TeleGeography Workshop

Brianna, Tim, and Jon

PTC
January 21, 2024
www.telegeography.com
Here’s what you get for the price of admission
1. Global Pricing Trends in a
New Era
• Brianna Boudreau

2. Towards an Interconnection
Index: Ranking the World’s
Greatest Hubs
• Tim Stronge

3. The Data Center Market

Blazes a New Trail
• Jon Hjembo
https://www2.telegeography.com/ptc-2024

www.telegeography.com
Global Pricing Trends in a New
Era
Brianna Boudreau

PTC
January 21, 2024
www.telegeography.com
 E R A
NG
PR ICI
O U R
E IN
E ’R
W

www.telegeography.com
The Set List
• Transport Pricing
• Are we out of the woods yet? Has price erosion returned to “normal?”
• How do trends compare across regions?
• 400 Gbps
• How have 400 Gbps pricing models rolled out?
• Lessons learned from 100 Gbps
• IP Transit Pricing
• Impact of transport on transit pricing
• Impact of network investments on existing hubs & secondary markets
• Our Next Era
• Where are we headed in 2024?
• Potential changes in customer purchasing patterns

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Transport Pricing
Are we out of the woods yet?

www.telegeography.com
Wavelength prices declining is Nothing New
Weighted Median 100 Gbps Wavelength Prices, 2020-2023

-13%
Average CAGR price decline
globally since 2020

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Long Story Short, declines slower than earlier eras
Weighted Median 100 Gbps Wavelength CAGR Price Decline, 2017-2020 vs. 2020-2023

100 GBPS AVERAGE

CAGR PRICE DECLINE
MAJOR ROUTES

2017-2020
-30%

2020-2023
-13%

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On routes to Asia, erosion has yet to Begin Again
Weighted Median 100 Gbps Wavelength Prices & CAGR Price Decline

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That’s When modest price erosion maintains global
price differences
Weighted Median 100 Gbps Monthly Lease Prices Relative to London-New York

Major Route Price

Comparisons
Marseille-Singapore
4.3x price of Lon-NY

LA-Tokyo
2.7x price of Lon-NY

Miami-São Paulo
2.8x price of Lon-NY

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But it’s been a Cruel Summer on other routes
Weighted Median 100 Gbps Wavelength Prices, 2020-2023

RFS of
PEACE

RFS of -26%
Equiano Average CAGR price decline
since 2020

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But it’s been a Cruel Summer on other routes
Weighted Median 100 Gbps Wavelength Prices, 2020-2023

-34%
Average CAGR price decline
since 2020

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New cable construction isn’t going out of Style
Total Cable Construction Costs by Region

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New cable construction isn’t going out of Style

https://www.submarinecablemap.com/status/planned
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So, are we Out of the Woods yet?
• Delays in capacity upgrades and new cable activation
• Global supply chain disruptions and card shortages have largely resolved
themselves, but geopolitical issues (such as those in the South China Sea & the
Red Sea) continue to delay new network projects.
• Fewer cables with inventory at one time = less competitive price pressure.
• On routes with recent upgrades, new supply, and pre-sales on new systems, price
erosion returning to higher levels.
• Look what you made me do
• Uncertainty on the timeline of future supply on some routes has changed customer
purchasing patterns.
• Supply is snatched up before it becomes available or bought in bulk. Customers
taking capacity at the price that is offered helps maintain price points.

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400 Gbps Pricing
…Ready for it?

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I Can See You: 400 Gbps pricing models taking
shape Global 400 Gbps Prices & Price Multiples

100:400 GBPS
AVERAGE GLOBAL
PRICE MULTIPLE

Terrestrial
3.5x

Subsea
3.9x

www.telegeography.com
The Last Time: Evolution of 10:100 Gbps price
multiples Global 10:100 Gbps Price Multiples

10:100 GBPS AVERAGE

GLOBAL PRICE MULTIPLE

2016
6.5x

2023
4.0x

www.telegeography.com
400 Gbps Pricing …Ready for it?
• 400 Gbps uptake reportedly slower than initially anticipated.
• Sales limited to shorter terrestrial routes within Europe and the U.S, & trans-
Atlantic.
• Asia and Oceania reporting limited demand so far.
• As a result, only a slight discount between 100 & 400 Gbps.
• Low multiples of 2.5-3x on terrestrial routes have been reported.
• As demand picks up, multiples will erode.
• Additional savings on install, cross-connect charges, and
power consumption compelling for higher capacity buyers.

