How Fiber, Peering, and Cross-Connects Create Moats in Data Centers

Connectivity, not capacity, builds moats. Fiber, peering, and cross-connects decide which data centers compound value and which become stranded warehouses.

Sep 26, 2025

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From the outside, a data center seems like a fortress of concrete and steel. Step inside, and you’ll find thousands of servers, miles of cabling, and enough power equipment to rival a small utility.

But none of it matters without connectivity.

Power keeps machines alive. Cooling ensures they don’t overheat. Yet the network is what allows data to flow in and out. It’s the nervous system of the digital economy—the piece that turns a warehouse of machines into a living node on the global internet.

Without fiber, cross-connects, and peering, a data center is just an island. With them, it becomes the gravitational hub of an ecosystem.

Fiber: The Arteries of Value

At first glance, fiber is simply strands of glass. But where those strands go, and how they’re engineered, determines whether a facility is resilient or fragile.

A single path to the outside world is a liability. One backhoe, one splice cut, and an entire campus can go dark. That’s why serious operators design multiple, geographically diverse routes into long-haul backbones, central offices, and subsea landing stations. The smartest secure indefeasible rights of use on dark fiber, locking in control for decades and aligning those rights with tenant lease terms.

For investors, the fiber map isn’t a side document—it’s a covenant. It reveals whether resilience is engineered into the asset or left to chance.

Meet-Me Rooms: The Marketplaces Inside the Walls

The beating heart of interconnection isn’t out in the street; it’s inside the facility. The meet-me room is where carriers, clouds, and enterprises plug into one another.

Every additional participant multiplies the value of the whole. A new carrier doesn’t just connect to the operator—it opens dozens of potential private connections to everyone else in the building. This compounding effect explains why carrier hotels like 60 Hudson in New York or Equinix SG1 in Singapore command extraordinary premiums. They aren’t the newest buildings or the largest by power, but their dense ecosystems make them irreplaceable.

The meet-me room is where an ordinary colocation site becomes an economic hub.

Cross-Connects: The Cables That Behave Like Annuities

Cross-connects look mundane. They’re just short cables linking one tenant to another or to a cloud service. But on the income statement, they’re gold.

The economics are simple but powerful: a small installation fee plus recurring monthly charges, with minimal operating cost. Once a tenant establishes multiple cross-connects, moving workloads elsewhere becomes prohibitively expensive. Every new connection compounds stickiness, raises switching costs, and increases the predictability of revenue.

That’s why investors often study cross-connect velocity—how many new links are added per tenant per quarter—as a leading indicator of margin expansion and renewal probability.

Internet Exchanges: The Invisible Gravity

If fiber is the arteries and meet-me rooms are the marketplaces, internet exchanges are the gravitational pull.

By allowing networks to peer directly, IXPs cut transit costs, reduce latency, and improve reliability. Their presence can tilt the economics of entire metros. Frankfurt’s DE-CIX, Amsterdam’s AMS-IX, and Equinix’s Ashburn exchange illustrate the dynamic: dense peering attracts networks, SaaS providers, and hyperscalers, which in turn attract investors.

Facilities tied into strong exchanges don’t just rent space. They become the meeting points of the digital economy.

Why Connectivity Dictates Capital Flows

Look at where institutional capital continues to concentrate: Ashburn, Amsterdam, Singapore. The common thread isn’t just megawatts or land—it’s connectivity. These hubs sit at the intersection of subsea cables, dense carrier hotels, and powerful internet exchanges.

That’s why capital keeps chasing the same few buildings, and why power-rich but fiber-poor sites often underperform. A facility can lease its first phase, but without network gravity, churn rises and valuation multiples sag.

Connectivity explains why carrier hotels with modest capacity command higher multiples than newer, larger shells. It explains why subsea-adjacent markets like Marseille or Mombasa suddenly become magnets for investment once landing stations go live.

Real-World Dynamics

Operators at the cutting edge are already reshaping their businesses around connectivity. CoreWeave has built specialized interconnects designed for AI inference clusters where microseconds matter. Meta has quietly become one of the largest private fiber owners in the world, controlling latency end to end. Edge operators prioritize proximity to population centers, often valuing low-latency routes more than raw power density.

Each of these strategies underscores the same truth: network isn’t plumbing. It’s positioning.

Final Takeaway

Fiber, meet-me rooms, cross-connects, and internet exchanges are not technical trivia. They are the hidden levers that determine whether a facility becomes a commodity or a compounding asset.

Here’s the asymmetry: megawatts are visible to everyone, but connectivity is often misunderstood or underappreciated. The investors who can evaluate it rigorously—reading fiber maps like balance sheets, treating cross-connect velocity like a financial KPI, and pricing internet exchange gravity into their models—gain an advantage the broader market overlooks.

In other words, connectivity is the place where diligence effort is low, but payoff is high. That’s the edge.

So I’ll leave you with this: if you could only double one resource in your next build—generator capacity or fiber routes—which would you choose, and why?

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