Content providers and Covid drive US, Canada bandwidth boom

With the pandemic amplifying the international bandwidth market’s critical role in keeping the world connected and moving, in Canada and the US this has resulted in international bandwidth connected to and between those countries more than doubling every two years between 2016 and 2020, a study from TeleGeography has calculated.

In its report, the global telecoms market research and consulting firm noted that if demand was the key factor in assessing the health of the global bandwidth market, then the market is thriving. It said that on a global scale, total international bandwidth has more than quadrupled during this period, exceeding 2Pbps. Overall demand has accelerated across not just the US and Canada, but on nearly all global networks, with operators feeling this increase most acutely in the access networks.

The report also showed that to get a sense of content providers’ thirst for bandwidth to and from the US and Canada, hyperscalers accounted for 91% of used capacity on the transatlantic route in 2020, but just 12% on the Europe-East Asia route. Demand growth has been strongest on links connected to Africa, which experienced a compound annual growth rate of 54% between 2016 and 2020.

And growth in the most developed markets in the world – Europe and the US and Canada – wasn’t far behind. TeleGeography noted that mature markets typically grow more slowly than developing markets, but that is not really the case when it comes to global bandwidth demand.

Historically, carrier networks provisioning public internet services have been the engine for demand growth in international capacity. Yet the study revealed that the leading major content and cloud service providers – Google, Facebook, Amazon and Microsoft – have become the primary sources of demand, with the top priority in their international network planning being to link their datacentres and major interconnection points.

As of 2020, these companies were the dominant users of international bandwidth, said TeleGeography, accounting for two-thirds of all used international capacity. But their capacity requirements vary extensively by route, it added.

As such, they often take tremendous capacity on core routes, while focusing much less than traditional carriers do on secondary long-haul routes, said the analyst. To get a sense of the contrast between mature and developing markets, TeleGeography pointed out that content providers accounted for 91% of used capacity on the transatlantic route, but just 12% on the Europe-East Asia route.

“Content providers like Google, Facebook, Amazon and Microsoft are huge drivers for bandwidth demand across the globe,” said Anahí Rebatta, senior analyst at TeleGeography. “Their top priority is to link their datacentres and major interconnection points, meaning they often take tremendous capacity on core routes, while focusing less on secondary long-haul routes.”

While the share of content provider capacity on some routes may be much lower than on others, the growth in their demand across all routes has been relentless, the study showed. A comparison of content providers’ international capacity demand growth compared to that of all other networks revealed that across six of the world’s seven regions, content providers added capacity at a compound annual rate of at least 62% between 2016 and 2020, compared to a rate no higher than 47% for others.

This is having a huge impact on capacity, with demand for international bandwidth more than doubling every two years. “To meet this demand, companies are investing in existing networks and in new infrastructure,” said Rebatta. “The lit capacity on major submarine cable routes is soaring to keep pace with demand. Between 2016 and 2020, lit capacity more than tripled on many routes. The swiftness of growth was the most rapid on the transatlantic route, where lit capacity increased nearly five-fold between 2016 and 2020.”

The TeleGeography study found that in addition to lighting new capacity, new systems were coming online across all routes. The year 2016 initiated a period of significant global investment in the sector, with cables with a combined construction cost of $10.9bn entering service between 2016 and 2020, and every major subsea route seeing new cables deployed during this period.

TeleGeography expects investment to continue across all global routes. Based on publicly announced planned cables, it forecasts that over $8bn worth of new cables will enter service between 2021 and 2023.