WAN and Cross Connects Often are Functional Substitutes

One reason the data center and colocation functions have become intertwined with the wide area connections business is that each is a potential substitute for the other. In other words, domains can be connected locally, within a building or between buildings at distance. 

Generally speaking, collocation by cross connect makes sense for larger domains with vast connection requirements, while WAN connectivity makes sense for smaller domains with fewer connectivity nodes. 

With the rise of cloud computing and ecosystems, much spending has shifted from WAN connections to colocation. 

Study	Year	Publication Venue	Enterprise Spending on Colocation $US	Enterprise Spending on WAN Services $US
Uptime Institute	2022	Data Center Industry Report	120 billion	100 billion
IDC	2021	Worldwide Quarterly Data Center Tracker	110 billion	90 billion
Gartner	2020	Market Guide for Colocation and Interconnection Services	100 billion	80 billion
IDC	2023	"Worldwide Quarterly IT Spending Tracker"	1.7 million each	1.5 million each
Gartner	2022	"Market Guide for Data Center Colocation"	1.8 million each	1.6 million each
Cisco	2021	"Cisco Global Cloud Index"	1.9 million each	1.7 million each