3 Trends Driving Latin America Down the Digital Fast Track

Global Interconnection Index expects LATAM to be the world’s fastest growing Interconnection market

Latin America (LATAM) is on the digital fast track. By the end of 2018, there were 82 million broadband customers, up from 78 million a year earlieri, and a recent survey of online habits ranked Brazil and Colombia among the top 5 countries in the world in terms of “screen time.”ii The same phenomenon that has swept the rest of the world – scores of people staring at their screens anywhere you go – is now sweeping across LATAM.

Content and cloud service providers are racing to keep up. Major players like Netflixiii, Amazon, Google and Apple are investing in the regioniv to better meet the surging demand and that includes IT investments. Anahí Rebatta, Latin America specialist with TeleGeography noted in an interview that “the presence of content providers is becoming more noticeable, not only because they’ve been deploying long-haul capacity throughout the region, but also because they are investing in new infrastructure.”v Examples like Google investing in the Curie and Monet subsea cables and Amazon Web Services expanding its AWS Direct Connect offering in LATAM appear to support this trend.

The majority of LATAM traffic flows through Miami, but that’s beginning to change for some applications that are latency sensitive. In these cases, companies are looking for ways to keep the local traffic from traveling long distances via peering exchanges. Network operators deployed an additional 32% capacity in intra-regional connectivity between 2017 and 2018, and ten new systems valued at nearly $1 billion are slated to launch in the region by 2020.i According to the second annual Global Interconnection Index (the GXI), Latin America will be the fastest growing region for Interconnection Bandwidth, with a projected 59% CAGR from 2017 to 2021, reaching 755 terabits (Tbps) by 2021.

Source: The GXI, Volume 2 published by Equinix

The GXI, a market study published annually by Equinix, delivers insights that drive digital business advantage by tracking, measuring and forecasting growth in Interconnection Bandwidth – the total capacity provisioned to privately and directly exchanged traffic with a diverse set of counterparties and providers at distributed IT exchange points inside carrier-neutral colocation centers. By 2021, the GXI Volume 2 estimates that installed Interconnection Bandwidth worldwide could reach 8,200+ terabits per second (Tbps), a fivefold increase over five years, with double-digit growth across all industries.

Trends driving Interconnection growth in LATAM

What is driving the rapid Interconnection growth in LATAM? Here are a few of the trends:

1. Network Optimization: Businesses can solve latency issues by localizing traffic in the hubs, which shortens the distance between users and services. Submarine cable company, Seaborn Networks develops and operates a carrier-neutral, “pay-as-you-grow” business model. By partnering with Equinix for their Seabras-1 cable route between Brazil and the U.S., Seaborn was able to land in dense enterprise and service provider hubs where it could provide the highest-speed, lowest-latency route to critical partners in the U.S. and Latin America for their customers. Locating in São Paulo and New York with Equinix also helped Seaborn better meet its goal of offering easy access to its subsea cable route because Equinix runs multiple interconnected data centers in each metro. That gave Seaborn’s customers the convenience of several places where they could connect to Seabras-1.

“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.”

– Andy Bax, Chief Operating Officer, Seaborn Networks

2. Digital Content: Thedemand for digital content continues to rise, particularly digital video on new consumption and over the top (OTT) platforms, which is also driving demand for network optimization to solve for latency issues. As content and service providers continue to invest in infrastructure to meet the surging demand in LATAM, video traffic will only increase. Scaling to meet these increased demands will mean getting closer to users and partner ecosystems to guarantee superior content production and delivery. LATAM is one of the fastest growing regions in the world for the Content and Digital Media sector in terms of projected installed Interconnection Bandwidth capacity. Expected to grow to 267 Tbps by 2021, at a 63% CAGR, it is the also largest industry segment in LATAM. That’s why content providers such as Netflix are turning to private direct Interconnection across their ecosystems to ensure a seamless streaming experience.

“With Equinix, we can operate in close proximity to many of our top network service provider partners, with access to a platform that ensures the most streamlined path between our content and our end users.”

VP of IT Operations, Netflixii

Movile is a leading mobile content and ecommerce developer in LATAM with exclusive mobile apps such as iFood, PlayKids, MapLink and more. In partnership with approximately 70 carriers, the company provides services to over 700 million customers on their mobile devices. A thriving mobile content market means that the end user experience is key to the company’s success. Low-latency and high availability, even during peak service times, are paramount to delivering the best user experience possible. Working with Equinix, Movile re-architected their digital edge for growth by implementing a hybrid cloud architecture based on AWS Direct Connect that established a private and secure network connection. The result was that they trimmed latency by 70% – from 12 ms to 5 ms – and realized significant cost savings. Their users now have better app loading performance while being in a more stable and secure environment,

“Low-latency is a critical factor to our business’ success. The AWS Direct Connect allowed us to render optimized, secure, and consistent performance to all of our customers.”

VP Flavio Tooru, Movile’s Infrastructure Manager

3. Hybrid Multicloud: Digital business requires real-time interactions between people, things, locations, clouds and data to increase value capture. To achieve this, many enterprises are turning to “as-a-service” solutions across multiple cloud providers to seamlessly and quickly move workloads between clouds, platforms, partners and providers across the globe. Recognizing this as a growth opportunity, Brazilian telecommunications company, Equinix customer, Megatelecom Telecomunicações S/Aexpanded its service portfolio by adding other Equinix solutions to its environment, including Equinix Cloud Exchange Fabric™ (ECX Fabric™). ECX Fabric enables Megatelecom to render secure, private and virtual connections for their customers to a number of global cloud providers through a self-serve portal or APIs. By building a digital edge alongside the largest industry ecosystems on Platform Equinix®, Megatelecom has realized a 50% increase in revenue.

“Nowadays, relying on Equinix’s structure is key to being able to operate within the market’s current configuration. Around 70% of Megatelecom customers located in Sao Paulo are assigned to Equinix.”

Carlos Eduardo Sedeh, CEO, Megatelecom Telecomunicações

Latin America is poised to take off as a major hub in the digital economy, opening the door for myriad growth opportunities for businesses. To learn more about Interconnection growth trends by region, vertical markets and vital ecosystem partners, download the Global Interconnection Index (also available in Spanish).

 [i] TeleGeography, Latin America Telecommunications Map 2019.

[ii] Hootsuite, The Global State of Digital in 2019 Report as cited in Banyan Hill, The Internet’s About to Explode in Latin America, Feb 2019.

[iii] Media Play News, Report: Netflix Driving Latin America SVOD Growth, April 2019.

[iv] Banyan Hill, Latin America’s Internet Growth Will Mint Millionaires, Mar 2019.

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