Private data exchange between companies is surpassing the public internet and is expected to reach a growth rate of about twice as fast, reaching a volume about six times higher than global IP traffic by 2020, according to the Global Interconnection Index . The new market survey, compiled by Equinix, globally analyzes the profiles of thousands of participants in colocation ecosystems ( space and data center infrastructure) around the world.
According to the report, the interconnection speed is expected to grow at an annual average growth rate of 45% (CAGR) and reach 5,000 terabits per second (Tbps) by 2020, surpassing the growing global IP traffic ( 24%) and volume (855 Tbps). It is also evolving much faster than Multiprotocol Label Switching traffic, the current business connectivity model, by a factor of 10x (45% x 4%).
According to the Global Interconnection Index, Latin America is expected to reach 626 Tbps of installed capacity, reaching 13% of global interconnection capacity in three years, more than half of the interconnection speed in Asia, which is an extremely populous region.
The region is the one with the lowest interconnection speed, but it is the one that is growing faster than other parts of the world. This is due to the advances made by building better infrastructure (data centers, submarine cables) as well as the political changes that have made the region more business-friendly.
Latin America is expected to be the fastest growing region in terms of interconnection speed, with about 62% CAGR by 2020. Also projected that the utilities and energy sector will lead several if not all followings, growing 21x from 2016 to 2020.
Another projection is that the financial sector (banks and insurance companies) will surpass the high-speed cloud and IT services sector, and will account for 27% of the interconnection speed in Latin America in 2020.
Macroeconomic and technological trends
The Global Interconnection Index also points to the macroeconomic, technological and regulatory trends that are impacting the growth of interconnection. One of them is the use of digital technology, which creates the need to support real-time interactions, which, in turn, requires more interconnection speed. According to Accenture, the use of digital technology is expected to add $ 1.36 trillion.
Another aspect is urbanization , which is transforming global demographics and creating a need for proximity to digital services concentrated in strategic markets around the world. It is estimated that more than 2 billion people migrate to large cities by 2035, creating up to 50 major strategic hubs in urban markets, which will require a dense interconnection network.
The cyber security risks should also expand the use of interconnection to the extent that companies opting for private data exchange, in order to bypass the public Internet and reduce digital threats. By 2020, it is estimated that 60% of digital businesses will have experienced significant service failures as violations spread across digital and physical platforms.
We can also speak of the global trade in services that is digitally provided, which ends up generating demand for interconnection. Global digital workflows require a comprehensive network of strategic interconnected markets to meet demand. Trade services, according to MCKinsey, are digitally provided now comprise 50% of all exports of services on a global scale, with a 9x increase in 2020.
“Some of the biggest technological trends of our time, including mobility, cloud , social and data explosion are producing a real disruption on the scale of a new industrial revolution,” said Sara Baack, Equinix’s marketing director. “Adapting to this new reality has become a necessity, and companies are reaching success by adopting interconnection, locating their IT infrastructure in close proximity to an ecosystem of companies that group together to physically connect their networks to those of your customers and partners. Interconnect helps promote digital transformation by supporting multicloud consumption on the scale, improving network performance and latency, enabling greater operational control and reduced security risks.