Telecommunication providers have been supporting global communication growth for decades and it would seem safe to assume this industry has reached a point of maturation. Today, we are finding that key macro trends driving the global digital economy are transforming the Telecom industry faster than ever before due to the market demands for more agile, robust and scalable connectivity solutions from its providers. The second annual Global Interconnection Index (the GXI), a market study published by Equinix, forecasts that Telecom will become the largest user of Interconnection Bandwidth by 2021. This reflects the industry sector’s pivot to evolve platforms to enable digital business, support cybersecurity and provide new interconnected services while implementing 100G capabilities into its platform. Let’s explore where this growth is being seen, the trends behind it, and how private Interconnection is enabling Telecom providers to deliver complete end-to-end communication solutions and address new demands from customers and technologies (5G, SDN, NFV, etc.).
The recently released GXI projects dramatic growth of global Interconnection Bandwidth ꟷ the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points inside carrier-neutral colocation centers. Thanks to continuing trends in global digital business transformation, urbanization, data security, compliance and critical business ecosystem interactions, the GXI estimates that installed Interconnection Bandwidth worldwide could reach 8,200+ terabits per second (Tbps) by 2021, a five-fold increase over five years, with double-digit growth across all industries.
Telecom leads the world in interconnection growth
The Telecommunications sector is estimated to become the greatest consumer of global Interconnection Bandwidth, holding a 21% share by 2021, according to the GXI, with a whopping 1,756 Tbps of capacity, at a 36% compound annual growth rate (CAGR).
Regional Interconnection Bandwidth growth predictions place the U.S. telecom industry in first place, mainly due to the industry’s upgrade to faster, more cost-effective 100G links, with 801 Tbps capacity at 37% CAGR over the next five years due to the presence of U.S.-based Telecom gorillas such as Verizon and AT&T. Asia Pacific comes in next at 470 Tbps with a 41 % CAGR, thanks to a large mobile consumer base. Europe (430 Tbps) and Latin America (56 Tbps) are relatively maturing markets with an 32% CAGR by 2021.
Trends accelerating Telecom’s consumption of Interconnection Bandwidth and driving overall growth
A number of digital platforms, such as SDN, NFV, 5G, subsea cabling and cloud, are converging in the overall networking industry to drive Interconnection Bandwidth growth. Many of these technologies reflect innovative solutions that were created to meet the requirements that have emerged from macros trends that are impacting every company in every industry.
For any company to succeed as a digital business, it’s network infrastructure needs to be as agile and flexible as the digital services and technologies (e.g., cloud) it supports. Software-defined networking (SDN) and network functions virtualization (NFV) technologies will be critical to deliver the flexibility and dynamic provisioning needed for the coming explosion in high-bandwidth applications over high-speed 5G networks. Together with artificial intelligence, NSPs will be able to automate and optimize bandwidth usage on a granular level of the network. In addition, NFV is a great way for NSPs to reduce both CAPEX and OPEX and reduce complexity, while improving flexibility and ease of adding new services. Equinix Cloud Exchange Fabric™ (ECX Fabric™) provides NSPs much needed network aggregation capabilities so they can offer cloud service providers and enterprises greater performance and scalability when interconnecting to networks and clouds, with higher levels of efficiency and less cost. ECX Fabric leverages SDN to interconnect enterprise and NSP IT infrastructures dynamically across global metros and provide access to thousands of network and cloud service providers and ecosystem partners, again with higher performance and less cost.
5G is the big Telecom promise to support the many requirements created by greater urban density using high capacity per connection and large numbers of simultaneous connections with ultra-low latency. 5G applications require direct and secure Interconnection for several reasons. Specifically, the actual 5G link sits at the end of a long chain of networks that must perform reliably for latency-sensitive applications to deliver a satisfying customer experience. Accordingly, in many cases NSPs must re-architect their network infrastructure along this chain to support 5G application providers that depend on secure, high-speed low-latency interconnectivity with partners and customers. 5G will enable applications such as ultra-high-definition video content streaming (4K/8K resolutions) from the Over-the-Top providers’ end of the chain, such as Amazon, Apple, Netflix and Hulu. 5G is also expected to boost IoT, VR, AR, autonomous driving, and AI applications and technologies. Private, Interconnection between Telecom providers and cloud services and (multiple) vertical industry partners is critical to offering these dynamic, real-time applications.
