If you have not heard of the concept of Open IX, I strongly recommend you become familiar with it as the tides are turning on this topic here in the states and the seeds that have been planted years ago are starting to bear fruit. Let’s get started:
WHAT IS OPEN IX?
Open IX is a movement among a few major data center providers, network service providers, and large consumers of bandwidth to build alternative and more neutral interconnection options in various markets in the US.
WHY OPEN IX?
Specifically what this amounts to are companies wanting to bypass the high and growing costs of cross connects within major US based IX’s primarily operated by Equinix, Telx, Terremark/Verizon, NYIIX, Coresite and few others. This movement is also driven by US based data center owner/operators (such as DRT and CyrusOne) who see this movement as a strategic way to position against their competition currently managing the existing large IX’s across the US through establishing their own IX’s based on this new standard, thus encouraging clients to deploy inside their facilities vs. their competition’s.
BUT CAN’T ANY DATA CENTER BE CONSIDERED AN IX?
No, simply having a dozen or more different carriers with optics in your facility does not make your facility an Internet Exchange Point (IXP). To be qualified as an IX (or IXP) networks must be interconnected directly on site within the facility, via a dedicated and managed peering exchange. It is easier for facilities with multiple carriers on net to develop an IX, however managing the relationships with both the network service providers and clients leveraging the exchange is no easy task.
WHAT ARE THE PRIMARY BENEFITS OF AN IX?
By understanding the principles of Peering (a voluntary interconnection of administratively separate internet networks for the purpose of exchanging traffic between the users of each network) one can quickly see how an IX drastically reduces the cost of bandwidth for those participating in the exchange, as the bandwidth clearing through the exchange is generally not billed by any of party.
The more locations network service providers and large consumers of bandwidth can interconnect, the fewer paths required for a packet to transfer from a server in a data center to your TV, laptop, mobile device, etc.
Due to the high cost of transport (traffic pushing between facilities) in many regions around the world, and the reality that bandwidth costs outside the US are generally 10x to 100x more expensive due to the limited options available, ISP’s outside the US generally have slower and more limited connectivity to the rest of the internet. The end result here is end users can access more information, faster, as more IX’s are developed in more regions around the world.
ARE THERE OTHER “OPEN” MODELS THAT CAN BE FOLLOWED?
Yep, and it’s primarily the success of EURO-IX that has sparked the conversation and work toward building a similar model here in the US.
My 2 cents is that for so long as providers such as Equinix, Telx and others continue to make it more difficult for network service providers and clients to do business with them, the faster the Open IX movement will spread across the US, creating numerous IX’s to compete with the existing stakeholders. To be clear, what I mean by “more difficult” is:
1. consistently raising the price point for existing and new providers to join an IX
2. mandating that clients purchase a pre-defined bundle of cross connects
3. making any attempt to be selective as to who can and can not deploy within their facility and/or join an IX based on a perceived or actual threat of competition
My belief is that existing IX’s should be trying to evolve their business models by finding creative ways to make it EASIER for any and all companies that wish to leverage their IX to connect. Though the cross connect product has traditionally been a huge money maker for providers a reduction in cross connect pricing is inevitable and already occurring as we found in a study done back in June last year. Thus, an OPEN and FLEXIBLE strategy vs. a CLOSED and RIGID strategy will serve to prolong the advancement of the Open IX movement, which should be their primary goal right now.
This said, due to the very nature and culture within these large, publicly traded, cash cows, it will likely take a very clear sustained net revenue loss across multiple quarters, caused by clients leaving their existing IX’s for cheaper more flexible alternatives across the street, for them to consider making such a change. It will also likely take longer still for any changes in strategy to translate into actions… at which point, it could very well be too late.
Regardless, from where I sit, it will be interesting to see how this all plays out!