The Interconnection Factor
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The document outlines the significant growth forecast for global IP traffic, expecting a CAGR of 22% through 2020, driven by factors such as digital technology, cybersecurity needs, and urbanization. It highlights the increase in interconnection bandwidth in Europe, particularly in cities like London and Frankfurt, as businesses shift towards private data exchanges. Additionally, it discusses the declining costs of delivering traffic, including transit and hardware expenses, as well as the expanding interconnection options being offered by Equinix across various markets.
The Interconnection Factor
- 1. Confidential – © 2017 Equinix Inc. Equinix.com 1 The Interconnection Factor Greg Dendy, Sr. Manager, IX Products September 2017
- 2. Confidential – © 2017 Equinix Inc. Equinix.com 2 Demand for capacity to handle IP traffic just keeps growing • Global IP traffic growth is forecast to grow at 22% CAGR through 2020 to 2.3 ZB per annum.* • Growth in peak traffic is increasing faster than average traffic peak traffic will grow 4.6 x vs. average traffic at 2 x between 2015 and 2020* • Global IP video traffic growth from 70 percent of all IP traffic (both business and consumer) in 2015 to 82 percent by 2020. • Mobile Data traffic is expected to grow at 53% CAGR and will be 16% of total IP traffic by 2020 at 30 EB per month. Plan for 22+% future traffic growth annually 72,521 88,719 108,533 132,101 160,561 194,374 2015 2016 2017 2018 2019 2020 Global IP Traffic Forecast* (PB per month) * Source: Cisco Visual Networking Index & The Zettabyte Era Trends and Analysis 2016
- 3. Confidential – © 2017 Equinix Inc. Equinix.com 3 And these trends are driving IP traffic growth in core markets Digital Technology Use Forces the need to support real-time interactions for payments, advertising, IoT Cybersecurity Risks Shifts the movement of information toward private data traffic exchange, bypassing the internet to help mitigate digital threats Digital Trade Transforming trade from physical to digital creating new global business processes involving customers, partners & employees Urbanization Data Sovereignty • Personal data subject to laws to the county in which it originated • Pending GDPR implementation in T-Minus eight months in EU • Data proximity to better reach partners, and satisfy legal requirements
- 4. Confidential – © 2017 Equinix Inc. Equinix.com 4 By 2020, internet traffic will grow 44% in Europe Europe’s Interconnection Bandwidth is expected to grow more than fourfold with 44% CAGR through 2020 to 1,451Tbps Top EU’s Interconnection Bandwidth Metros: • London, Frankfurt, Amsterdam, Paris Growth Drivers: • Data sovereignty and the need for European businesses to exchange information with other businesses in-region Top Growth Areas: Banking & Insurance and Telecommunications Banking and Insurance is expected to add 200+ Tbps of bandwidth by 2020, a greater than six-fold increase, catapulting it ahead of Cloud and IT Services, with Telecommunications narrowly retaining the lead
- 5. Confidential – © 2017 Equinix Inc. Equinix.com 5 And the costs to deliver traffic costs are consistently dropping Reducing transit costs • Average cost of 10G of transit is has dropped 60% in last four years Decreasing hardware costs • 10G hardware is commoditized, port costs fell 40% over last three years; 100G costs dropped 85% Declining fiber costs • Long haul capacity supply increasing and costs declining for wavelengths as new capacity is built $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 Amsterdam Frankfurt London Paris Average Warsaw Zurich IP Transit Pricing $/Mb (10G Port) $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2012 2013 2014 2015 2016 YoY 2012 2013 2014 2015 2016 10G -24.5% -10.7% -11.1% -20.0% -23.0% 100G -35.2% -50.6% -45.3% -71.6% 10G / 100 G Network Hardware Cost 10GCosts 100GCosts Source: Telegeography Source: Telegeography $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 2013 2014 2015 2016 10G Wavelength Cost ($/km) Amsterdam-Frankfurt Frankfurt-London London-Paris London-Madrid Budapest-Frankfurt Frankfurt-Sofia Frankfurt-Warsaw
