Silicon Valley: The Hub of Western North America

Digital corridors, where data traffic flows between major metros or across countries, are creating new revenue opportunities for both regional and multinational businesses. These digital corridors between metros around the world are creating an extended form of conurbation, extending the reach of metro areas across terrestrial and subsea routes that span neighboring countries and continents. And just as the urban sprawl of many countries started along major transportation routes — riverways, railways and highways — we are now seeing this same type of urbanization along major metro area digital exchange routes, such as Silicon Valley in the Western U.S., New York City in the Northeast and Washington D.C. in the Southeast.

We are also seeing an interesting trend among our more than 10,000 customers on Platform Equinix®, where 88% of those businesses are in multiple metro Equinix International Business Exchange™  (IBX®) data centers. Across our global footprint in the Americas, EMEA and Asia-Pacific (AP), 74% of our customers are in multiple regions and 62% are in all three regions.[i]

These global metro expansion trends are creating interesting digital traffic dependencies around the world. According to Pingdom, the vast majority of the source of digital content is not local to the consumer, usually requiring local caching to improve performance. As shown below, most U.S. traffic is delivered locally. Canada is a mix of local and remote distribution and Greenland, Mexico and certain South American countries primarily depend on content coming from the U.S. Most of EMEA consumes digital content locally, but Africa and the Middle East are largely dependent on traffic coming from other regions, either routed from the U.S. through Singapore or Amsterdam. And the majority of Asia-Pacific content is being delivered locally, aside from some islands that rely on other APAC content sources. However, traffic coming from AP to the Americas are being routed through Australia for political reasons.

Deep Blue: 100% of the content is locally cached
Red: 100% of the content is coming from another place.
Other: shades of these colors represent some percentage of local and remote content

Source: Pingdom

Silicon Valley: A central hub for the Western North American digital corridor… and beyond

Silicon Valley (SV) is in the middle of a wide reaching digital corridor that spans south through Los Angeles (LA) and into Mexico and LATAM, and north through Seattle into Canada. This Western North American digital corridor also has gateways to Asia-Pacific (via FASTER and Hawaiki Cable, Pacific Light Cable Network (PLCN)) and South America (via Google’s Curie) through LA and Seattle subsea landing cable systems.

The SV metro area is home to the densest concentration of tech companies (2,000+) including leaders such as Apple, Google, Oracle and Intel. It is also home to 14 Equinix IBX facilities that house more than 670 businesses, including 135 networks, 48 local cloud service providers (CSPs) and 163 G2000 companies.

The fourth volume of the Global Interconnection Index (GXI) predicts that private interconnection bandwidth capacity will increase in the SV metro by 46% annually (1,112 Tbps) between 2019 and 2023. The top three vertical industries driving this  growth are Telecommunications, Cloud & IT Services and a thriving Content & Digital Media sector that supplies digital media to the majority of the world. This growth illustrates the trend of enterprises in Equinix SV IBXs directly exchanging data with their suppliers and customers, reducing the use of intermediaries; thereby reducing the cost of transport and improving their time to market.

Taking the digital corridor south through Los Angeles and Mexico… and into LATAM

The Los Angeles metro area is home to more than 240,000 businesses with robust Manufacturing, Biotech, Aerospace and FinTech industries, and of course, a vibrant Content and Digital Media sector. Equinix LA IBX data centers house 102+ network services, 18+ local CSPs and 90+ G2000 companies. Equinix LA also operates the 2^nd largest internet peering exchanges in the metro.

Equinix’s LA4 IBX houses some of the newest subsea cable systems, with direct access to PLCN going to AP and the Google Curie route to Chile. In 2022, the Southern Cross NEXT to Australia, New Zealand, Fiji, Tokelau and Kiribati will be located in Equinix’s LA metro campus. With an abundant selection of network providers, subsea cable access, and cloud on-ramps, Equinix LA is a lucrative hub for regional and global businesses along the Western North American digital corridor.

The Mexico City metro area is a greenfield opportunity for enterprises and network and cloud service providers to expand into that country’s manufacturing and financial services industries. Average internet traffic flowing across Mexico’s borders totaled 3.086 Tbps in 2020, mainly from the U.S., Mexico’s largest trading partner. And the average internet traffic flowing into LATAM has grown 59% from 2019 to 2020 from 9.8 Tbps to 15.6 Tbps.[ii] Equinix Mexico IBX data centers mainly exchange traffic with the Dallas metro IBX facilities, with a portion of their traffic going north to the Equinix LA metro data centers. However, new growth is expected between Mexico and the North American Western corridor and LATAM. By 2023, the GXI Volume 4 estimates interconnection bandwidth capacity will grow in Mexico City annually by 53% (209 Tbps) and in the LATAM region as a whole by 50% (1,479).

Moving Northward to Seattle and into Canada

Washington State is home to 10 Fortune 500 companies, including Amazon, Costco, Microsoft and Starbucks, and is an incubator for 5,044 startups, with 2,286 of those within the city of Seattle. Equinix Seattle is home to 69 networks, 13 local CSPs and 85 G2000 companies. Our Seattle data centers are also home to Financial Services, Health & Life Sciences and Manufacturing industries, in addition to a growing CSP ecosystem.

Equinix’s Seattle IBX facilities are the closest interconnection hubs between the U.S. and AP markets through high-speed, low-latency subsea cable routes to Japan via the FASTER subsea cable landing station and indirect access to other subsea cable routes, such as Southern Cross and the Hawaiki Cable that connects North America to AP markets.

Another greenfield region of this digital corridor is Western Canda in the Calgary, Kamloops and Vancouver metros, where the average international internet traffic coming across Canada borders was 2.950 Tbps in 2020 — the majority coming in from the U.S. and the U.K. With our acquisition of 13 Bell Canada data centers, in addition to our Toronto facilities, we can interconnect Canada from coast-to-coast.[iii]

Across the Pacific to Japan

The Tokyo metro area is the engine of the Japanese economy. Access between Tokyo and the Western North American digital corridor opens up the opportunity for Trans-Pacific traffic exchange between Japan’s businesses and those in North and South America. Equinix Tokyo metro data centers are home to 860+ businesses, including 80+ network services, 12+ CSPs and 160 G2000 companies. With growing Retail/Wholesale, Banking, Manufacturing and Professional Services industries and subsea access to Tokyo markets from the U.S., Australia, Russia, EAEA and Asia, this digital corridor is poised for growth. The GXI Vol. 4 predicts that private interconnection bandwidth capacity in Tokyo will grow annually at a rate of 48% (1,138 Tbps). Highly regarded in networking, with an 86% penetration rate for fiber-to-home internet connection and ~97% for mobile phone, Tokyo is Japan’s hub for internet communications.

Western North American internet traffic exchange is expanding in international digital corridors

In this article, we’ve identified digital corridors that span routes between Western North American metros from Mexico to Canada and extending out to Japan and LATAM.

For example, the total international bandwidth capacity of internet traffic in 2020 coming across U.S. borders from the following countries is show in the table below: [iv]

Source: Telegeography^iv

Following the data traffic patterns across digital quarters on Platform Equinix identifies where the growth potential and greenfield opportunities lie across metros, regions, countries and continents. By leveraging our digital corridor blog series and the annual GXI report, you can strategically map out a regional and/or global expansion strategy for your digital business.

[i] Equinix Q1 FY2021 Earnings Presentation.

[ii] TeleGeography’s Global Internet Geography, Mexico and LATAM, 2021.

[iii] TeleGeography’s Global Internet Geography, Canada, 2021.

[iv] TeleGeography’s Global Internet Geography, United States, 2021.