Home to 60% of the global population, Asia-Pacific (AP) continues to digitize rapidly as large populations gain access to higher bandwidth and enterprises increasingly adopt hybrid multicloud as a digital business enabler. This is driving the need for digital infrastructure and interconnection to support real-time interactions between people, places, things, services and data to gain competitive advantage. The Global Interconnection Index (GXI) Volume 4, a market study published by Equinix, predicts that AP will lead North America and Europe in installed interconnection bandwidth growth with a 47% compound annual growth rate (CAGR) over five years (2019 – 2023). The GXI tracks, measures and forecasts the growth of interconnection bandwidth globally.[i] It also provides an inside view into what’s happening with digital adoption across service providers, enterprises and multiple industries.
By 2023, the predicts that installed interconnection bandwidth worldwide could reach 16,300+ Terabits per second (Tbps), and AP is expected to contribute 27% (4,431Tbps) of that total.
AP PERCENTAGE OF GLOBAL INTERCONNECTION BANDWIDTH BY 2023
AP INTERCONNECTION BANDWIDTH GROWTH (TBPS): 2019-2023
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Global trends + COVID-19 are driving digitization and interconnection in Asia-Pacific
Five macro trends have been creating unforeseen pressures on organizations’ ability to digitally transform according to the GXI. These include rapid growth in digital business, urbanization, cybersecurity risk, data volumes and compliance requirements, and business ecosystems. Collectively, these trends are creating significant challenges with efficiency, scalability and security. To meet these challenges, companies must create a digital foundation that leverages interconnection to accelerate digital transformation.
Seven of the ten most populated cities in the world are in AP[ii], fueling an ever-increasing need for interconnected digital services for citizens and businesses in smart cities. And the sudden arrival of COVID-19 in AP’s large cities brought home the importance of digital to all businesses in the region. Those that were further ahead in adopting the digital infrastructure and interconnection needed for improved agility, scalability and security were better prepared to cope with the unexpected pressures created by the pandemic. And those that lacked a strong digital foundation are accelerating their digital transformation plans and budgets to adapt to new ways of interacting.
Service providers are leading the way in AP interconnection growth, for now
Prior to the COVID-19 pandemic, enterprises were outpacing digital service providers in interconnection bandwidth growth. The reverse is now true as service providers have accelerated their interconnection bandwidth growth to meet massive increase in demand for digital services during the lockdown. The GXI Vol. 4 expects service providers to have a 5x increase in their projected interconnection bandwidth growth over the next four years. However, as traditional markets shift, enterprises are transforming their digital infrastructure to follow service provider best practices, resulting in accelerated growth. By 2023, enterprises are expected to overtake service provider growth rates again, as forecast in prior GXI volumes.
Demand for connectivity is on the rise in AP as companies seek to upgrade IP and virtual private network (VPN) bandwidth to support a huge remote workforce distributed across the region, in addition to rolling out 5G wireless networks. Nine AP markets have launched 5G services and 12 more have announced plans to do so.[iii] This is contributing to the rapid interconnection bandwidth growth in Telecommunications, the fastest growing sector in AP projected at 53% CAGR and surpassing the expected global rate of growth of 50%.
Enterprise demand for private, public and hybrid multicloud, already exhibiting strong growth, is also accelerating during the pandemic. In a recent Equinix survey of 2,500 tech leaders across three regions, over two-thirds (69%) of IT decision-makers in AP said they want to move more IT functions to the cloud in the future. As a result, cloud service providers (CSPs) continue to expand their infrastructure and offerings throughout the region, including partnering with telecoms on subsea cable developments. Given these trends, it’s not surprising that the is accelerating in interconnection bandwidth with a projected 51% CAGR between 2019-2023. By comparison, the global growth rate for Cloud & IT Services is expected to be 48% CAGR over the same time period.
Finally, Content & Digital Media companies providing online entertainment such as gaming and streaming video during the extended lockdown also experienced a significant boost with an anticipated 52% CAGR. For example, both China and Japan recorded a high growth in online gaming downloads after the announcement of each countries’ lockdown measures were made. In the first half of 2020, China hit 25% growth in mobile game downloads and Japan recorded the second-highest growth among the top markets at 40%, after Spain at 65%.[iv]
Other industries in AP are accelerating digital adoption
AP faces unique challenges with respect to managing large, densely populated cities, often in limited land space prone to natural disasters. Providing public sector services such as education, healthcare, utilities, waste management and emergency/disaster response to such large populations can be difficult. And dense urban areas can also produce massive amounts of pollution and waste. That’s why AP governments frequently turn to cloud-based smart city technologies such as smart grids and buildings and intelligent transportation to help solve these hurdles. And, with COVID-19 ushering in additional urgent needs for public/private sector collaboration, digital learning and remote citizen services, Government & Education is currently one of the fastest growing industries for interconnection bandwidth growth at an anticipated 52% CAGR.
Similar to global trends, the pandemic is also having a significant impact on the Healthcare & Life Sciences sector in AP, which forecasts accelerating growth of 48% CAGR. AP will play an important role in the pharmaceutical industry going forward as innovation-friendly markets like Singapore, Korea, Australia, China and Japan are seeing increased investments and partnership activity from global players. Telemedicine is also a key area of focus given the large population in AP, many of which are underserved today, as well as aging trends. By the middle of this century, one in four people in AP will be 60 or older, compared to one in ten today. Interconnection provides the reach, security and privacy needed for care providers to connect, access/share data, collaborate, innovate and drive advanced approaches for value-based remote care.
One sector that was already showing strong growth in the region, Securities & Trading, is forecast to continue on that path with a 48% CAGR. Already on the path to digital maturity, the industry was better equipped to buffer the COVID-19 impact than other sectors that have been slower to adopt. That, combined with an increasing desire to allocate assets outside of domestic markets for growth opportunities, is accelerating digital adoption in the AP Securities & Trading sector.
AP digital leaders are expanding their digital infrastructure via interconnection
- NAVER, a South Korean IT infrastructure and cloud services provider, expanded its global presence, increased revenue and saw a 20-fold jump in average network bandwidth usage with consistent uptime and zero disruption.
- Children’s Cancer Institute in Australia leverages interconnection and a cloud adjacent architecture to collaborate with other researchers on their Zero Childhood Cancer Initiative. A flexible, scalable hybrid multicloud architecture enables the Institute to not only store petabytes of data but to also share it within different environments, regardless of location or cloud provider.
- Spark Systems provides foreign exchange training platforms and processes $600 billion worth of daily transactions in Singapore and Asia. By leveraging Platform Equinix to support its trading platform, the company was able to securely connect to other key locations via ultra-fast connections and improve trading latency from 360 milliseconds to 1 millisecond.
To learn more about how you can benchmark your digital-readiness and design/deploy digital infrastructure to create strategic advantage, read the Global Interconnection Index Volume 4.
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[i] Interconnection bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic, with a diverse set of partners and providers, at distributed IT exchange points inside carrier-neutral colocation data centers.
[ii] World Population Review, World City Populations 2020. As of Sept 2020, these 7 cities were in the top 10 list (Tokyo, Delhi, Shanghai, Dhaka, Mumbai, Beijing, Osaka).