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IP Transit Pricing
A trend we know all too well

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Transit prices starting to Shake It Off
Weighted Median 10 GigE IP Transit Prices in Major Global Cities

-17%
Average CAGR price decline
globally since 2020

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Returning to that trend we know All Too Well
Weighted Median 10 GigE CAGR Price Decline, 2017-2020 vs. 2020-2023

10 GigE AVERAGE CAGR

PRICE DECLINE MAJOR
ROUTES

2017-2020
-22%

2020-2023
-17%

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Timeless: Prices falling in APAC
Weighted Median 10 GigE IP Transit Prices & CAGR Price Decline

-20%
Average CAGR price
decline since 2020

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So It Goes: Reducing premium in secondary markets
Weighted Median 10 GigE IP transit prices relative to Singapore
APAC Price
Comparisons
Bangkok
4.4x price of
Singapore

Manila
4.7x price of
Singapore

Taipei
1.5x price of
Singapore

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Change to 100 GigE in global hubs
Weighted Median 100 GigE IP Transit Port Prices

7.2x
Global by carrier
average 10:100 GigE
port multiple

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It’s Time to Go: Assessing the case for 100 GigE
Nx10 GigE & 100 GigE with Cross Connect Prices in New York

Cheaper to purchase
100 GigE port

Cheaper to purchase
10 GigE port

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IP Transit Prices
• Return to a trend we know all too well
• Global IP transit prices continue to fall at a steady pace.
• In established hubs declines enabled by escalating volumes & lower unit
costs.
• In secondary markets declines drive by reductions in the underlying cost of
transport and increasing local traffic exchange.
• 100 GigE ports now represent majority of sales in key hubs
• Price multiples remain high, but savings on install, cross connects & ease
of management are compelling factors.

www.telegeography.com
Our Next Era
• Will price erosion return to normal? Or is there a “new normal?”
• While supply chain constraints are largely resolved, geopolitical issues still
delaying new submarine cable systems on some routes.
• Change in the competitive landscape
• Approaching an era of cable retirements, which could change the number of
bandwidth suppliers on some routes.
• Change in customer purchasing patterns
• When does it make sense to purchase a fiber pair/spectrums vs leasing
wavelengths?
• Fiber pair pricing is very cable specific and not subject to the same pricing
trends we are used to.
• More local market growth for IP transit
www.telegeography.com
Towards an Interconnection Index:
Ranking the World’s Greatest Hubs
Tim Stronge

PTC
January 21, 2024
www.telegeography.com
The interconnection index: what we’re doing
• Questions we’re often asked
• What is the next emerging hub in
region x?
• How do various hubs compare to
each other?
• Where should I expand in country
X besides the largest city?
• We will solve with data and
maps

www.telegeography.com
Let’s think about the data sets for each city
• Data Centers • Market Potential
• Data center infrastructure • Geography and demographics
• Internet exchange infrastructure • Local access
• Network Connectivity • Power
• Cloud infrastructure • Regulations and governance
• Long-distance internet
• Long-distance transport
• Pricing

www.telegeography.com
Example city: Osaka Smallest city = 500 pop.
Normalized
Largest city = 32,224,328 pop.
Data Group Category Value Score
Geography and Demographics GDP per Capita $39,734 17.7

Geography and Demographics Population 12,815,240 39.8

Geography and Demographics Population in Nearby Cities 20,298,215 25.2 Osaka is 39.8% between the
Geography and Demographics Group Average 27.6 MIN and MAX cities

Cloud Infrastructure Cloud Local Zones 2 40.0

Cloud Infrastructure Cloud On-Ramps 7 17.5

Cloud Infrastructure Cloud Regions 5 55.6

Cloud Infrastructure Cloud Regions Planned 0 -

Cloud Infrastructure Group Average 28.3

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Example city: Osaka
Normalized
Data Group Category Value Score
Geography and Demographics Group Average 27.6

Cloud Infrastructure Group Average 28.3

Data Centers Group Average 31.8

Internet Exchanges Group Average 18.0

Local Access Group Average 36.3

Long-Distance Transport Group Average 13.7

Power Group Average 30.8

Pricing Group Average 85.3

Regulations and Governance Group Average 84.4

Overall Score 39.6

www.telegeography.com
Screenshot of full list: 600k data points

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What are the highest-scoring hubs?
Top 5 Cities by Overall Score

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Overall quantity isn’t all that matters
The “shape” of a city’s interconnection assets matters too!

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Top 3 hubs in each region
Legend

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Biggest gainers in near term
Top 20 Cities with Fastest Expected Gains in Next Two Years

Madrid Beijing

Riyadh

Kuala Lumpur
Fortaleza

Santiago

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How can we measure long-term potential?

