The Opportunity in Digital Infrastructure
Digital infrastructure businesses like data centers, towers, 5G providers, fiber owners, and last-mile ISPs collectively have a multi-trillion dollar valuation. These assets underpin our modern lives.
The IO Digital Infrastructure index (BYTE) provides focused, global access to the secular growth of this industry.
What is Digital Infrastructure?
We demand frictionless access to any data, anywhere, anytime. Enabling this has been the most important theme of the past 50 years and will be for the next 50 years. Powering that vision is a latticework of digital infrastructure assets that allow you to remain connected to a ubiquitous high-quality internet experience.
Well-placed assets like data centers, mobile towers, and fiber connectivity are the Class A real estate of the 21st century. These are growing, resilient, inflation protected assets that generate large amounts of predictable cash flow, enabling strong shareholder returns.
Data centers are the connection nodes of the internet, where different networks tie into each other and where data is stored and distributed. Increasingly data centers are being pushed to the “edge” to improve speed and latency. 5G will drive this even further.
Mobile infrastructure such as cell phone towers, DAS, wifi networks, or small cell technology help take data from a fixed line service and distribute it broadly. As 5G develops, speeds and throughput will increase, as investment grows with it.
Fiber optic and last-mile fixed infrastructure are the expressways that carry data from one location to another. Connecting various data centers are long haul fiber, often sold as dark fiber or lit fiber. Last-mile networks deliver data to and from the end-users
How Big is the Digital Infrastructure Market?
Anytime you open an app on your smartphone, browse the internet, save a document to the cloud, have a Zoom call, or play an online game you are relying on Digital Infrastructure.
Massive, world-changing industries are built on top of Digital Infrastructure. For example, the global cloud computing market is estimated at $275 billion in 2020 and is expected to grow at over 18% per year through 2028. Telecom services revenue is even larger. Industries like these need high-performing Digital infrastructure to effectively serve customers and win.
More People x More Devices x Growing Performance Expectations
= Massive Digital Infrastructure Investment
The telecom industry is a multi-hundred billion dollar global revenue industry that spends over $100 billion annually on CapEx investment on categories like fiber, cable, 5G, mobile towers, and data centers.
Rapidly growing markets like cloud computing are built on top of digital infra. Cloud revenue is expected to nearly quadruple from 2020 through 2028, generating over $1 trillion of global sales and growing.
Why the IO Digital Infrastructure Index?
- Critical assets that underpin the modern economy
- Grow regardless of what use cases win (e.g., streaming, online gaming, SaaS, social media, eHealth, VR/AR, AI/ML, Internet of Things, autonomous driving, crypto, NFTs, etc.)
- Contractual recurring revenue
- Inflation resilient
- Cash generative
- Long-lived, High-Quality assets
Nearly all modern software is delivered as a service (SaaS) on a subscription basis from the cloud. This demands SaaS providers invest in data center usage and users invest in improved last-mile delivery technologies.
Activities that range from surfing social media to using futuristic augmented or virtual reality touch the cloud. The demands on digital infrastructure grows with usage and quality of these technologies.
Video is a massively data intensive application. When we do Zoom video calls or stream movies, the experience is made or broken by the quality of the digital infrastructure delivering the underlying data.