It is fairly easy to illustrate the value wide area networks have for data centers. S&P Global, for example, expects carrier-neutral data centers with multiple connections to wide area networks to generate revenue growth about 10 percent higher than data centers without such connections.
S&P Global expects cash flow growth of data centers with carrier-neutral interconnection to grow about three times the rate of sites without such carrier-neutral interconnections. Cash flow margins also are expected to be higher, and financial leverage lower, for carrier-neutral sites.
“Interconnection provides a key competitive advantage,” S&P Global says. “We expect providers with carrier-neutral interconnection facilities will continue to outperform those that lack interconnection capabilities.”
“We believe that interconnected data center facilities with carrier-neutral ecosystems will continue to have greater demand among cloud and network providers, as well as enterprise customers, enabling greater pricing power than data centers that do not have carrier-neutral hotels,” the firm argues.
“Operators that lack interconnection are forced to primarily compete on price or upselling their customers with managed services, which tend to have lower margins, shorter contract lengths, and higher churn than colocation,” S&P Global says.
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