Latin America’s Interconnection Growth Leads the World at 50% CAGR

Global Interconnection Index Volume 4 predicts increases in data traffic exchange throughout the region

Wellington Lordelo
Gustavo Garcia

Increased demand in edge services, content and last-mile connectivity to transport growing volumes of data is driving the growth of interconnection bandwidth capacity in Latin America (LATAM) businesses. This is according to the fourth annual volume of the Global Interconnection Index (GXI), a market study published by Equinix. The GXI Vol. 4 tracks, measures and forecasts the growth of interconnection bandwidth[i]. It also reveals how digital leaders are harnessing interconnection — the direct and private traffic exchange between key business partners — to build and interconnect digital infrastructure that create competitive advantage.

The GXI predicts LATAM will lead the world in installed interconnection bandwidth capacity growth by a 50% compound annual growth rate (CAGR) over five years. It is estimated that LATAM businesses will contribute 1,479 Terabits per second (Tbps), 9% of the world’s interconnection bandwidth by 2023 – a total of 16,300+ Tbps. This growth in LATAM interconnection bandwidth reflects a steady increase in digital transformation as regional and multinational businesses build out digital infrastructure that leverages direct and secure interconnection across the region.

LATAM Interconnection Bandwidth Growth (Tbps) – 2019 – 2023

Percentage of Global Interconnection Bandwidth Capacity

Global Interconnection Index Vol. 4

GXI Vol. 4 tracks shifts in the digital economy and their impacts on digital business. Explore how leaders use their digital infrastructure to fuel growth, where it’s happening and how you can use interconnection to stay competitive.

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50%

LATAM is predicted to lead the world in installed interconnection bandwidth capacity growth by a 50% CAGR over five years.

Global trends and COVID-19 are accelerating digital adoption

Like many of the companies around the world, a series of global trends are creating greater challenges for LATAM organizations as they embrace digital transformation. The convergence of digital business, urbanization, cybersecurity, data volumes/compliance and business ecosystems make placing an interconnection strategy at the center of a business’s digital infrastructure essential to its competitive advantage.

The COVID-19 pandemic has also had its impact on the region. A survey by Americas Market Intelligence and Echo Market Research of over 2,000 consumers in Brazil, Mexico and Colombia in early June 2020 paints a vivid picture of sentiment at the end of a nearly three-month quarantine. According to the survey, “a new (and sudden) reliance on the internet, for just about everything, has Latin Americans curious, anxious, frustrated and excited.”[ii] This is primarily due to the insufficient bandwidth for their internet connectivity. But those limitations are not stopping consumers from shopping online  ̶  according to the survey, LATAM’s e-commerce share of total retail spend grew more in the last three months of the quarantine than the last three years.

This increase in online shopping can be seen in the region’s growth in the Retail & Wholesale interconnection bandwidth growth rate (43%) as well as the associated growth rate in Banking & Insurance (41%) as a result of increased online payments. Larger retail platforms are also coming to the aid of smaller merchants to give them a boost during the pandemic. For example, in Brazil, eBay is allowing merchants to use eBay’s marketplace in Brazil free of charge.[iii]

Service providers are surpassing traditional digital businesses

Similar to the global GXI results, the pandemic is driving higher interconnection growth in LATAM service providers. As the demand increases for edge services, content and last-mile connectivity to transport growing volumes of data, Content & Digital Media (62% CAGR), Cloud & IT Services (51% CAGR) and Telecommunications (50% CAGR) are projected to be the fastest growers of interconnection bandwidth. In fact, did you know the Content & Digital Media industry is expected to pass Banking & Insurance as the third-largest interconnection bandwidth consumer in the region? This is due to the increase in content providers in the region and the high consumption of online entertainment, gaming and sports events by consumers.

In addition, the Malbec 2,500 kilometer submarine cable system, co-owned by GlobeNet and Facebook, has landing points in Argentina and Brazil metros to meet the high-speed access demands in the region to cloud services, streaming content, and other bandwidth-intensive internet of things (IoT) and edge computing applications.[iv] The Malbec subsea cable system provides seamless connectivity between the Southern Cone of South America, Brazil and the United States, doubling the current international capacity to Argentina. This new infrastructure will allow much greater high-speed access to social media content, streaming and cloud services throughout the region.

Did you know the Content & Digital Media industry is expected to pass Banking & Insurance as the third-largest interconnection bandwidth consumer in the region?

New industry leaders are growing their interconnection to digital services

The Healthcare & Life Sciences industry is projected to soar in interconnection bandwidth capacity between 2019 – 2023 with a 60% CAGR. With telemedicine in LATAM on the rise during the pandemic, more providers will need to connect and exchange data between hospitals, patients and insurance companies. And given that telemedicine requires patients to make online payments, there will also be an increase in data exchange between providers and digital payment providers.

Digital leaders are taking the next steps in their digital transformation

The GXI Vol. 4 shows how leaders are deploying, extending and enhancing their digital infrastructure to be prepared for whatever comes next and gives enterprises key insights into the next steps for digital transformation. Some of the LATAM digital leaders on Platform Equinix® include:

  • Megatelecom, a Brazilian telecommunications company that built its digital edge next to the largest industry ecosystems and multiplied its business volume by 10x over three years and increased revenue by 50%.
  • C3NTRO Telecom, a telecom carrier based in Mexico, interconnected its customers to leading cloud providers to run their workloads with the best possible performance. Overall latency was typically reduced by more than 50% as compared to the public internet, and automated, near-real-time provisioning enabled C3NTRO to get its customers up and running faster, with improved security, performance and reliability.

To learn more about how you can benchmark your digital-readiness against today’s digital leaders and increase your business advantage, read the Global Interconnection Index Volume 4.

You may also like to read:

Powering Digital Leaders: Harnessing Your Digital Infrastructure to Gain Business Advantage

 

[i] Interconnection bandwidth is 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] Americas Market Intelligence, “The LATAM COVID Consumer: Worried, Reflective and Going Digital,” July 1, 2020. LATAM COVID Webinar.

[iii] Podium, “Tech in Latin America: An entrepreneur’s guide to May’s startup news,”

[iv] Capacity, “Malbec subsea cable in “final stages” of implementation,” March 13, 2020.

60%

The Healthcare & Life Sciences sector is projected to soar in interconnection bandwidth capacity between 2019 – 2023 with a 60% CAGR.