Data Center Interconnection: A literal network effect

Research evidence excerpt

Data Center Interconnection: A literal network effect

16 June 2026

US Communications Infrastructure

If you’ve been paying attention to any players in the data center colocation market, it’d be Madison Rezaei

+1 917 344 8622 hard to miss conversations on interconnection. Interconnection is simply linking networks

madison.rezaei@bernsteinsg.com to one another and handing off data, keeping the traffic off of the public internet. Players

do this to minimize costs, lower latency, and increase security. It’s an ~$8B market, but

Nancy Wu measurement has always been a bit wishy-washy…we recently unearthed a new data

+1 917 344 8545

nancy.wu@bernsteinsg.com source and constructed our own proprietary database, giving us new insight into the players.

Spoilers: EQIX is even stronger than you think and AMT’s CoreSite is a great asset.

For enterprise colo data centers, interconnection is a high-margin (70-90%), high-moat

layer that shifts a data center from being commoditized power and space to being a true

network hub. Cross connects (whether physical or virtual) are cheap to make, sticky for

customers, and multiply in value as campuses fill - a literal network effect.

Historically this segment was more buying criteria than revenue driver, but with AI’s

emergence, interconnect is becoming a real growth story. Data is getting heavier, models

bigger, and workloads increasingly latency sensitive...interconnection is increasingly

dictating not only a data center’s right to win, but also its own meaningful revenue stream.

In our new dataset, we look at 645 of the most critical interconnected enterprise

collocation facilities in the world. Across them, we register 21,000+ interconnections from

various network providers across a series of categories: Cloud On-Ramps, Tier 1 / Global