Emerging market dynamics across multiple industries and the rising adoption of digital technologies in business are escalating Latin America’s adoption of Interconnection, the direct and private traffic exchange between businesses. The financial services industry in particular is centered in Brazil’s vital metro São Paulo, making it the largest financial hub in Latin America (LATAM). And the convergence of submarine cable systems, such as Monet and Globenet, makes Brazil a growth hot spot for telecommunications and hyperscale cloud providers such as Microsoft Azure, AWS and Google.
The second annual Global Interconnection Index (GXI) analyzes global Interconnection and estimates that, by 2021, the LATAM region will contribute 9% of the global installed Interconnection Bandwidth-the total capacity provisioned to privately and directly exchange traffic with a diverse set of participants at distributed IT exchange points. That may be the smallest share of Interconnection Bandwidth capacity at 750+ Terabits per second (Tbps), but LATAM is projected to be the fastest growing region in the world for Interconnection at 59% compound annual growth rate (CAGR) between 2017 and 2021.
GLOBAL INTERCONNECTION BANDWIDTH GROWTH BY REGION (Tbps)
Strong industry growth in Interconnection
Nine out of the 11 industries represented in the GXI report are growing at a greater than 60% CAGR. The three strongest industry sectors estimated to consume the most Interconnection Bandwidth capacity by 2021 will be:
- Content & Digital Media (267 Tbps), which represents 35% of the total LATAM Interconnection Bandwidth consumption
- Cloud & IT Services (135 Tbps), signifying the laser focus in Enterprise cloud adoption
- Banking & Insurance (109 Tbps), the most established of all the industries in LATAM
A focus on Interconnection to service provider ecosystems
According to the GXI, Enterprise Interconnection is expected to grow by 71% CAGR. However, it will represent only 39% of the total Interconnection traffic in LATAM. The largest share (71%) of LATAM Interconnection Bandwidth capacity is being driven by Network Service Providers working to enable greater Interconnection to North American and other global markets. Interconnection to Cloud & IT Providers makes up the second largest segment (116 Tbps) with an aggressive 109% CAGR, representing greater demand for more scalable and agile cloud-based services from growing LATAM businesses, both from companies deploying multicloud on-premises IT infrastructures and within colocation providers, such as Equinix.
Urbanization is driving metro Interconnection
A macro trend that is taking the world by storm is urbanization. This is being played out in LATAM metros in a big way, where the GXI predicts that 90% of all of the region’s Interconnection traffic will come from four cities:São Paulo, Rio de Janeiro, Buenos Aires and Mexico City. This represents the fastest growth in Bandwidth Interconnection from any region in the world at 61% CAGR through 2021. São Paulo and Rio de Janeiro are both expected to grow sevenfold over the next four years.
Interconnection is driving digital business deployments throughout LATAM
A number of our customers at Equinix are leveraging Interconnection to scale their capabilities, improve performance and integrate digital technologies, such as hybrid cloud, to meet growing market and customer demands. Here is how a service provider and an enterprise in Brazil are accelerating as digital businesses via private Interconnection:
Amistad Networks provides voice communication, data and network security solutions, and is a reseller for Mitel Networks in Brazil. Before migrating to the Equinix International Business Exchange™ (IBX®) data center in Tamboré, São Paulo, the company kept its IT infrastructure in-house, which, according to Celso Silveira, CEO of Amistad Networks, “Limited us considerably since it was difficult to expand, in addition to making us totally dependent on the telecom network operators that could reach us.” The company wanted to expand its operations within Brazil and reach 6,000 active telephone branch lines. Once inside Equinix, Amistad Networks leveraged its colocation services and direct and secure interconnections with telephone network operators.
“At Equinix, we provide high availability, more security, scalability and direct access to all network operators in the country. This allows us to rapidly expand and reach new regions in Brazil,” said Silveira.
Ingresso Rápido provides ticket sales and distribution, box office management, and the dissemination of cultural, sports and entertainment events throughout Brazil. Event ticket sales have seasonal spikes, causing ticket demands to grow exponentially in a very brief period, so the company could not afford to experience latency issues and poor performance during these peak times. To increase its sales capacity and optimize its performance to its customers, it deployed a hybrid cloud environment by interconnecting its private cloud to Microsoft Azure via Azure ExpressRoute and Equinix Cloud Exchange Fabric™ on Platform Equinix. Before turning to Equinix, the company connected to its cloud provider through the internet, which generated a latency of around 50 milliseconds (ms). With direct connection via Express Route and ECX Fabric, the latency was reduced to 3 ms, a 94% performance improvement. The direct connection to Azure also helped reduce internet bandwidth costs. Through hosting its IT infrastructure on Platform Equinix, Ingresso Rápido increased simultaneous ticket sales capacity from 500 tickets per second to 6,000 tickets per second.
Said José Carlos Brabo, IT Operations Manager at Ingresso Rápido, “Our portal and e-commerce structures, both online, are in the public cloud, and the direct connection to Azure assures us more data processing speed and stability in sales, which helps to increase our simultaneous sales capacity.”
Latin America is a thriving region with new and exciting possibilities for businesses in the region and around the world. Learn more about how Interconnection is making this vibrant region accelerate digital business by reading the GXI Vol. 2 report.