Size of underlying market (demographics, power, governance)

𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑑𝑎𝑡𝑎𝑠𝑒𝑡𝑠

(𝐷𝑎𝑡𝑎 𝐶𝑒𝑛𝑡𝑒𝑟 + 𝑁𝑒𝑡𝑤𝑜𝑟𝑘 𝐶𝑜𝑛𝑛𝑒𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑑𝑎𝑡𝑎𝑠𝑒𝑡𝑠)

Size of existing telecom hub infrastructure

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Underserved cities?
Top Cities with Highest Potential : Current Score Ratio

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Laws matter
Governance Scores for Selected Asian Hubs

Control of Government Regulatory Voice and

City Corruption Effectiveness Quality Rule of Law Accountability Average

! Tokyo 80 88 83 91 80 84

" Singapore 93 100 100 96 52 88

# Seoul 61 82 77 81 76 76

$ Beijing 44 64 43 53 11 43

% Jakarta 33 62 56 49 57 52

& Kuala Lumpur 49 75 66 67 53 62

' Bangkok 33 56 56 55 37 47

( Manila 31 54 53 42 52 46
) Darwin 85 86 93 89 88 88

Underlying data source: Daniel Kaufmann and Aart Kraay (2023). Worldwide Governance Indicators, 2023 Update (www.govindicators.org),

www.telegeography.com
Let’s talk electricity
Planned Electricity Generation Sites – All Sources

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
Can you guess the source of power?
Planned Electricity Generation Sites – Coal

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
Can you guess the source of power?
Planned Electricity Generation Sites – Gas

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
Can you guess the source of power?
Planned Electricity Generation Sites – Wind

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
Can you guess the source of power?
Planned Electricity Generation Sites – Hydro

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
Can you guess the source of power?
Planned Electricity Generation Sites – Solar

Underlying data source: Global Energy Monitor (https://globalenergymonitor.org/)

www.telegeography.com
The importance of weighting
Selected City Scores – Default Weights

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The importance of weighting
Selected City Scores – Heavier Weight on Power/Electricity

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Final thoughts
• All the stuff you’ve just seen is subject to change
• We need your help!
• What data sets are important to you?
• What weights should we assign?

www.telegeography.com
Sources
• Telecom and demographic:
• https://www2.telegeography.com/data-center-research-service
• TeleGeography proprietary datasets
• Power:
• https://globalenergymonitor.org
• Global Energy Monitor
• Governance:
• https://www.govindicators.org
• Daniel Kaufmann and Aart Kraay (2023). Worldwide Governance
Indicators.

www.telegeography.com
The Data Center Market Blazes a
New Trail
Jon Hjembo

PTC
21 January 2024
www.telegeography.com
Themes we’ll investigate

Exploring the APAC frontier

Is power the new gold?

Coping with high costs

www.telegeography.com
Exploring the APAC frontier

Source: National Geographic. “Admiral Zheng He, surrounded by the “treasure ships”” by Hong Nian Zhang

www.telegeography.com
The market has already ventured forth
Capacity and Growth, Select Data
Center Markets, 2023
• Singapore: few sites have
opened since moratorium
began

• Mumbai: among the 20

largest global markets,
Mumbai’s growing the
fastest

• Kuala Lumpur and Jakarta

already experiencing rapid
growth that will only gain
momentum

www.telegeography.com
And continues to develop new markets
Changes in Growth,
Gross Data Center Capacity, Select Markets

Singapore: Pipeline limited to

license winners + SingTel

India 3rd only to U.S. and China

globally for number of new projects

Chinese and U.S.-based operators

converging in Malaysia

International providers snapping up

land in Malaysia and Indonesia

Lots of global operators building

into Japan and Korea

www.telegeography.com
Chinese development pushes inland
Capacity and Growth, Select Data
Center Markets, 2023
• Very slow growth for Hong
Kong

• Strong growth in Yangtze

River Delta and capital
region

• Focus has moved to the

mainland and will continue
to do so

www.telegeography.com
Chinese development pushes inland
Number of Planned Sites by Metro in China, 2023
Chinese policy: “Eastern Data,
Western Compute”
• Eastern Data: low-latency
applications for large
population centers
• Western Compute: data
storage in areas with more
abundant power

Significant pipeline development:

• North – Beijing
• Yangtze Delta – Shanghai
• Greater Bay Area – Shenzhen,
Guangzhou
• Hong Kong? Not so much

www.telegeography.com
Is data power the new gold?

