Last month, I had the pleasure of speaking at Cairo ICT about colocation and connectivity trends.
I covered global bandwidth first, followed by a rundown on bandwidth in the Middle East and Africa.
Next up, data centers and interconnection hubs, with a discussion on where the hubs are, what makes a hub, and how hubs grow. Finally, I talked about end-user demand, which is very important with the growth of internet and demand.
You can catch a video of this presentation and download my slides below.
[Transcription starts at 04:43]
If we watch submarine cables, we kind of have an idea where hyperscalers want to go, or move, or build their submarine cables, or their consortium cables to connect these data centers.
So in the next three years, we’re seeing $11 billion of investment. It’s a huge, huge amount of growth. It takes going back to the early 2000s before we see growth like this. So this is all announced investment.
Why do we see this? Because globally, we’re seeing demand, and we’re talking about capacity growing at 20-30% a year.
So, to meet the demand, commercial factors like reducing unit costs. A very important aspect for hyperscalers is to enhance route diversity because, as we saw with what happened in Africa, Middle East at the beginning of the year—the cable cuts in the Red Sea and off the coast of Côte d’Ivoire—we saw a lot of problems with connectivity.
So even though there are three or four cables per side—long-haul cables—that go all the way down, the hyperscalers see this, and they say, “oh, we need more connectivity, more resiliency.” So we’ll be seeing a lot more cables coming in.
Also, a lot of the cables are aging out, primarily on the Africa side. A lot of the cables came in around 2010, about 2008, 2012. These cables are starting to get older, economically almost end of life, so it’s getting closer.
This is just a map—because TeleGeography is maps—that shows the most recent cable systems in red, the planned cables in gray, and then all the blue dots are basically how many landings per location. If you look closely, where do you see a ton of landings over the next few years?
A lot of it around the peninsula in the Middle East and the northeast side of Africa, of course, including Egypt. And that’s why we’re here.
This image shows where all the planned data centers, hyperscaler cloud data centers have been announced to be built. And if you look once again it’s very dense around the peninsula, Arabian Peninsula, and in Africa.
Now, a couple of things that are important when we’re talking about the growth and the connectivity is pricing.
This is the weighted median of 100 GigE IP transit, basically buying internet, in the world. Basically, green is a very low price globally and red is a very high price. So we see three areas left with very high prices for connectivity, or IP transit, in the Middle East area, India, and Australia.
And then if we look at this, it’s showing the rate of decline. We see the red is a slow rate of decline and the green is a fast rate of decline.
India is declining a little faster. South Africa has been declining very quickly recently, but the Middle East and some parts of East Asia are holding. And then in the U.S. and Western Europe there hasn’t been much of a drop because prices are already so low. Keep that in mind as we go forward.
Want a copy of Patrick’s slides?
Download his full presentation over here.
