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Tier1 Research: Growth in Internet Traffic Is Significantly Increasing Demand for Cabinets in Top Colocation Facilities

Posted on: Thursday, 5 April 2007, 09:00 CDT

A new report by Tier1 Research finds that recent growth in Internet traffic has caused a spike in interconnection and has significantly increased the demand for cabinets in top colocation facilities. As a result, a number of competitors are vying for dominance in the interconnection facility market. These findings are contained in a report released today by Tier1 Research (T1R), an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors.

"The carrier-neutral colocation market is continuing to develop in North America, and leadership in this market is up for grabs," said Daniel Golding, Vice President and Senior Analyst at T1R and lead author of the report. "Over the next four years, we believe there are several trends that will have a significant impact on interconnection growth and the carrier-neutral colocation market -- and on the companies that are looking to 'make it or break it' in this market."

This 37-page report, titled 'Carrier Neutral Colocation 2007,' is an in-depth, competitive analysis of the carrier-neutral colocation market. The report provides financial professionals, executives, prospective customers, sales staff, engineers, product marketing staff and support staff with an overview of the carrier-neutral colocation market, including analysis of customer preferences, industry trends, pricing directions and market dynamics. Managed service providers that sell colocation, as well as carrier colocation providers that are competing directly with the carrier-neutral providers, will benefit from this report.

The trends covered in this report include:

Stagnant conventional voice interconnection -- The proliferation of Competitive Local Exchange Carriers (CLECs), the breakup of the Bell system and the large number of highly competitive international long distance providers meant that numerous interconnects were necessary to keep everyone 'talking.' However, a number of factors -- including voice over IP (VoIP) and a lack of independent mobile telephone providers -- has resulted in a stagnant, if not shrinking, quantity of Public Switched Telephone Network (PSTN) voice interconnects.

Increased growth in Internet traffic -- Internet traffic has been growing at about 15-20% per quarter, effectively doubling every 12 months. This increase in Internet traffic has resulted in significant growth in network interconnection.

An increasing number of entities wishing to interconnect -- The number of websites and Internet content sources has grown considerably over the 2004-06 time frame, as successive waves of social networking, picture-sharing and video-sharing websites have come online.

A subsequent increase in the absolute number of cross connects in interconnection facilities -- Just as the number of entities choosing to interconnect is increasing, so, too, is the number of interconnections per customer.

The resolution of the network neutrality issues currently under intense debate -- The issue of network neutrality will have significant bearing on the interconnection facility market in the years ahead.

Key Companies Covered

The report covers key public and private companies in the carrier-neutral colocation sector, including the following: Equinix, Switch & Data, Telehouse America, Telx, Terremark, Digital Realty Trust, CRG West and 365Main.

Report Orders

To learn more about this report, contact Lori Larson, Business Development Manager with Tier1 Research, at 239-561-9504 or at lori@tier1research.com.

About Tier1 Research

Tier1 Research analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors. Tier1 blends traditional Wall Street investment research with industry analysis to deliver dynamic market and financial intelligence. Clients include institutional investors and technology vendors, along with end users and venture capitalists. These clients leverage Tier1 Research's analytical insight for idea generation, trend identification, due diligence and grounded opinions, as well as metrics and forecasts on companies and industries covered. Since its founding in August 2000, Tier1 Research's coverage has spanned the largest publicly held technology companies as well as smaller, pioneering public and privately held companies in order to provide comprehensive assessments of all companies impacting the technology marketplace in a meaningful way.

Tier1 Research, a division of The 451 Group, is headquartered in Minneapolis. For additional information on its research coverage and services, visit www.t1r.com.

Source: Business Wire

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