Why Interconnection Is Booming in the U.S.

Karl Strohmeyer

The concept of an “Intergalactic Network” connecting people, programs and data globally sounded like science fiction when MIT researcher J.C.R. Licklider introduced it in 1962. But in that same year, when Licklider was made head of the computer research program at the federal government’s Advanced Research Projects Agency (ARPA), the seeds for the global internet and, subsequently, the world wide web, were planted.

As the birthplace of the internet, it is no surprise that the United States (U.S.) leads the world in Interconnection, which enables the direct, private traffic exchange between businesses. You can see how this is playing out today with Interconnection hubs like our Ashburn campus in Northern Virginia that hosts the country’s largest concentration of network participants and is rapidly becoming a hotbed for most of the world’s internet traffic.


Our recently published market study, the “Global Interconnection Index,” projects that the U.S. is expected to grow 40% per annum to reach 1,795 terabits per second (Tbps) of installed Interconnection Bandwidth capacity by 2020, contributing more than a third of the 5,000 Tbps of Interconnection Bandwidth capacity globally (see diagram below).

The macro-demand trends in the industry, use case and geographic segments that are projected to fuel this accelerated Interconnection growth within the U.S. include:

  • Vertical Industries: Banking and insurance is expected to be the largest industry segment driving Interconnection growth in the U.S., accounting for approximately 22% of the overall market by 2020, overtaking telecommunications and cloud and IT services.
  • Enterprise and Service Provider Use Cases: Today, service providers in the U.S. are estimated to account for 57% of the total Interconnection Bandwidth capacity. However, by 2020 enterprises are expected to take the lead in Interconnection growth, accounting for an estimated 55%. The majority of enterprises’ Interconnection Bandwidth demands are projected to be driven by interconnecting to network, cloud and IT providers, and financial services partners. Meanwhile, service providers are projected to be interconnecting most frequently to network cloud, IT and content providers.
  • U.S. Metros: Four of America’s largest metros – New York, Chicago, Washington, D.C., and Silicon Valley – currently make up more than 70% of the total market in North America, and they are expected to grow around 40% annually until 2020.

In addition to these macro trends, we see various micro-demand trends driving U.S. Interconnection growth, including:

  • Increasing numbers of overseas service providers and content companies deploying in the U.S.
  • More joint solutions available to regional enterprise buyers from colocation providers, such as Equinix, and their channel partners
  • More colocation reseller deals being generated by U.S.-based service providers
  • Growth among smaller regional network service providers
  • Rising government demand for multicloud

Equinix customers Aon, Lincoln Financial, Devon Energy and Smithfield Foods are U.S.-based enterprises in the insurance, financial services, energy and food production industries that have expanded their global digital business footprint by leveraging greater Interconnection within Equinix global data centers. They discuss their bold moves to accelerate digital business transformation through Interconnection with our CMO Sara Baack in this blog article about what they’ve learned along the way. You can read and hear their stories by going to How Aon, Lincoln Financial, Devon Energy and Smithfield Foods Do Digital.

What does all this mean to your business?

These new insights into the projected Interconnection Bandwidth capacity demands of U.S. businesses can help enterprises and service providers map out their Interconnection strategies in target industries, use cases and geographies. For example, if your business is wondering about tapping into more urban areas or a specific vertical market, then you can see from the demand for Interconnection what metros and markets are going to be high-growth opportunities for your business. This is important, because as your global reach and digital business expand through Interconnection, so do the opportunities that your business can capture.

To learn more about how Interconnection can help your company grow either regionally or globally, check out the Global Interconnection Index.