Data Centers Now Drive Half of Demand for WAN Capacity

There are lots of reasons why hyperscale data centers are such a huge driver of global wide area network business models. 

Hyperscale and other data centers now drive as much as half of all data traffic across wide area networks. In 2021, data traffic between data centers now represents as much traffic as used by internet users. 

So half of total demand for WAN capacity now is driven directly by data centers that need to connect to other data centers. To be sure, local access facilities are required, whether traffic is bound for an actual end user location or moving between data centers. 

source: Cisco 

But access facilities supporting data center to data center facilities are quite concentrated. Access facilities supporting consumers are ubiquitous.  

That was not the case two decades ago. 

Also, hyperscale “computing/storage/software as a service” suppliers now also directly supply some “connectivity” services that otherwise might be sold by public telecommunications providers. 

AWS, for example, sells private connections, content delivery and virtual private network services. Some estimate that such networking services represent as much as 25 percent of total AWS revenues. 

In other words, AWS earns significant revenues from selling WAN networking services to its customers. That drives even more hyperscaler activity in the WAN market.