SUMMARYOF FINDINGSTeleGeography Colocation Research

Summary of Main FindingsPricing

Individual Pricing Components

• Median baseline prices (median price per kilowatt for a 4-kilowatt cabinet) are consistentlyhigher in European metro markets than in North America. The median price for North Americanmarkets is $275, while the European median is 31 percent higher at $360.

• Relative median high-density colocation rates (price per kilowatt for 10 kilowatt cabinets) varycompared to prices per kilowatt for standard 4-kilowatt cabinets but average 8 percent lower thanthe standard rate. Whether high-density space is provided at premium or discounted rates is afunction of relative scarcity between power and space.

• Large-scale retail colocation leases are consistently discounted relative to single-cabinet leases,at rates averaging 16 percent lower than standard rentals.

• The gulf between cross-connect rates in Europe and North America has not narrowed. NorthAmerica’s median fiber cross connect price of $300 is still nearly five times the European medianrate.

• Operators in North America generally charge more for fiber cross-connects than for Ethernet,whereas European operators typically charge more for Ethernet cross-connects.

Total Cost Model

• When assuming one cross-connect, total cost for colocation is quite similar between NorthAmerica and Europe. Hong Kong, London, and New York were among the most expensivemarkets covered in the survey, with an average TCO of $1,865 to $2,500 per month.

• When five cross-connects are assumed, the total cost for colocation in North America isdramatically higher than in Europe, averaging $2,690, compared to $2,060 per month. In thismodel, cross-connects account for nearly 55 percent of the Total Cost of Ownership (TCO) inNorth American markets and just 22 percent of TCO in Europe. In competitive markets such asAmsterdam, average TCO was less than $1,800.

Trends and Expectations

• While historical baseline prices fluctuate by metro more than by region, historical cross-connectrates show persistent regional trends. Median rates in key U.S. markets have remained at $300

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over the past year. European rates have dropped back to historic median prices ranging in anarrow band between $55 and $65.

• Across global markets, median near-term price change expectations are flat or lean towardsmodest price erosion.

Capacity and Providers

Metro Capacity

• The international hubs of New York and London are estimated to be the world’s biggest retailcolocation markets, each with at least 7 million square feet of gross data center space.

• A number of sizable regional markets have cropped up around the globe in recent years. Criticalsecondary markets with at least 1 million square feet of retail colocation space include Madridand Moscow in Europe; Toronto, Boston, and Seattle in North America (among others); andSydney and Mumbai in the Asia-Pacific.

High-Growth Markets

• Many of the fastest-growing markets like Stockholm and Phoenix started from small base levelsof capacity, though these two markets in particular have quickly risen to the status of keysubregional markets. Major hubs with healthy growth rates include Toronto, Hong Kong, andSydney.

Vacancy

• Across the metro areas represented in TeleGeography’s latest colocation survey, operatorsindicate average vacancy levels of around 33 percent. Among hub markets with sufficient data toreport, Chicago exhibits relatively low excess colocation inventory, with 21 percent vacancy.Conversely, vacancy rates almost reach 45 percent in New York.

Providers

• Equinix’s acquisition of TelecityGroup gives the company nearly as much capacity in Europe asit has in North America. In North America at least ten operators each control more than 1 millionsquare feet of colocation space.

• In the last two years, Equinix has added almost two times the amount of data center capacity inthe Asia-Pacific that it has added in North America, with new sites coming online in Sydney,Melbourne, Singapore, and Tokyo. While Telehouse’s launch of North Two in London addedmore than 260,000 square feet to its European footprint, it also launched sizable new facilities inOsaka and Tokyo.

Proprietary Data Centers

• Among the proprietary data center operators tracked in the Colocation Database, all are rapidlyexpanding into new markets. Apple has plans to launch massive new campuses in Arizona,Ireland, and Denmark over the next few years, as well as expanding in Oregon. AWS is addingregional availability in North America, China, and the UK. Facebook is concentrating newdevelopment in the U.S. and Europe, and Microsoft is adding data centers across core Europeanmarkets. Google is planning new data centers for Alabama and the Netherlands, and is rapidlyexpanding its Google Cloud availability to key nodes worldwide.

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Connectivity

• Level 3 and Verizon are the most prominent carriers offering connectivity at retail colocationsites, with ubiquitous site presence in North America. AT&T and Zayo are also commonlypresent in North American facilities, while Cogent, TeliaSonera, and BT are heavily representedin European data centers.

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The content on the preceding pages is a section from TeleGeography's Colocation Database

The work is based on sources believed to be reliable, but the publisher does not warrant the accuracy orcompleteness of any information for any purpose and is not responsible for any errors or omissions.

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