Wednesday, 22nd January 2020

Expanding telecom sector to continue fuelling the need for data centre colocation

Owing to the spiraling demand from the telecom sector, the demand for data center colocation is expected to be fueled rapidly in the coming years. Stimulating technological trends are likely to improve adoption of 5G networks and increase the need for larger data storage capacities closer to the location.

Augmenting digital transformation and unprecedented use of smart devices globally has raised the amount of data generation. According to Information Overload Research Group, over 3.7 billion people have access to internet, which equates closely to half of the entire population in the world. Around 3.5 billion searches in a day and about 40,000 searches every second are performed via Google search engine. The day-by-day rise in data generation is likely to trigger demand for efficient data center available at small distance.

Due to continuous generation of data, it has been predicted that data creation will reach nearly 463 exabytes each day globally by 2025. Speaking about entire digital universe, data generation is likely to surpass approximately 44 zettabytes by 2020, which is 40 times more bytes than stars present in the observable universe. To answer the demand for storage of huge data, data center colocation demand is expected to grow exponentially by 2025.

5G technology is the telecom industry's appropriate response to faster data transmission & bandwidth needs of consumers. 5G technology comes with higher bandwidth and greater data generation. Rapid and denser streams of data offered by 5G technology is expected to fuel need for more data center capacity. Upcoming 5G technology is estimated to contribute around $2.2 trillion to the global economy over the next 15 years.

Telecom companies eyeing on expanding their customer base are investing in data centers for storing their own data and offering colocation services. For instance, in 2018, Bharti Airtelmade it to the headlines when it announced that it will provide its data center infrastructure to multinational companies, such as Microsoft and app makers, among others. To achieve the same, the company revealed its plan to set up 10 new data centers closer to the customer location in India. Such striving attempts being made by the telecom sector to achieve data localization will subsequently influence data center colocation trends.

Latin America – the emerging hub for the adoption of data center colocation

From the regional perspective, Latin America is poised to exhibit hefty investments towards co-located data centers. The region houses around 100 co-located data centers, with Brazil evolving as the most lucrative regional business sphere. In addition, given the expansion plans of major companies to capitalize on broad regional demand from customers for colocation, the country is likely to contribute significantly to data center colocation industry.

For instance, in May 2019, CenturyLink expanded its data center infrastructure in Rio de Janeiro. The expansion was intended to bring processing capacity nearer to users. CenturyLink already has 18 data centers located in Latin America, which are directly connected to its global fiber network.

Some other major participants in data center colocation space are NTT Communications, Singapore Telecommunications Limited, KDDI Corporation, Global Switch Corporation, Interxion N.V., Equinix, Inc. All the companies operating in data center colocation industry are adopting various strategies of expansion, collaboration, mergers to increase their bottom line. According to the latest research report published by Global Market Insights Inc., data center colocation business share is slated to exceed $100 billion by 2025.

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