Year in Review: Data center interconnection satisfies growing cloud, OTT service usage

Network performance

FierceTelecom is wrapping up an eventful 2016 by taking a hard look at five of the most important trends and developments that emerged in the market this year. Today’s installment checks in on the market for data center interconnection.

The news: Microsoft proclaimed in one of its recent commercials that its cloud enables its Partners In Health to stay connected throughout their global reach, but none of that is possible without connectivity options from other wireline providers into data centers.

Enter data center interconnection (DCI). DCI is the process of creating speedy connections between data centers from different providers, thus allowing large enterprise customers, cloud providers, content owners and others more data center options at lower prices.

Traditional service providers connecting into these facilities also are able to reach a broader audience of customers.

Take Cogent, for example, which provides connectivity to over 900 carrier-neutral data centers. The service provider estimates that it has been adding about 90 new data centers to its network every year.

Dave Schaeffer, CEO and founder of Cogent, told FierceTelecom that this reach “allows a lot of OTT content producers to connect to us in multiple markets.”

Telcos are taking an equal interest in DCI. For example, Windstream may have sold off its data center assets in 2014, but the service provider has been hard at work making sure that it’s extending its fiber to key data centers: For example, the service provider is establishing an ultra long-haul (ULH) network on the West Coast and it has also connections into the Miami market to carry traffic in and out of Latin America.

And despite selling its data center business, CenturyLink announced this month that it established a fiber connection to TerraCom’s primary location in Melbourne, Florida, as part of a broader effort to connect to hundreds of data centers in its wireline territory.

Why it matters: As wireline operators look to diversify their revenue mix, the data center interconnection market is one that has a growth path driven by the consumption and distribution of various data forms over the public internet and private networks.

To be desirable interconnection points, data centers require rich fiber and IP-based services that connect their facilities to other major internet peering points. Since these sites are carrier-neutral, traditional and emerging non-telco service providers have a wide choice of network connections that suit their own needs.

By establishing cross connects into major data center facilities, the data center provider and the connecting provider gain benefits: Data center providers attract more customers to their sites, while service provider partners can attract other customers present in the data center with their services.