This Industry Viewpoint was authored by Steve Roberts, Vice President Strategic Investments, EXA Infrastructure
In the race to improve Europe’s digital infrastructure, much of the focus has been on local access networks and funding for broader investments. But as more workloads move to the cloud and hyperscale traffic continues to grow, more attention has been shifting to international connectivity, and in particular to create greater diversity in parts of Europe where there is overreliance on certain long-established routes.
At a local access level, the growth mandate is clear. The European Union has set an ambitious target of connecting all households to a gigabit network by 2030. While, at a long-haul level, the infrastructure improvement focus has moved to interconnection between Europe and its neighbouring regions: Africa, the Middle East and Asia.
As the need for even more diverse routes and network upgrades becomes increasingly apparent, it is essential to address the sometimes overlooked yet critical aspect of Europe’s digital infrastructure. At the long-haul level, infrastructure improvement focus has moved to interconnection between Europe and neighbouring regions.
The need for connectivity across Spain and the Iberian Peninsula is one example – a region which is strategically located and fast becoming a data hotspot. Spain is ideally positioned connecting the Atlantic to the Mediterranean, and across the Balkans towards Asia. Both routes serve as crucial links between continents.
The demand for improved inter-regional connectivity arises primarily from hyperscaler growth, which is generating massive amounts of data. A report by Data Bridge Market Research estimates that the hyperscale data centre market size will grow at a compound annual growth rate of 26.93% between 2021 and 2028.
As we witness an increasing interconnectedness of global markets, businesses relying on cloud-based solutions must adapt their workflows to accommodate the constant movement of data between continents.
This shift requires robust infrastructure and network capabilities to ensure seamless data transfer and accessibility across geographic boundaries. As such, the existing network routes are under pressure to accommodate this data traffic, and need multiple backup links and capacity enhancements, sometimes to routes that have lacked investment in the latest fibre technology for some years.
Rethinking Infrastructure Investment
The digital infrastructure sector is experiencing a surge in investment, mergers and divestments. The exponential growth of data generation and consumption, rise of hyperscalers, cloud computing growth and data-intensive applications, requires a significant expansion and improvement of the underlying infrastructure, particularly across long-haul routes.
Investors have started to recognise the immense market potential and long-term profitability of infrastructure projects in this space, but there is a need for continued commitment as the need for regional interconnectivity will only intensify.
The requirement is no longer limited to short-distance projects connecting two cities in fairly close proximity. Instead, it extends to routes spanning hundreds of miles, across multiple countries, and encompassing both terrestrial and subsea fibre. Europe needs new investment, new thinking and new inter-regional connections in order to digitally bridge previously underserved cities and countries across the continent.
The broader aim right now should be to improve digital infrastructure capabilities in Europe, particularly across the south-eastern regions. Europe needs projects that span multiple countries and link to critically underserved regions with huge potential and major data centre clusters in the area – the Balkans and Caucasus regions being top of the list.
Focus on underserved markets and inter-regional traffic
Looking ahead, there are several regions in Europe where enhanced interconnectivity will be crucial. The Balkans, for instance, are in need of robust digital infrastructure to support economic development and integration into the broader European digital ecosystem. By investing in inter-regional projects, the Balkans can bridge the digital divide and capitalise on the opportunities offered by the digital economy.
The Caucasus region with its strategic location between Europe and Asia has the potential to become a crucial hub for digital trade and innovation. By investing in reliable and diverse network routes, the region can attract international businesses and strengthen its position in the global digital landscape.
The investment required to carry data between continents too needs a fresh perspective and a greater level of ambition than the telecoms sector has historically applied in Europe.
Currently, only indirect routes across multiple operator networks offering mostly old fibre technology are available. Enhancing routing diversity, by connecting Asia and the Middle East via a direct course through Europe, will be a major step forward for European operators, if done right and done soon.
The need for new more direct routes establishing better connection across continent isn’t
just about faster data transfer and better user experience – it’s also about supporting commercial opportunities in Europe and beyond, developing digital services at a faster rate, and ultimately about allowing new ideas across all business sectors to come to life and thrive.
It is important to recognise that diversifying Europe’s inter-regional digital infrastructure goes beyond mere connectivity. It is an opportunity to foster collaboration, innovation, and sustainable growth. By embracing joint ventures and partnerships between different sectors we can do more to drive digital connectivity forward.
As the digital economy continues to evolve, the need for robust and resilient network routes spanning multiple countries will only grow. Investors are increasingly seeing Europe as a gateway for global digital connectivity and a leader in technological innovation – after years of under-investment, the appetite for diversity is driving it.
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