at all the “exit ramps?” Who has more insight into which cloud services the enterprise could benefit from most and the best possible way to access them?

In short, NSPs are well equipped to find revenue opportunities on their highways because they built them and they know them. And Equinix’s wide selection of partners, broad interconnection capabilities and a sturdy infrastructure that can absorb the increasing power and cooling demands of increased data traffic make us the right data center provider to help capture that value.

Watch Interconnections for a more detailed look at common ways NSPs can expand services to the enterprise.