Digital service providers to increase connectivity 5X by 2023 to manage pandemic

Deepika Chauhan
October 25, 2020 11:24 am
Kamel Al-Tawil, Managing Director, Middle East and North Africa, Equinix

The latest Global Interconnection Index, GXI, an annual market study published by Equinix, shows that the Covid-19 pandemic has already had a dramatic effect on how businesses are planning their digital infrastructure initiatives over the next three years. Digital service providers, within industries like telecommunications, cloud and IT services, content and digital media and technology providers, are forecast to increase private connectivity bandwidth 5x by 2023, driven by greater demands from enterprises to close digital gaps at the edge.

Even before the current pandemic, enterprises were implementing digital transformation initiatives, reassessing their cloud adoption strategies and cloud readiness, and moving towards digital solutions and tools to ensure business continuity. As the pandemic continues to accelerate the shift to digital, enterprises facilitating more remote working, such as telecommunications and cloud and IT providers, are expected to contribute to 54% of the total interconnection bandwidth growth in EMEA, outpacing other industries in the region.

The report also forecasts that overall interconnection bandwidth, the measure of private connectivity for the transfer of data between organisations, will achieve a 45%  CAGR, from 2019 to 2023, within the EMEA region. The expected growth is driven by digital transformation, and specifically by greater demands from enterprises extending their digital infrastructure from centralised locations to distributed edge locations. This comes as businesses scale and support real-time interactions by strategically interconnecting workflows closer to, and across people, things, locations, cloud and data. The capacity of this connectivity is equivalent to 64 zettabytes of data exchange, which is enough bandwidth for every human on the planet (7.8 billion) to transmit their full DNA sequence in an hour.

Digital adoption patterns

  • The digital adoption pattern has altered, with service providers now forecast to provision more interconnection bandwidth, 10,284 Terabits per second by 2023, than enterprises, by a factor of nearly 2x.
  • However, much of this service provider demand is anticipated to be in support of enterprises that are prioritising their digital transformation in preparation for post-pandemic recovery.
  • Enterprises with a digital infrastructure will extend their competitive advantage and continue to lead in business growth, while those without have struggled and are dependent on service providers to transform their business models.

Edge-first architecture

  • Traditional business, within industries like banking and insurance, manufacturing and business and professional services, will represent a combined 30% of global interconnection bandwidth by 2023. This is led by the growing need to move workloads to the digital edge while scaling core IT infrastructure. By 2023, these traditional businesses are expected to reach a peak interconnection bandwidth growth rate of 50% annually.
  • Healthcare and life sciences and government and education are expected to lead the traditional enterprises in their interconnection growth rate as public and private initiatives on artificial intelligence and machine learning are forecast to drive a combined 47% CAGR in interconnection bandwidth from 2019 to 2023.

The network effect

  • Organisations are maximising their digital advantage by building a presence in locations with the most users, largest number of providers and the densest activities, known as the “network effect.” According to IDC, 80% of digital leaders will see the impact of connecting to multiple ecosystems, including improving their value to end customers by 2025.
  • The need for application exchange in digital ecosystems to support real-time engagement is essential and creates a network effect for businesses. The GXI Vol.4 predicts that connectivity from service providers to networks and cloud and IT service providers will be the two main sources of ecosystem interconnection, with an estimated 49% combined CAGR from 2019 to 2023.

The GXI report delivers insights by tracking, measuring and forecasting growth in interconnection bandwidth, 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 centres.

Kamel Al-Tawil, Managing Director, Middle East and North Africa, Equinix, said, “Digital transformation within the MENA region has become a focal point for organizations of all sizes, in both public and private sectors, as they look to build new capabilities through advanced digital infrastructure, in this time of great innovation. The latest edition of the Global Interconnection Index demonstrates the increased need for private connectivity to support enterprises, so they are enabled to meet the demands of a new digital era.”

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