What Is Interconnection?

What companies need to know about interconnection to succeed at digital business

Jim Poole
What Is Interconnection?

Editor’s Note: This blog was originally published in July 2017. It has been updated to include the latest information. 

While Equinix is perhaps best known for running 240+ data centers worldwide, our core business is interconnection. It’s been that way since we were founded in 1998 to provide a vendor-neutral meeting place where network and internet service providers could connect as they built the early internet. Our data centers are where we deliver that interconnection globally.

But exactly what do we mean by interconnection, and why does it matter?

Interconnection is the private exchange of data between businesses. More specifically, it’s the deployment of IT traffic exchange points that integrate direct, private connections between counterparties. Interconnection is best achieved in carrier-neutral data center campuses, where distributed IT components are colocated. In an age when reams of information race around the world with the click of a finger and massive transactions routinely occur several times faster than the blink of an eye, interconnection powers digital business.

Interconnection is much more than successfully connecting Point A to Point B. Telephone wires pulled off that kind of simple connectivity ages ago. Today’s enterprise-grade interconnection has some key characteristics that can help take digital business to the next level:

  • Digital ecosystem density
  • Proximity
  • Direct connectivity
  • Global reach

Digital ecosystem density spurs interconnection growth

The prefix “inter” offers a clue about what makes interconnection different from standard connectivity, because it can mean “among.” So “inter”-connection speaks of a connectivity that involves several parties at once. Interconnection links numerous discrete entities and makes them not only capable of uniting with each other in digital ecosystems, but also of connecting as a unit with other individual entities, ecosystems and groups of ecosystems.

This is the many-to-many connectivity that’s required in this interconnected era, when companies create value by connecting to partners, customers and employees globally to collaborate or exchange data. These entities must be able to connect instantly and simultaneously over a variety of devices and through various sources to execute the ultra-fast transactions essential to business today.

Proximity helps interconnected partners overcome latency

Bringing together the interconnected world’s players (including cloud providers, data, companies, digital ecosystems and individuals) is just one hallmark of interconnection. These interconnected parties must also be as close to each other as possible. Distance creates latency, and shrinking the distance between counterparties is the only way to minimize it and offer the greatest user experience possible. In addition, closer connections (via cross connects or exchange ports) are typically far less expensive than connections over long-haul networks.

Direct connectivity is faster and more reliable

Direct connections that do not need to traverse the public internet are another key characteristic of interconnection. Direct, private, one-to-one or one-to-many connections are the fastest connections. They not only deliver the best performance, they’re also the most secure. That’s hugely important in a time of expanding digital borders, and expanding vulnerabilities.

A technical benchmark from Equinix, performed in collaboration with Oracle, found that interconnection offers up to 28x greater performance than the public internet.

Globally distributed exchange points help reach end users

Finally, companies, clouds and digital communities need a place to gather to be close enough to each other to make their myriad direct connections. These places must be close to dense population centers, or high latency will degrade the user experience. In the global digital economy, interconnection must happen at distributed exchange points like the carrier-neutral colocation campuses Equinix operates. The alternative is backhauling traffic to a central data center, which is costly and can’t provide the connectivity that users demand.

The graphic below shows the shift from centralized infrastructure with constrained point-to-point connectivity to globally distributed traffic exchange points with multipoint connectivity. At Equinix, we call this approach Interconnection Oriented Architecture® (IOA®).

In our hyperconnected world, interconnection isn’t optional. As digital transformation continues to accelerate, businesses must be interconnected in order to compete and grow in the digital economy.

What’s next: Staying ahead of interconnection bandwidth

If interconnection is critical to digital business, how can the enterprise know where it stands today and where to go next? That’s where a metric called interconnection bandwidth is essential.

While traditional bandwidth measures how much data can be transferred over a given network, interconnection bandwidth shows how ready an industry or region is to maximize interconnection. Specifically, interconnection bandwidth measures the capacity to transfer traffic via direct, private interconnections at traffic exchange points hosted inside carrier-neutral colocation data centers.

Companies can determine existing interconnection bandwidth requirements by measuring installed data center capacity and connections. Then, by looking at the projected growth of interconnection bandwidth by company size, regional footprint, use cases or vertical industries, they can pinpoint how much interconnection bandwidth they will need to successfully compete in the digital economy.

The ability to proactively assess and apply interconnection bandwidth will become increasingly important as enterprises and service providers create new strategies to grow and expand their digital business capabilities and results. The Global Interconnection Index (GXI), a market study published by Equinix, aims to measure interconnection bandwidth growth and examine the ecosystem density driving it across regions and industry verticals. The latest edition of the GXI forecasts that interconnection bandwidth will grow at a five-year compound annual growth rate (CAGR) of 35%.

The GXI also predicts that 85% of global companies will expand multicloud access across several regions by 2025. Interconnection can help enterprises optimize their multicloud strategies to get best-of-breed services, lower costs and greater resiliency across their distributed operations, all without getting overwhelmed by the complexity of hybrid multicloud networking.

Read the 2023 GXI report for a closer look at how companies are using interconnection to exchange more data with ecosystem partners, thus supporting their digital transformation strategies.


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