By any measure, the global bandwidth market is thriving. International bandwidth demand has nearly doubled from 2020 to 2022, and has now reached 3.8 Pbps.
Meanwhile, the lit capacity on major submarine cable routes continues to soar, keeping pace with demand.
How? Is the network getting faster?
Not quite. Think bigger highway, not faster cars.
The pressures of supply chain disruptions, electricity price volatility, and government intervention are impacting prices in the global colocation market.
As we continue to move through 2023, here are a couple of trends to keep an eye on.
By our 2023 estimates, the Washington metropolitan area—or more specifically Northern Virginia (NoVA)—dominates as the world's largest data center market.
With more than 22 million square feet of operational capacity, NoVA is 30% larger than the next-biggest data center hub, Tokyo.
What else does the most recent update to our Data Center Research Service tell us?
Recently, we’ve been closely monitoring the intensifying pressures of insatiable demand and supply constraints in key data center markets.
Supply constraints have come in the form of both short-term and long-term challenges.
In the short term, supply chain disruptions have hindered development timelines. On the long-term side, regulators and utility providers have begun taking a hard look at the data center sector and how to grow it sustainably going forward. In some cases, these entities have severely disrupted development during the interim period.
None of these challenges have been resolved. And as we move through 2023, another major disruptive component has been added to the mix—the accelerated growth of generative Artificial Intelligence (AI).
The global data center market is under an unprecedented squeeze as we move into 2023.
On one hand, we have a long-term challenge surrounding the sustainability of the industry’s growth trajectory in essential hub markets. On the other, we have an acute short-term problem with energy prices in the colocation sector.
These issues combine to create an uncomfortable phase in the market right now.
There’s a remarkable sense of uncertainty in the data center sector right now.
Some of the biggest global markets have seen unprecedented disruption to data center development as regulators and utility companies attempt to work through critical issues surrounding the long-term sustainability of the industry.
At the same time, the war in Ukraine has fueled tremendous volatility in European wholesale power prices, bringing further stress to an industry that’s fundamentally dependent on vast amounts of power. Let’s unpack the current situation.
Today we answer the burning question "what is peering and how does it work?"
In short, a colocation center is a data center that provides shared space for network storage and interconnection.
Unlike a web hosting site, a colocation facility provides storage for customers' equipment. The facility typically provides power, cooling, security, and intra-site connectivity, among other offerings.
Cloud computing is dynamic hosting, where users share computing resources allocated on demand from the cloud provider’s servers.
Conversely, colocation is the physical space in which you may operate your company-owned software and hardware. (The joke we like to make is that the cloud doesn’t exist; it’s just someone else’s server.)
You can find more information on colocation and data centers in TeleGeography's Data Center Research Service—the most comprehensive source of intelligence on data center infrastructure and ecosystems. With the Data Center Research Service, you can:
We dug into the latest summary of key findings from our innovative Data Center Research Service to extract three pricing facts we think any colo expert should have on their radar. Here's what we've got.
