Executive Summary Global colocation markets continue to signal a mix of positive and negative growth indicators in 2014. Core global markets show steady historical growth, but many operators indicate that existing capacity is more than sufficient to address short-term demand. TeleGeography s Colocation Database is an online directory containing profiles of over 3,100 colocation sites around the world, coupled with analysis of market capacity and provider presence based on survey data from more than 1,400 sites and internal company estimates. Metro Capacity While large individual projects can inflate short-term colocation capacity growth statistics measured as the increase in aggregate gross data center space long-term growth is more modest. The median four-year compound annual growth rate across the markets covered in TeleGeography s latest Colocation Database update hovers around 12 percent. Dallas, Amsterdam, and Frankfurt are among the major hubs that have experienced significantly faster growth, with each expanding colocation capacity by 20 percent or higher compounded annually (see Figure: Select High-Growth Metro Areas, CAGR, 2011-2014). 1
FIGURE 1 Select High-Growth Metro Areas, CAGR, 2011-2014 Notes: Based on data collected by TeleGeography in 2014 from survey responses and public information. High levels of colocation capacity growth only make sense if demand can meet supply. In struggling to maintain a supply and demand balance, operators must determine how much of their gross space should be fitted for usable server space at any given time. Of that usable server space, the amount of current availability (or vacancy) can be a good indicator of demand. Among the tier one global markets with sufficient data to report, Amsterdam and Chicago have low excess colocation inventory, with less than 15 percent availability (see Figure: Colocation Space Available for Select Metro Areas, 2014). Capacity in Moscow is especially tight, with only 8 percent reported vacancy. Conversely, vacancy rates in the New York/New Jersey metro area exceed 50 percent, though vacancy rates fluctuate significantly from one site to the next, and the number reported here is heavily influenced by higher availability levels at several new facilities. 2
FIGURE 2 Colocation Space Available for Select Metro Areas, 2014 Notes: Based on data collected by TeleGeography in 2014 from survey responses and public information. Percentages represent weighted average percentage of usable/fitted floor space that is available or vacant. Providers With nearly 10.5 million gross square feet of global retail colocation space, the NTT Group is the largest provider of colocation space worldwide (see Figure: Largest Retail Operators by Gross Floor Space, 2014). Unlike other operators in the list of largest providers, NTT s capacity is distributed among six group companies. A vast majority of this capacity 8.1 million square feet or 77 percent is concentrated in Japan. Nonetheless, NTT has a sizable international footprint of nearly 2.4 million square feet of data center space. If only tallying its international footprint outside Japan, NTT would still be counted among the ten largest global operators. Among single-company operations the vast majority of operators in the database Equinix remains the largest global retail provider. With nearly 9.8 million gross square feet of data center space, Equinix increased its gross capacity by more than 8 percent over the previous year. Level 3 registers a massive global footprint of more than 300 data centers and nearly 8 million square feet of colocation space. CenturyLink, Verizon Terremark, and CyrusOne are also among the largest operators with sizable operations in multiple global regions. 3
FIGURE 3 Largest Retail Operators by Gross Floor Space, 2014 Notes: Based on data collected by TeleGeography in 2014 from survey responses and public information. Companies that requested data confidentiality are not shown. NTT data represents the combined capacity of six group companies worldwide. 77 percent of the NTT Group s gross colocation capacity is located in Japan. Over the last two years, most major colocation operators have concentrated capacity expansion in just one region (see Figure: Retail Operators with Largest Amount of New Colocation Site Capacity, 2012 2014 (million sq ft)). For example, CyrusOne focused all of its buildout in North America, while NextDC focused exclusively on new builds in Asia. The exceptions to this trend include Equinix, which expanded its footprint across the globe, and CenturyLink, which undertook new developments in both North America and Asia. Several operators concentrated new development exclusively in single countries such as the U.S., Australia, China, and Japan. 4
