TeleGeography's Official Blog

The COVID-19 Impact on Data Centers

Written by Jon Hjembo | May 7, 2020 12:04:00 PM

In our research, we think a lot about the nature of interconnection.

And in our ongoing effort to gauge the impact of the COVID-19 pandemic on global networks, we wanted to highlight what’s happening in the nodes where interconnection takes place—data centers. 

We spoke with experts across the market to get a sense of how they’re working through the crisis. They gave us insight on how the situation is affecting demand, operations, supply, and new construction. 

Let’s take a look at each of these facets. 

Demand

So far, demand for colocation data center space appears to be strong, at least for some customer verticals. The sectors with the greatest surge in growth for colocation space and cross-connects have been predictable for a world in quarantine. Think video streaming, gaming, and cloud. There has also been aggressive growth in demand for educational access to cloud platforms. (More demand updates here.)

According to several operators who we connected with, customers are making adjustments to their network interconnections as needed. Operators note that recurring revenues are continuing as normal for the time being.

Daily Operations

As critical nodes of global interconnection, data centers are maintaining daily operations, albeit with more precautionary policies in place. 

Operators tell us that they’re implementing social distancing requirements within workspaces, enforcing the use of masks and gloves, implementing temperature checks, and disinfecting regularly.

Operators tell us that they’re implementing social distancing requirements within workspaces, enforcing the use of masks and gloves, implementing temperature checks, and disinfecting regularly. Only essential activities are now taking place in most facilities, as sales teams and other support staff work from home. 

From what we’re hearing, customer representatives are allowed to continue visiting data centers in many countries, so long as they adhere to the same controls as onsite staff. In other countries, access restrictions are tighter.

However, customers are less likely to send their engineers to sites due to the risk of COVID-19, so operators are seeing a drop in site visits. On-site staff are increasing levels of support in cases where customers can’t travel to the location. 

Supply Chain

Most of the operators we spoke with haven’t yet indicated major disruptions to their own supply chains. Most disruptions so far appear to be affecting customers more than data center operators themselves. 

In cases where factory closures and shipping disruptions have affected delivery of operator equipment, some have been able to find workarounds to address the challenges.  

Most disruptions so far appear to be affecting customers more than data center operators themselves. 

New Construction

Construction has ground to a halt in some locations, but this is hardly the case everywhere.

We’ve heard that active projects in parts of Europe have stopped completely for the sake of worker safety. Further, pre-construction activities like permitting have been temporarily stopped. 

The response in Southeast Asia is mixed. Singapore has instituted a temporary moratorium on construction activities, but in Thailand, at least one construction project continues under reduced workdays to allow offsite workers to return home for curfews. 

Overall, we don’t anticipate that the data center industry will be as adversely affected by COVID-19 as other sectors. In the long run, this crisis will cause many networks to bolster their colocation deployments as they plan for more robust service delivery in a world increasingly reliant on network connectedness.