www.telegeography.com
How much power do data centers use?
Commercial operators in these
ten data center markets
Metro Capacity by Gross Power (MW), 2023
consume about 12 gigawatts
(GW) of power

• That’s roughly the same

amount of power used by 9
million homes…for about
1,000 data centers

www.telegeography.com
Scarcity is already an issue
• Singapore: limited pool of licenses

• Netherlands: zoning laws effectively ban

hyperscale

• Germany: Federal Energy Efficiency Act adds

restrictions

• Dublin: operators must provision own energy

generation, but projects still may not be
approved

• UK: Ofgem urgently cleaning up power

connection queue

• Dominion in NoVA is out of transmission

capacity

www.telegeography.com
AI will only make this situation tougher
Amount of power needed is
staggering

• Estimates that AI data centers

will require 2-5x capacity of other
cloud data centers
• Latest gen of individual Nvidia
GPU chips can use as much or
more power than entire cloud
servers.
• H100 and H200 Tensor Core
GPUs tout up to 700W max
thermal design power

www.telegeography.com
Most sites can’t handle the density needed
Supportable Colocation Rack Density, Share of Sites
• Nvidia GPUs use about 6.5-11 kW per 6U Globally (kW/rack), 2023
box.
• So about 45-80 kW per 42U rack

• Vast majority of sites can’t support even

20 kW/rack

www.telegeography.com
How far can we go in searching for power?
• Will data centers be constrained
by location in their hunt for
power?

• Training - perhaps less constrained

• Could open opportunities to deploy to
less crowded, more cost-effective Source: Bulk Infrastructure

locations with more abundant power

• Inference – more constrained due to

latency requirements
• Compounds demand for capacity in
already congested locations

www.telegeography.com
Adapting to the situation
Strong utility partnerships and creative power solutions will be key

• Location: Proximity to utility providers for access to generation

• AWS in Louisa County, VA with Rappahannock Cooperative near nuclear plant
• Digital Realty procuring hydropower from Süwag near Hattersheim campus (FRA)

• Conversion: Site-based mini generator solutions to convert gas power

to electricity
• Expensive but plausible

• Making use of waste heat: Heat transfer for resourceful use of power
• Germany: will be increasingly mandated to transfer waste heat.
• Telehouse to share in FRA via the Mainova district heating network

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Coping with High Costs

www.telegeography.com
Some tech workers fleeing San Francisco for Austin
The cost of
living is too
high!

www.telegeography.com
Energy prices have dropped, but still sit
higher than before IEA Wholesale Electricity Rates, 2H19-2H23

• Prices have generally fallen

since 2020-2022 surge but sit
historically higher than before
2020

• European rates down more

than 60% Y-o-Y but still more
than double what they had
been

• Singapore sits 2x higher than

Eur rates

• Rise and fall relatively

moderate in U.S.
Source: IEA Real-Time Electricity Tracker

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Do colocation prices rise with utility rates?
It’s complicated
• Long-term contracts and lag effect

• Pass-through vs. rolling increases

• Hiding inflationary costs elsewhere– cross connects, base colocation rate,

etc

• Government subsidization

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Colocation prices are higher too
Average Monthly Price per Kilowatt at 4-Kilowatt Density, H2
2021-H2 2023
• European rates rose about
40% between 2H21 and
1H23 and have leveled off

• Asian hub rates continue to

climb north of $500/kW
(driven by Singapore)

• U.S. has lagged at more

competitive level due to
localized competitive
pressure

www.telegeography.com
Will rates continue to rise?
Expected Changes for 2024, Expected Changes for 2024,
Price per kW Price per Cross Connect
• Still inflationary
expectation but outliers
are much less extreme

• Average expectation for

price inflation per kW
slightly slower than H1

• Average expectation for

higher cross-connect rates
has risen. Think lag effect
and hidden cost Note: Columns represent high to low reported expectations of change, and light blue circles
represent average.

www.telegeography.com
The takeaways?
• As Singapore’s growth is curtailed, there’s a concerted push into other subregional
markets:
• South Asia – India
• Southeast Asia – Malaysia
• North Asia - Japan
• And as new infrastructure investment in Hong Kong diminishes, China’s focus moves
further into the mainland

• Commercialized generative AI compounds difficulties in sourcing power

• Inflation is slowing, but rates in many markets are settling at higher levels

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Slide download

https://www2.telegeography.com/ptc-2024

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Thank You

Brianna Boudreau [email protected]

Tim Stronge [email protected]
Jon Hjembo [email protected]
www.telegeography.com