Changes are underway in the network connectivity market of the New York metro – one of the world's most important interconnection hubs. Submarine cables from Central and South Americas, Europe, Africa and Greenland land in the region, from where traffic is picked up and carried across the Americas and beyond, from the West Coast, across the Pacific Ocean to Asia-Pacific markets.

Changes in the New York metro market are tied to changes elsewhere around the world, where more and more people access and create digital media content, and more and more companies outsource IT functions to providers of cloud services. Financial services, a New York staple, are still the connectivity industry's bread-and-butter, but the demand they create is not growing nearly as fast as demand by digital media content companies and cloud providers.

As more consumers of network services enter the market, they look for alternatives to incumbent service providers. This is what brought European Internet exchange operators AMS-IX (Amsterdam Internet Exchange) and DE-CIX (Deutscher Commercial Internet Exchange) to New York.

Whether the two newcomers will have success in attracting enough members to compete with peering points operated by the likes of Equinix and Telx remains to be seen. They just arrived, but they arrived because they saw demand. It was not a speculative move.

Cloud and content are kings

Telx, a New York market mainstay, has seen traditional demand drivers remain. But Ben Goneya, the company's VP of product, says the increase in demand from cloud and content companies has been dramatic.

For Telx, the cloud demand has meant providing more and more private interconnection services. Enterprises are using cloud services, but they do not want to connect to them through the public internet. The internet is too unreliable and insecure.

Jim Poole, VP of global service providers at Equinix, another dominant player, says this drives demand for interconnection between cloud provider cages in its data centers and cages leased by network carriers, who transport enterprise data between corporate data centers and the cloud. “That's crated a lot of demand in our particular space,” he says.

Web companies in the business of search engines and social networking are also gobbling up a lot of network in New York. “Those guys are buying big blocks of connectivity,” Zach Nebergall, VP of the metro and dark fiber product group at Zayo, a network services company.

These customers are also increasingly interested in customizing network routes to decrease latency and increase infrastructure diversity, Nebergall says. While not terribly new, these services have lately been in

high demand.

New hubs on the rise

The region's two most important buildings in terms of network density are at 111 8th Avenue (owned by Google) and 60 Hudson Street. Both are in Manhattan. Other locations have been gaining momentum as well, however.

There has been a lot of activity at the Equinix facility at 755 Secaucus Road in Secaucus, New Jersey, Nebergall says. NYSE Euronext's move to open its Mahwah, New Jersey, data center to outside service providers in May 2012 has created a “shift in demand,” he adds.

Another building that has been gaining steam is at 375 Pearl Street in Manhattan, formerly known as the Verizon building. Seattle's Sabey Data Centers bought the 32-story giant by the Brooklyn Bridge in 2011 and commissioned a ton of data center space there last year.

New Jersey, which is just across the Hudson River, is continuing its rise as a major data center market. Brian Warren, VP of product marketing at CoreSite, a Denver, Colorado-based data center provider, says companies choose to go to New Jersey because of cheaper real estate and power but also because there are more purpose-built modern data centers there.

These buildings can provide higher power densities and more room to grow in the future than the old-guard Manhattan carrier hotels can. There are also plenty of connectivity options in New Jersey with low-latency links to those Manhattan hubs.

Fiber availability is one of the big reasons CoreSite decided to build its newest data center in Secaucus. The company held a grand opening for the 280,000 sq ft

building in February.

The European IX factor

Both AMS-IX and DE-CIX have put exchange infrastructure in New Jersey data centers in addition to Manhattan sites. Frank Orlowsky, director of global marketing at DE-CIX, says the operator decided to move into the New York market because of requests from existing customers and because the demand would support more peering points there.

Another reason was Open-IX, a recently created standards organization that wants to stimulate growth of internet exchanges in the US that would provide alternatives to the dominance by Equinix, Telx and a few others. DE-CIX is a member of Open-IX and so are AMS-IX and LINX (London Internet Exchange), another European exchange operator who recently expanded into Northern Virginia.

We don't know at the moment whether the new internet exchanges will become a disruptive force in the market. Their ambitions certainly seem to be somewhere along those lines. DE-CIX has moved into seven buildings in the region, and AMS-IX has moved into six.

What we do know is that the market is different than it was a couple of years ago. There are plenty of new customers and providers, which means lots of options to shape the future.

Read this article and more on the New York-New Jersey data center market in the latest issue of DatacenterDynamics FOCUS magazine. See the digital version of FOCUS magazine or subscribe for the print issue free of charge at on the magazine's website.

To meet key players in the New York metro data center industry and hear about the latest trends, come to the DatacenterDynamics Converged 2014 conference in New York City on Tuesday, 11 March.