Private Data Exchange to Skyrocket by 2020, Study Finds
By 2020, the private connections that companies use to link their networks will grow almost twice as quickly as the global public internet and experience nearly six times the data volume, according to a new study by Equinix. This direct data exchange is expected to reach 5,000 terabits per second, a fourfold increase from 2016. How fast is 5,000 Tbps? Fast enough to transmit all printed content in the U.S. Library of Congress three times in a single second.
The Equinix study also shows that robust interconnection capabilities across business ecosystems are increasingly important for companies seeking global expansion. The company’s Global Interconnection Index is a first-of-its-kind effort to track, measure and forecast the growth of interconnection bandwidth, a measure of global capacity to transfer traffic via direct, private links with multiple counterparties at distributed data exchange points.
The Virtues of Interconnection
As digital business transformation advances, global organizations will have a greater need to link to more partners and service providers. And they’ll do so outside the internet, which is viewed as slower, less reliable and less secure than private connections.
According to Equinix, interconnection powers digital transformation by:
- Enabling businesses to exert greater control over centralized and distributed digital platforms.
- Lowering security risks by bypassing the internet and implementing local security protections.
- Reducing latency and accelerating business interaction.
- Providing better scaling of multicloud environments.
However, by implementing the wrong interconnection strategy, companies will likely lack the agility, capacity, security, scale and quality of service needed to compete globally as a digital business, the report warns.
Global Reboot of Enterprise IT
Total interconnection bandwidth is expected to grow 45 percent each year by 2020, Equinix forecasts, a development that’s causing a “radical reinvention” of enterprise IT. Within three years, more than 82 percent of enterprises’ bandwidth will be dedicated to two use cases: interconnecting to network and to the cloud.
As the largest user of interconnection services, the U.S. provides a good example of this trend. Equinix forecasts the U.S. to reach 1,800 Tbps of installed capacity within three years, contributing more than one-third of global interconnection bandwidth. The banking and insurance industry will be the biggest driver of U.S. interconnection growth, accounting for nearly 22 percent of the American market by 2020.
Europe’s growth with be even more impressive — 44 percent per year, reaching more than 1,450 Tbps by 2020. Multiple factors will drive interconnection expansion in Europe, including data sovereignty and business-to-business data exchange in the region, Equinix forecasts. As in the U.S., banking and insurance industries will be the biggest growth driver, adding about 200 Tbps of bandwidth, making these sectors second only to telecommunications in interconnection usage.
Asia-Pacific is another hot spot for growth. Its per annum growth rate of 46 percent will top that of the U.S. and Europe, with the region reaching 1,120 Tbps of installed bandwidth by 2020. Asia-Pacific’s rapid expansion isn’t surprising, as it’s expected to surpass North America as the world’s wealthiest region by 2019, according to a recent report from Boston Consulting Group, CNBC reports.
So, what’s the takeaway for global enterprises?
“Organizations must take swift and decisive action to scale their digital platforms or risk extinction,” the Equinix study concludes.