Verizon, Equinix cooperate on SDI to colo data centers

The trend toward network virtualization

Service providers use network virtualization software to split up bandwidth into independent channels and then assign those channels to customers. Verizon has used network virtualization in providing software-defined WAN and security services. Verizon's new SDI service is an expansion of the company's use of network virtualization, which, until now, was used mostly for software-defined WAN and security services, said Steve Vachon, an analyst at Technology Business Research Inc.

"This [SDI] is really the next platform leveraging software-defined networking," Vachon said. 

The Verizon-Equinix offering would appeal to large enterprises that, for example, have offices in New York but want to use an Equinix data center in London to test and develop business applications for customers or partners in Europe.

"You're connecting to the New York [Equinix] data center, and then you're riding their cloud infrastructure," Munroe said.

Tapping into the Equinix exchange frees an enterprise from having to spend money on establishing network capabilities in London, Munroe said. Companies can also lease computing and storage from Equinix.

Once testing is complete, a company could then decide whether to launch a permanent facility for serving European customers or sticking with Equinix, Munroe said.

As a market trend, the Verizon-Equinix deal is the latest example of how service providers have chosen to partner -- rather than compete -- with co-location companies. A year ago, AT&T sold 31 data centers to Brookfield Infrastructure Partners for $1.1 billion, and Verizon sold its 29 data centers to Equinix in 2016.

Rather than compete with co-location providers and infrastructure-as-a-service providers, such as AWS, Microsoft and Google, service providers are focusing on providing the networks that enterprises use to connect to those companies.