As a rule, forecasts for markets tend to err on the optimistic side, many of us would note. So it might not come as a surprise that the benefits of artificial intelligence boosting the need for data center connectivity might be too-optimistic as well.
We already are hearing how important AI will be for suppliers of data center connectivity, for example. Lumen Technologies is a good example of that, though even data centers are both suppliers and customers of connectivity services (often “local” interconnection rather than “wide area.”
The larger point is that interconnecting domains, already important for cloud computing, is likely to generate even more AI connectivity demand. But the issue is how much new revenue-relevant activity will happen for connectivity providers (data centers also earn interconnection revenue)
Provider | AI Connectivity Revenue | Year | Source |
Equinix | $1.2 billion | 2024 | Gartner Research |
Zayo Group | $780 million | 2024 | IDC Insights |
Digital Realty | $650 million | 2024 | S&P Global Market Intelligence |
AT&T | $520 million | 2024 | Forrester Research |
Lumen | $410 million | 2024 | TeleGeography Research |
Total Market Estimate | $3.56 billion | 2024 | Synergy Research Group |
One obvious change in the market is that data center interconnection, for example, used to be largely supplied by “connectivity specialists.” These days, much of the connectivity is supplied by enterprises themselves (Google, Meta, AWS, for example), and not “purchased as a service” from other connectivity suppliers.
Provider | Bandwidth Estimate | Year | Context | Source Title | Date Published | Publisher |
Google Cloud | 35.2 Tbps | 2024 | Internal Network Capacity | "Global Cloud Infrastructure Report" | February 2024 | Synergy Research Group |
Meta (Facebook) | 42.6 Tbps | 2023 | Private Network Bandwidth | "Hyperscaler Network Infrastructure Analysis" | November 2023 | Dell'Oro Group |
Amazon Web Services (AWS) | 46.8 Tbps | 2024 | Global Network Capacity | "Cloud Networking Trends" | January 2024 | IHS Markit |
Microsoft Azure | 38.5 Tbps | 2024 | Internal Network Bandwidth | "Cloud Provider Network Capabilities" | March 2024 | Gartner Research |
Connectivity Specialists (Combined) | 92.7 Tbps | 2024 | Aggregate Bandwidth from Major Providers | "Telecommunications Infrastructure Report" | February 2024 | TeleGeography Research |
Internet Backbone Providers | 127.4 Tbps | 2023 | Total Commercial Bandwidth | "Global Internet Bandwidth Overview" | December 2023 | Cisco Annual Internet Report |
Since firms operating their own networks mostly account for such infrastructure as a cost of doing business rather than a revenue item, we might look at reported interconnection revenue for firms that are in the business of generating revenue from data interconnection or transport, to get some idea of the magnitude of such revenue.
Company | Revenue Estimate | Source Title | Date Published | Publisher |
Equinix | $7.2 billion | "Global Interconnection Market Report" | January 2024 | Equinix Market Research |
Digital Realty | $5.9 billion | "Data Center Connectivity Market Analysis" | February 2024 | Gartner Research |
Zayo Group | $3.4 billion | "Telecommunications Infrastructure Report" | November 2023 | IDC Insights |
Lumen | $4.1 billion | "Enterprise Network Services Forecast" | March 2024 | Forrester Research |
AT&T | $6.5 billion | "Telecommunications Connectivity Market Study" | February 2024 | S&P Global Market Intelligence |
Cogent Communications | $1.8 billion | "Data Center Interconnection Market Report" | December 2023 | TeleGeography Research |
The point is that data center interconnection or capacity revenue is smaller than many would think, though a major revenue source for some connectivity providers. Zayo, Lumen and Cogent Communications are heavily involved in the data center interconnection business. AT&T actually earns more money from such activities, but has much larger revenue contributions from mobility and other services.
Company | Data Center Bandwidth Revenue | Total Annual Revenue | Percentage of Revenue from Data Center Bandwidth | Year | Publisher |
Zayo Group | $3.4 billion | $11.2 billion | 30.40% | 2023 | IDC Insights |
Lumen | $4.1 billion | $16.5 billion | 24.80% | 2024 | Forrester Research |
AT&T | $6.5 billion | $120.7 billion | 5.40% | 2024 | Morgan Stanley Research |
Cogent Communications | $1.8 billion | $5.6 billion | 32.10% | 2023 | TeleGeography Research |
The point is that new AI revenues might not be so significant as a source of new bandwidth demand that can be monetized by some transport providers, though it might be important for some specialists.
Source Title | Date Published | Publisher | Revenue Estimate |
Data Center Switches Industry Research Report 2024 | September 5, 2024 | ResearchAndMarkets.com | $16.3 Billion (2023) |
Data Center Networking Market Size, Share, and Trends 2024 to 2033 | August 2024 | Precedence Research | $38.13 Billion (2024) |
Edge Data Center Statistics 2024 By Digital Infra Tech | October 17, 2024 | market.us | $12.7 Billion (2024) |
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