I know this is a known issue, however just wanted to post a suggestion on how to fix the problem.

Instance/shard/phase you starting cities and or all zones such that after X (100) characters are in the same zone a new shard is used within the same server. Much like how Neverwinter handles the main city and Starwars:TOR, GW and other games have handled similar issues.

As it helps cap the (N)^2 communication problem with network communication.