Cybersecurity and Data Compliance
To ensure greater cybersecurity and data compliance for their customers, Telecom providers must also leverage NFV—software-based virtual network services running on industry-standard platforms—to provision the routing, firewall, intrusion detection, load balancing, WAN acceleration and countless other network services needed to deliver applications dynamically in an interconnected environment. ECX Fabric’s global infrastructure, coupled with software-defined Interconnection, enables businesses to securely route traffic between cloud environments and extend their reach to new markets worldwide without impacting CAPEX or deployment times.
Together, Cloud and Telecom providers are going to be the linchpins for enabling business ecosystem collaboration, driving greater growth of Interconnection Bandwidth between these critical service providers and their customers. The Cloud and IT Provider ecosystem is expected to have the highest interconnection growth rate by 2021 at 98% CAGR, according to the GXI, as enterprises increasingly leverage hybrid/multicloud architectures for greater scale and agility. Network providers will continue to lead as the ecosystem with the greatest Interconnection Bandwidth capacity at 1,327 Tbps by 2021, as companies in all vertical markets optimize their network topologies for digital business.
Subsea cabling deployment has exploded over the past five years and will continue apace over the next five, with cloud, data center and network providers competing to provide high-performance services for the global, cloud-enabled enterprise. Cloud providers are some of the biggest investors in this category as demand for their services increases worldwide. Content companies are also increasingly dependent on Interconnection, subsea cabling and the cloud to deliver content where, when and to whom it’s needed in an omnichannel fashion.
Multiple subsea providers have partnered with Equinix worldwide to build their landing stations at Equinix. This helps subsea cable providers gain proximate Interconnection with network and cloud providers and enterprise customers to deliver the low latency and high performance users expect.
Where Interconnection is powering Telecom today
Telecom providers seeking the low latency and security required for emerging 5G applications to flourish will benefit from strategically-placed, metro-based interconnection control points at the edge, close to mobile customers, IoT deployments and other data sources. Trying to get out from under the increasing overhead of owning their own data centers, many NSPs are leveraging carrier-neutral colocation facilities with virtual points of presence that can expand their regional or global reach, such as with Equinix.
Direct data exchange becomes possible when network providers, cloud service providers and industry partners interconnect across control points in strategic metro locations. This is what Equinix provides for all its enterprise and service provider customers on Platform Equinix.
For example, British mobile network operator and internet service provider EE (now part of British Telecom) chose Equinix to enable its massive, high-speed 4G rollout. “We needed a data center provider that could work at our pace,” says Matt Stagg, Director of Mobile Strategy at BT Sport. “Equinix has the relationships with the CDNs, transit providers and content generators we needed to access. It’s very important for us to connect with our top 20 content providers either via the London Internet Exchange or direct peering. Equinix had that connectivity and flexibility to support our growth.”
Mobile handset software provider Seven Networks leveraged an Equinix IBX to interconnect directly with mobile operators, major ISPs, mobile applications and social networks to deliver a real-time mobile experience for handset and carrier customers. “Scaling efficiently is critical to our future success,” says David Ratner COO, Seven Networks. “With Equinix, we get high-grade connectivity at attractive prices. Cross connecting saves us money, enables better security by requiring fewer network hops, and empowers us to be better internet citizens by sending private traffic instead of using public bandwidth.”
Submarine cable system provider Seaborn Networks pioneered the carrier-neutral, “pay-as-you-grow” business model. Seaborn’s new Seabras-1 cable is the first direct point of presence
(POP) cable route between U.S. and Brazilian commercial and financial centers, and it
terminates within Equinix International Business Exchange™ (IBX®) data centers in the
interconnection-dense New York and São Paulo markets. “We wanted to reach the most customers possible and open up new opportunities for them and our business anywhere we wanted to go.
Equinix was the clear choice,” says Andy Bax, COO, Seaborn Networks.
Telecommunications Interconnection Bandwidth growth, as projected by the GXI, is being driven by a set of global macro trends that are creating the demand from today’s businesses for new digital technologies that require direct and secure Interconnection to perform. Telcom and Cloud providers are partnering more and leveraging private Interconnection to meet the growing demands of the global digital economy for their customers.
Download the Global Interconnection Index for more information on internet trends by region, vertical market and ecosystem partners.
You may also want to check out the Digital Edge Playbook for Network Service Providers and the Network Blueprint in IOA Knowledge Base for real-world interconnection best practices for NSPs.