US Data Centre Market is Evolving to Become Carrier Neutral

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Neutral IXs can create network density and opportunities for businesses and operators
An independent study conducted on behalf of DE-CIX finds 80% of US Internet Exchanges are now data centre and carrier neutral to support AI, cloud & IoT

The US continues to move towards a framework that is data centre and carrier neutral to support new AI and cloud-based applications.

A new study conducted by Dstream Group on behalf of DE-CIX, the global Internet Exchange operator, reveals that 80% of all Internet Exchanges (IXs) across the region now have this in place.

This news comes during a time where net absorption of data centre capacity across the US is reaching record levels. As generative AI (Gen AI) continues to make its mark across the industry, DE-CIX’s commissioned study provides greater insight into how the US interconnection landscape continues to evolve to cope with rising technology demands.

Neutral IXs play a vital role in creating collaborative ecosystems by connecting various data centres and aggregating networks

Interconnection driven by rising AI and cloud computing needs

The rising need for high-performance interconnection has been prompted by increased interest in online gaming and high-resolution streaming. As a result, deployment of IXs across the country has surged by 600% in the past decade alone, given rising needs for AI and cloud computing.

These IXs are now data centre and carrier neutral, which enables interconnection between multiple telecommunication carriers and/or colocation providers. 

Summary of key findings:
  • Demand for low-latency and resilient interconnection solutions will increase
  • There is an urgent need for resilient and redundant connectivity
  • Secondary and tertiary data centre markets (ie. Vegas, Reno and Columbus) are becoming important growth areas
  • Neutral IXs play a vital role in creating collaborative ecosystems by connecting various data centres and aggregating networks

These neutral platforms have on average four times more data centres from various operators connected to the platform than other IX models. This results in them being to offer enterprises and network operators greater choice and resilience opportunities.

Neutral IXs are operated by independent specialists and distributed over data centres from multiple operators within a city or region. The benefits associated with such an offering include being able to provide more access points and combine more networks than IXs operated by a data centre carrier.

Likewise, neutral IXs can create network density and opportunities for businesses and operators to leverage more resilient, edge-based connectivity at a lower latency.

According to DE-CIX’s study, 70% of the top 50 largest IXs in the US are neutral, which the company states highlights a strong preference of network operators for the model.

“The past decade has demonstrated the immense value of the neutral and distributed model for driving digital growth in the US market. The study shows that these IXs, which follow the European model of neutrality, are not only future-proof, but essential to support the emerging needs of cloud computing, AI, and IoT to enable extremely low latency connectivity for critical current and future use cases. We’re proud to have played a crucial role in the growth of this model in the US, establishing robust interconnection hubs that power innovation and economic growth.”

Ivo Ivanov, CEO of DE-CIX
Ivo Ivanov, CEO of DE-CIX (Image: DE-CIX)

A need for data centre flexibility

The study also reveals that in the current top 50 US-based IXs, the distributed and neutrally operated IXs have an average of 11 connected facilities operated by a minimum of two independent data centre operators within a metro area. 

In comparison, the DC/Carrier-operated IXs have an average of three facilities operated by a single operator within a metro area. 

Greater operator diversity and geographical distribution ultimately enables companies to have greater choice between data centre operators, thereby bringing interconnection closer to end-users and improving connectivity performance.

“The distributed, independently operated IX model has several significant advantages for building digital ecosystems,” highlights Serge Radovcic from Dstream Group and co-author of the study. 

Serge Radovcic from Dstream Group (Image: Dstream Group)

“The neutral model can potentially be accessible from all colocation data centres within a metro area – and even from outside of the metro area. By leveraging connectivity to multiple data centre operators, an IX can eliminate the risk of vendor lock-in, and make it easier to establish redundant connections, increasing the resilience of connectivity for critical use cases.”

Shifting gears to confront high demand

The distributed and neutral IX model enables data centres outside of city centres to be incorporated into the interconnection ecosystem, providing companies with solutions to what DE-CIX calls a “data centre squeeze” being experienced in some historical hubs.

With such high demands and low data centre vacancy rates, data centre planning and construction is increasing. As the US currently holds the highest number of data centres, future interconnection trends across the data centre market are only expected to continue.

Notably, technology trends such as edge computing, disaggregated computing and AI will dominate, proving that the resilience and flexibility offered by neutral IXs will grow. 

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“In order for digital ecosystems to develop and prosper, connectivity is non-negotiable,” Ivo Ivanov adds. “The US was home to the very first Internet Exchange, so it’s fitting that the country is now recognising the need for connectivity to move closer to the edge, providing faster access as demand for latency-sensitive applications booms. 

“The distributed and neutral model is the ideal way to encourage innovation, opening up market choice and providing multiple paths to connectivity.”

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