FIGURE 4 Retail Operators with Largest Amount of New Colocation Site Capacity, 2012 2014 (million sq ft) Notes: New colocation capacity refers to square footage of new colocation sites launched by operators between August 2012 and August 2014. Based on data collected by TeleGeography in 2014 from survey responses and public information. Companies that requested data confidentiality are not shown. Power and Cooling Power is as important a measure of capacity as space when considering colocation facilities. Major retail colocation hubs make use of large amounts of power. According to TeleGeography survey data and estimates, aggregate power used for shared data center space in the London, Washington, D.C., and New York metro areas each exceeds 450 megawatts (MW) (see Figure: Largest Metro Areas for Colocation by Gross Power (MW), 2014). 5
FIGURE 5 Largest Metro Areas for Colocation by Gross Power (MW), 2014 Notes: Based on data collected by TeleGeography in 2014 from survey responses, public information, and internal company estimates. Some metro areas with sizable colocation presence are not depicted due to insufficient data. Connectivity One of the core purposes of a colocation site is to serve as a point of network interconnection. External connectivity at colocation sites is supplied by global, regional, and local carriers that have a physical presence in the facilities. According to colocation providers responding to the latest survey, Verizon and Level 3 are the most common wholesale carriers in their facilities, with numerous PoPs in both North America and Europe (see Figure: Top Bandwidth Providers to Colocation Sites, 2014). AT&T and Zayo Group are particularly well-connected in North America, while Colt and BT provide extensive connectivity at European sites. 6
FIGURE 6 Top Bandwidth Providers to Colocation Sites, 2014 Notes: Based on data collected by TeleGeography in 2014 from colocation operator survey responses and public information. Results are not derived from survey of bandwidth providers. Some colocation operators chose not to disclose bandwidth operators connected to their sites. Major carriers often connect to Points of Presence (PoPs) that are not colocation sites. Many types of network interconnectivity take place in colocation facilities. IP traffic exchanges are particularly common. IP network interconnections can be facilitated either through a private transaction between a few operators or through public arrangements via an Internet exchange (IX). Some exchanges are run by consortia or non-profit entities, while others are run by for-profit telecom operators. In Europe, the former model tends to prevail, while in North America, the latter is more common. A recent trend has seen major European exchanges establish physical presence outside of Europe. This is due to the exchange operators interest in expanding market reach, as well as initiatives to bring neutral European exchange models to other locations. TeleGeography offers a free interactive Internet Exchange Map that depicts over 350 active Internet exchanges and more than 500 buildings in which those exchanges reside. Search by country, metro area, IX, or building to view exchanges and locations. Or, select an IX from the list provided to view the buildings in which that exchange is present. Colocation providers are increasingly addressing the demand for cloud computing by offering such services of their own. About 61 percent of respondents to TeleGeography s Colocation Database survey indicate that their sites offer Infrastructure as a Service (IaaS) as of 2014, 6 percent higher than the percentage of positive responses in 2013. On a metro level, there is quite a bit of variance regarding cloud provisioning (see Figure: Percentage of Sites Offering IaaS by Metro, 2014). Notably, colocation operators in Paris and London are among the most likely to offer IaaS in their data centers, while only a minority of operators report that they offer IaaS in the major U.S. hubs of New York, San Francisco, Dallas, and Washington, D.C. 7
FIGURE 7 Percentage of Sites Offering IaaS by Metro, 2014 Notes: Based on data collected by TeleGeography in 2014 from survey responses. 8
The content on the preceding pages is a section from TeleGeography's Colocation Database The work is based on sources believed to be reliable, but the publisher does not warrant the accuracy or completeness of any information for any purpose and is not responsible for any errors or omissions. This work is for the confidential use of subscribers. Neither the whole nor any part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded or otherwise, without prior written consent from PriMetrica, Inc. All rights reserved. TeleGeography A Division of PriMetrica, Inc. Washington, D.C. / San Diego / Exeter U.S. tel: +1 202 741 0020 / U.K. tel: +44 1392 315567. www.telegeography.com 9