Who is a "WAN Services" Provider, These Days?

Equinix is widely considered to be a “data center” business with a retail focus. 

On the other hand, a huge portion of its total revenue is earned from interconnection, including private cross connects, the cloud exchange linking Equinix sites to other public cloud computing suppliers, connections from Equinix to internet exchange points, ethernet private line services and virtual LAN services.

By most estimates, those sources of revenue represent more than $1 billion annually, out of a total revenue in excess of $6.6 billion. In other words, interconnection revenue represents nearly 18 percent of total Equinix revenue. 

According to IHS Markit, only about 25 telcos globally earn that much from wide area network data transport services. Assume global WAN revenues of about $58.5 billion. Assume that figure excludes WANs created by enterprises themselves at the edge. 

If there are 25 telcos globally each earning at least $1 billion each, then at least 43 percent of total WAN service revenue is earned by those 25 firms. But a few firms, such as China Mobile, earn as much as $24 billion in WAN revenue. AT&T might earn as much as $13 billion. Verzon earns about $12 billion.

China Telecom earns perhaps $17 billion from WAN services. Deutsche Telekom earns perhaps $14 billion from WAN services. NTT Communications earns something on the order of $8 billion. 

Generally speaking, firms do not tend to separately report revenue items that are “too small.” 

Orange does not disclose its WAN revenue, but it has to be at least $1 billion annually, and probably a couple billion to a few billion dollars. KDDI does not disclose its WAN revenue either, but the amount is at least $1 billion. 

Likewise, SoftBank does not report its WAN revenue, but it is at least $1 billion. SK Telecom also does not report WAN revenues, but one assumes it is at least $1 billion. 

Still, add all that up and global WAN revenue earned by those 10 firms might represent $92 billion in WAN services revenue, with the last four firms booking $1 billion to a few billion in WAN revenue. 

By that measure, Equinix would rank almost within the top 10 telcos globally in terms of WAN service revenue, the caveat being that much Equinix interconnection revenue is in the form of local cross connects.

But in an increasingly virtualized world, the difference between a connection inside the building or across the globe might be increasingly insignificant. And Equinix and other data centers will start to be significant providers of interconnection revenue.