Interconnection, or cross connects, deliver a point-to-point cable link, predominantly through fiber, between two customers in the same data center. In turn, these cross-connects provide fast, convenient, affordable, and reliable connectivity and data exchange for data center customers, making them interconnected. In 2020, total interconnections, which includes both physical cross connects and virtual interconnections, reached 1 million globally.
Interconnection has grown in importance for data center customers as data integration, and low latency capabilities become higher priorities. Indeed, this prioritization of interconnection has resulted in 10% year-over-year growth in physical cross connects from 2019 to 2020.
At the same time, virtual interconnections are growing even faster at 50%+ year-over-year. Virtual interconnection growth is being led by data center providers such as Equinix. Additionally, third-party software-defined networking (SDN) interconnection platforms such as Megaport, PacketFabric, and Console Connect by PCCW are fueling the growth of virtual interconnections.
Data Centers – Top 10 Interconnection-Oriented Operators
Below we highlight the top 10 interconnection-oriented data center operators which, in aggregate, comprise 740k of the 1 million global interconnections.
Equinix has the greatest number of interconnections at 394k, which includes both physical cross connects and virtual interconnections. Additionally, interconnection is a significant contributor to Equinix’s business, comprising 17% of the company’s total revenue.
Equinix breaks-out its total physical cross connects of 365k by region. Specifically, these include cross connects of 163k in the Americas, 133k in EMEA, and 69k in Asia-Pacific. Additionally, Equinix is a leader in virtual interconnections, with 30k, having grown this figure by 32% over the past year.
Digital Realty has a total of 164k interconnections. Indeed, the company recently bolstered its interconnection offering through the acquisitions of Interxion and the remaining 49% stake in the Westin Building Exchange, which it did not already own.
Cyxtera has a total of 40k interconnections and is trying to position the company as a leading interconnection platform. However, the business is better characterized as a data center operator focused on legacy retail colocation.
CoreSite has a total of 30k interconnections and is one of the true leaders in interconnection. Importantly, interconnection is a significant contributor to CoreSite’s business, comprising 14% of the company’s total revenue.
Overall, the company has increased its interconnections by an 11% compound annual growth rate (CAGR), over the past four years.
Colony Capital has a total of 30k interconnections through the two data center companies it owns on its balance sheet, namely DataBank and Vantage stabilized hyperscale data centers (Vantage SDC). Of the two companies, DataBank is the data center operator that focuses on interconnection.
Additionally, DataBank recently enhanced its interconnection offering through its purchase of zColo. Overall, DataBank currently has 30k interconnections, of which, the company gained 23k through its acquisition of zColo.
CyrusOne has a total of 24k interconnections. Overall, the company has increased its interconnections by an 18% compound annual growth rate (CAGR), over the past four years.
QTS Realty Trust
QTS Realty Trust has a total of 20k interconnections. Overall, the company states that its interconnection business is growing at 15% annually.
SUNeVision has a total of 14k interconnections. Notably, all of SUNeVision’s cross connects are located in its MEGA-i data center. Indeed, the company states that the MEGA-i facility is the most connected telecom and internet service provider (ISP) hub in Hong Kong.
NEXTDC has a total of 14k interconnections. Overall, the company has increased its interconnections by a 22% compound annual growth rate (CAGR), over the past four years.
Switch Inc has a total of 8.7k interconnections. In comparison to other data center operators, Switch derives a comparatively low proportion of its revenue from interconnection, at only 4%.
Firstly, interconnection-focused providers, like Equinix and CoreSite, generate 14% to 17% of their revenues from interconnection. Secondly, less interconnected data center operators, with more of a wholesale presence, like Digital Realty and CyrusOne, derive 6% to 10% of their revenues from interconnection.
Data Centers – Other Operators with Meaningful Cross Connects
Numerous interconnected data center operators contribute to the 260k balance of interconnections globally. Specifically, these companies include Cologix, Netrality Data Centers, EdgeConneX, Iron Mountain, Keppel DC REIT, GDS Holdings, 21Vianet Group, and Allied Properties REIT, amongst others.