Equinix reveals despite Brexit, London is projected to show strong digital growth

Russell Poole
- Leadership - Nov 09, 2018

Equinix recently published the second volume of its Global Interconnection Index (GXI) – the industry’s annual analysis of global traffic exchange that tracks, measures and forecasts growth in interconnection bandwidth. This bandwidth is the total capacity provisioned to privately and directly exchange traffic with a diverse set of participants at distributed IT exchange points, allowing businesses to exchange data away from the public internet. It is the fuel for business-critical interactions and a powerful barometer for how companies are leveraging interconnection to grow, scale and ultimately succeed as digital businesses.

This year’s GXI forecasts global installed interconnection bandwidth capacity will grow to 8,200+ Terabits per second (Tbps) by 2021. This is a five-fold increase, compared to last year’s GXI forecast, with double-digit growth across all industries. To quantify the volume of data 8,200+ Tbps of interconnection bandwidth capacity can move, it is the equivalent of 33 Zettabytes (ZB) of data exchange per year, which is 10X more than the public internet – this could, in one minute, concurrently process 3bn PayPal transactions, 7.4m Uber driver streams, 30.8bn emails with attachments, 1.5m corporate training videos, 1.4bn UCC calls, 1.4bn document uploads and 57.6m pre-production 4k video streams.

What is driving this global growth of interconnection bandwidth?

Industry trends such as the rapidly increasing digitisation of businesses and the proliferation of IoT devices, are just one factor. According to IDC FutureScape: Worldwide IT Industry 2018 Predictions, by 2021 at least 50% of global GDP will be digitised, with growth in every industry driven by digitally enhanced offerings, operations and relationships. Modern customer demand forces the need to support real-time digital interactions to capture the true value of data, enabling a company to enhance customer services and offerings. This setup requires the interconnection of people, things, locations, clouds and data, all of which enable a digital-ready infrastructure for today’s businesses. These include vital elements for digital businesses such as network optimisation and distributed security and data.

Urbanisation is another industry trend driving the global growth of interconnection bandwidth. Every year, 65 million people are added to the world’s urban population. This is the equivalent of adding seven cities the size of Rome, creating as many as 50 urban metro hubs by 2030 (Ten Questions with Global Strategist Parag Khanna, Georgetown Magazine, 2018.) This urbanisation is transforming global demographics and demand origins, creating a proximity need for digital services. Supporting urban density requires the interconnection of applications, data, content and networking in locations where there is a concentration of users. Digital technologies, enabled by interconnection, will have the potential to help cities run better, improve public services, and enrich the safety and quality of life of people living in urban areas.

The GXI not only explores the trends that are driving this rapid growth, but also investigates growth by category, including region, industry and ecosystem. In doing so, the GXI offers insights that can help to drive digital business advantage.

Below are some of the key trends from this year’s GXI, that businesses should be aware of:

Europe’s interconnection bandwidth growing rapidly

This year’s GXI reveals that Europe’s interconnection bandwidth is growing fast, at a 48% compound annual growth rate (CAGR). In fact, Europe is expected to contribute to 23% of interconnection bandwidth globally by 2021. Across Europe, interconnection bandwidth in London, Frankfurt, Amsterdam and Paris is demonstrating strong growth, with those markets expected to outgrow other European markets by at least 10% CAGR. Frankfurt and Amsterdam are both projected to outpace London in terms of growth with London predicted to see a 52% CAGR, Frankfurt 58% and Amsterdam 57%. Indeed, Frankfurt is showing the fastest growth rate in the world.

Despite Brexit, London shows strong digital growth

In spite of Brexit and the resulting political uncertainty in the UK, London is still projected to show strong growth, accounting for more than 35% of Europe’s interconnection bandwidth growth. In a separate independent study commissioned by Equinix in August 2018, and answered by 133 senior IT professionals across the UK, 64% of respondents believe that despite Brexit, due to the flourishing data centre industry in the UK, it is still the best place in Europe to Interconnect with partners, customers, supply chain and cloud service providers. And over half (51%) of the senior IT leaders surveyed cite interconnection as being key to their business’s survival – showing how critical London’s lead is to the UK’s post-Brexit competitiveness. That is why we are continuing to invest in the digital infrastructure of the UK. We already have 12 international business exchange sites across the country, with more to come!

Asia’s interconnection bandwidth to overtake Europe’s

Europe is projected to lose its second place spot in the global growth of interconnection bandwidth, behind America, to Asia. Asia is not only projected to overtake Europe, contributing to 27% of global interconnection bandwidth, but will grow at a faster rate of 51% CAGR. Asia is benefitting from rapid urbanisation, which is fuelling this growth of interconnection bandwidth. It is predicted to see significant industry growth in its energy and utility sector, as well as in its banking and insurance sector, and these industries will help to drive its interconnection bandwidth growth. Within Asia, Tokyo will boast the highest volume of interconnection bandwidth, at 445 Tbps, and with a projected growth rate of 53%. Hong Kong meanwhile is expected to grow quickest, with a 55% CAGR by 2021.

America remains the global leader

America still holds the top spot globally and is projected to have the largest capacity worldwide, contributing to more than 40% of global interconnection bandwidth by 2021. As early adopters of digital business, the U.S has traditionally led interconnection adoption. Looking ahead, it is expected to have a relatively consistent mid-40% growth each year through 2021, despite its maturity. This is being driven by its telecommunications industry, which is expected to remain the largest industry for interconnection bandwidth, representing 24% of the market. Of all the American cities, New York has the highest interconnection bandwidth volume, with 878 Tbps, while Chicago shows the fastest growth with 52% CAGR.

Latin America meanwhile is on track to be the fastest growing market, with a CAGR of 59%. Sao Paulo has both the highest volume and strongest growth projections for the region, with 331 Tbps of interconnection bandwidth and 64% CAGR.

Telecommunications remains Europe’s largest industry segment

In Europe, like the U.S., telecommunications is expected to remain the largest industry segment growing at a 32% CAGR, followed by the Cloud and IT Services, with these two industries composing 38%+ of total bandwidth. The wholesale and retail trade sectors are expected to have the fastest growing interconnection bandwidth in Europe (75% CAGR) thanks to shifts such as the e-commerce boom. The securities and trading sectors, along with healthcare and life sciences, will have the joint second fastest growing (69% CAGR). Both the business and professional services industries, and banking and insurance industries, are projected to grow rapidly, with 65% and 66% CAGR of interconnection bandwidth respectively.

Interconnection is key to business survival

Equinix’s study of 133 senior IT professionals in the UK, reveals that over three quarters (77%) of respondents believe that as the public internet becomes more saturated, interconnection is key to digital business success. Interconnection is about security, scale and performance in a rapidly evolving digital world. It’s about the future, and the trends driving interconnection demand are enduring – the continued proliferation of the IoT being just one example of that. They reflect fundamental changes in the way business is being done in the digital age, and Equinix’s GXI Vol. 2 helps to illuminate the new digital business landscape, that provides businesses with the tools they need to embrace a competitive edge.

You can read Equinix’s GXI Vol. 2 here.

Russell Poole is the Managing Director UK at global interconnection and data centre company Equinix.

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