- 6. Confidential – © 2017 Equinix Inc. Equinix.com 6 Over 90% of interconnection is happening over private links Private Peering Delivers Highly Scalable Bandwidth • For many networks private peering can be 9X larger traffic volume than public peering • Large global networks are aggregating where they can interconnect directly with key partners, and capture the long tail of non-PNI partners • Optimize dedicated capacity to major traffic partners • No reliance on metro or long haul optical transport and fiber • Common meet-me point for major fiber providers * Source: Equinix study AMS-IX Ashburn Atlanta Chicago CIXP Dallas DE-CIX ECIX France-IX INEX IXManchester Geneva Hong Kong JPIXTokyo JPIX Osaka JPNAP Tokyo JPNAP Osaka KleyReX LINX LONAP Los Angeles Melbourne Miami MIX-IT NETNOD New York NL-IX NSW-IX Osaka Palo Alto Paris PTT.br Sao Paulo PTT.br Rio de Janeiro Seattle Silicon Valley SIX SOLIX STHIX SWISS-IXTORIX Toronto Vienna USA Singapore Tokyo Sydney UAE-IX VIC-IX Warsaw Zurich Public Peering Private Peering (PNI) AKAMAI AMAZON DROPBOX Facebook LIMELIGHT LINKEDIN Microsoft NETFLIX OVH RACKSPACE SALESFORCE SOFTLAYER Twitter 1&1 INTERNET Bharti Airtel Blizzard Entertainment Bouygues Telecom Cable & Wireless CARPATHIA CENTURYLINK CHINA MOBILE Chinacache Cisco Systems COGENT COMMUNICATIONS COLT COMCAST COX COMMUNICATIONS Deutsche Telekom EDGECAST NETWORKS ELECTRONIC ARTS Etisalat FLAG GTT Hibernia Hurricane Electric HUTCHISON GLOBAL IPTP Jaguar Network KDDI KPN Korea Telecom PacNet PCCW RIM SFR SINGTEL SWISSCOM TDC TELECOM ITALIA Telefonica Telekom Austria TeliaSonera TRIPADVISOR TURK TELECOM VERISIGN Verizon Vodafone WARGAMING Websense WIKIMEDIA Yahoo ZAYO 90%
- 7. Confidential – © 2017 Equinix Inc. Equinix.com 7 Networks are increasingly moving into colo with a wide cross-connect footprint to support private interconnection
- 8. Confidential – © 2017 Equinix Inc. Equinix.com 8 Equinix is expanding interconnection options across markets Market Date Dublin October 2017 Frankfurt October 2017 London October 2017 Manchester October 2017 Milan October 2017 Stockholm October 2017 Miami November Q4 Sao Paulo November Q4 Amsterdam New (H1/18) Bogota New (H1/18) Denver New (H1/18) Houston New (H1/18)
- 9. Confidential – © 2017 Equinix Inc. Equinix.com 9 ide Maintaining and Growing our Existing Partnerships • Same IX partners will be available on the campuses • More resell options in more markets • Dual, diverse platforms in EMEA markets supported by SLAs and 24x7 operations • Access more content, network, SaaS providers MAINTAINING OUR PARTNERSHIPSPARTNERS EXPANDING OFFERINGS • Metro Backhaul • Long-Haul Transport Services • Direct Cloud Connectivity services • Distributed Peering • Enterprise Peering
- 10. Confidential – © 2017 Equinix Inc. Equinix.com 10 Also Equinix is lowering the cost of public peering • Campus-based cost savings by reducing/eliminating metro transport costs • Higher-density, low cost vendor-supported hardware • Purpose-designed and engineered platform, only the features needed for an Internet Exchange IX Port Pricing Dropping Globally IX Port Pricing 1G 10G 100G EMEA* €250 €400 €2,800 Americas $375 $500 $3,000 * Integrated markets
- 11. Confidential – © 2017 Equinix Inc. Equinix.com 11 Equinix Beer & Peer Roadshow Dates & Locations • Stockholm – 17th Oct - STRANDVÄGEN 7A • Manchester – 19th Oct – The Fitzgerald • London – 25th Oct – Gaucho • Dublin – 26th Oct – Guinness Store • Milan – 30th Oct - Palazzo Parigi Hotel & Grand SPA • Frankfurt – 2nd Nov – Flemings Frankfurt 11 Also, visit us at other sponsored events: • NANOG 71 San Jose, CA – Oct 2-4 • Peering Asia 1.0 Kyoto, Japan – Nov 1-2 • Global Peering Forum 13 Seattle, WA - April, 2018
- 12. Confidential – © 2017 Equinix Inc. Equinix.com 12
Editor's Notes
- #4: Demographic and political/legal trends
- #5: Interconnection Bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic
- #7: VO: networks are locating where they can most reliably reach partners without risky points of failure, and near major fiber meet-me points
- #8: L to R, top to bottom: Interxion Madrid Interxion Stockholm Equinix Slough Interxion Frankfurt Equinix Dublin Telehouse London Docklands Equinix Ashburn
- #9: Expanding in 6 markets in EMEA next month – list Then we integrate Verizon 2 IXs with additional 100g port option Add in 2018 we add IX in Amsterdam as well as Bogota, Denver and Houston in the Americas