What Australian businesses need to know about Microsoft 365 and ExpressRoute

A question we hear from time to time from larger clients is whether ExpressRoute is the right way to connect to Microsoft 365. It sounds logical: a private, dedicated circuit straight into Microsoft’s network must be better than regular internet, right? The answer is more nuanced than it used to be, and Microsoft’s own guidance has shifted significantly.

If you are evaluating connectivity options for Microsoft 365 in 2026, this article covers what ExpressRoute actually is, what Microsoft now says about using it for Microsoft 365, and what most Australian businesses should be doing instead.

What is Azure ExpressRoute?

Azure ExpressRoute is a private network connection between your on-premises infrastructure and Microsoft’s data centres. ExpressRoute connections do not route through the public internetwhich gives you more predictable latency, consistent bandwidth, and a connection that does not share capacity with general internet traffic. It connects via a third-party provider, a carrier or colocation exchange, at a peering location. In Australia, peering locations are available in Sydney, Melbourne, Canberra, and Perth, served by a range of local and global carriers.

ExpressRoute is well suited to Azure workloads: large data migrations, private access to virtual machines, business continuity replication, and regulated industries that cannot allow data to traverse the public internet. Those are its strongest use cases.

Microsoft’s current position on ExpressRoute for Microsoft 365

This is where the story has changed. As of March 2026, Microsoft’s official guidance states clearly that they do not recommend ExpressRoute for Microsoft 365 because it does not provide the best connectivity model for the service in most situations. Microsoft now requires explicit authorisation before any subscription can use ExpressRoute routing for Microsoft 365 traffic. They review every request and approve it only in genuinely rare scenarios.

The reason is architectural. Microsoft 365 was built to be accessed over the internet, with thousands of front-door endpoints distributed globally. Forcing traffic through a fixed ExpressRoute circuit in one location can actually make performance worse for users who are not physically near that circuit. Real-time workloads like Teams calls are especially sensitive to this, routing them through the wrong geographic path introduces latency and jitter, not reduces it.

When ExpressRoute for Microsoft 365 might still apply

There are narrow scenarios where Microsoft will grant authorisation. These generally involve very large organisations with specific regulatory requirements, or hybrid architectures where Azure and Microsoft 365 workloads are tightly combined. For most Australian SMEs with fewer than 300 users, none of these scenarios apply.

The scenarios that can justify an exception include:

• Organisations in regulated industries where all traffic must stay on private circuits, with a documented compliance requirement to that effect.
• Businesses already running ExpressRoute for Azure IaaS workloads who need to extend selective Microsoft 365 routing through that existing circuit.
• Large enterprises with fixed, centralised network egress points where the peering location is geographically appropriate for the majority of users.

Even in these cases, ExpressRoute does not replace internet connectivity for Microsoft 365. Some endpoints, including content delivery networks and public DNS, must always traverse the internet regardless of your circuit configuration.

What most Brisbane businesses should do instead

For the vast majority of Queensland businesses, the right approach to Microsoft 365 connectivity is optimising your internet connection rather than replacing it with a private circuit. Microsoft has invested heavily in bringing its network closer to users, and a well-configured internet connection with local breakout performs better than a circuit that backhauled through Sydney or Singapore.

The practical steps that actually move the needle:

• Use a quality business internet connection. A reliable business NBN or Ethernet service with a reputable provider gives you a solid foundation without the complexity and cost of ExpressRoute.
• Configure split tunnelling if you use a VPN. Forcing Microsoft 365 traffic through a corporate VPN is one of the most common causes of Teams and SharePoint performance issues. Split tunnelling routes Microsoft 365 traffic directly to the internet.
• Check DNS configuration. Microsoft 365 uses DNS to direct users to the closest front-door endpoint. Misconfigured DNS can route Australian users to servers in the US.
• Use Microsoft’s connectivity test tool. Microsoft provides a free network connectivity test at connectivity.office.com that identifies specific configuration problems affecting your location.

For businesses already on Azure with significant IaaS workloads, a cloud migration assessment is a better starting point than jumping straight to ExpressRoute. Understanding what is in Azure versus what is in Microsoft 365 determines which connectivity approach makes sense for which traffic.

ExpressRoute still has a genuine role for Azure workloads

None of this means ExpressRoute is a product to avoid. For Azure-hosted workloads, it remains a strong choice in the right context. Microsoft Learn documents the scenarios well: large data ingestion into Azure storage, private connectivity to virtual machines and databases, and hybrid architectures that extend your on-premises network into Azure regions. These benefit from ExpressRoute’s predictable latency and dedicated bandwidth in ways that Microsoft 365 SaaS traffic generally does not.

If your business runs regulated workloads in Azure, financial records, health data, government information, and needs to keep that traffic off the public internet, ExpressRoute is worth evaluating with your IT consultant. The cost starts at circuit-plus-provider fees, and Australian providers quote separately from the Azure circuit charge, so get a full picture before committing.

Getting the Microsoft 365 connectivity conversation right

The shift in Microsoft’s guidance matters for any business that was told a few years ago that ExpressRoute was the premium option for Microsoft 365. It was presented that way by many in the industry, including in older documentation. The current position is different, and acting on outdated advice can mean paying for infrastructure that makes your environment more complex without improving performance.

We work with Queensland businesses across professional services, transport, healthcare, and other industries. The connectivity question comes up regularly. Our IT consulting team can assess your current network setup, identify where Microsoft 365 performance is being constrained, and recommend practical steps, whether that is a better internet service, fixing a VPN configuration, or a more significant infrastructure change for the right reasons.

Where to from here?

If Microsoft 365 performance is a concern for your business, or you are unsure whether your current network setup is working as well as it should, start with a conversation. Get in touch with the TTA team and we can take a look at what is actually happening on your network before recommending a path forward.