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EXECUTIVE SUMMARY
AN INDUSTRY IN FLUX
INVESTING IN AUTOMATION
Finding themselves in a maelstrom of plummeting IP transit costs,
No Internet Exchange can afford to ignore the potential of
growing competition, skyrocketing traffic and rapidly evolving
automation to reduce overheads, drive down prices and empower
technologies, Internet Exchanges are innovating at a relentless
members with new capabilities. From faster troubleshooting
pace. It’s an exciting time, with huge experimentation.
to self-serve portals, new innovations like Software Defined
ACCELERATING GLOBAL EXPANSION
Networking can increase flexibility and ease-of-use for peering
communities. Ironically, exchanges that face severe price pressures
Traditionally, Internet Exchanges only operate in their country,
from their members may be less able to exploit new these new
or city, of origin. However, increasing national and international
developments.
expansion means local incumbents must now wrestle with
competition from new entrants to their markets. While some see
SPECIALISATION AHEAD
this growth as essential to stay relevant, others believe it causes a
As peering and transit prices converge towards zero, Internet
needless increase in costs and complexity.
Exchanges will need to differentiate themselves in other ways. In the
SERVING NEW MEMBERS
Under pressure to harness additional revenue streams, many
future, we expect to see exchanges specialise in different markets,
members, or services to remain distinct.
Internet Exchanges are experimenting with complimentary services
A FUTURE OF COLLABORATION
in areas like security and cloud connectivity, while also seeking to
Looking ahead, Internet Exchanges may forge new partnerships
expand their member numbers by targeting the enterprise market.
to ensure they remain competitive. From reselling white-labelled
CUSTOMERS VS. COMPETITION
Will Internet Exchanges roll out new services that put them in
competition with their own members? Opinions vary: some say that
additional competition will mean little to peering communities, whilst
others believe that networks and service providers will no longer
fund platforms that compete with them.
01 / THE FUTURE OF PEERING
services from commercial competitors, to entering into a federated
business model with other exchanges, collaboration offers solutions
to many of the challenges facing the public peering market today.
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INTRODUCTION:
AN (EX)CHANGING WORLD
In little more than two decades since they first appeared, Internet
Exchanges (IXs) have changed beyond all recognition. From their
origins inside academia in the early 1990s to today’s communityled status quo, IXs have transformed not only themselves but the
entire Internet, playing a vital role in the birth of our modern digital
world.
Early academic milestones, like the IBR-LANi at the Dutch Centrum
Wiskunde & Informatica (CWI), are a far cry from the ubiquitous
global connectivity members can now expect from the 778 internet
exchange points (IXPs)ii worldwide. Yet, because they emerged
Many IXs are experimenting with
new strategies and seeking ways
to adapt. It’s an exciting time, but
there’s no clear agreement on the
right path to take and how
(or even if) IXs should evolve
from an environment of research and education, European IXs have
a long heritage of focusing on cooperation, rather than competition.
This continues today, with public IXs still offering low cost, not-forprofit connectivity that’s fundamentally supported by members, for
members.
By allowing members to sidestep the effort and expense of
agreeing a myriad of private network connections amongst
themselves, IXs have been instrumental in driving down peering
costs, increasing network resilience and improving the end-user
experience. Without IXs, IP traffic would be forced to travel via
slower, more expensive and congested routes to its ultimate
destination via upstream transit networks – undermining the
seamless access to online content and services companies and
consumers now demand.
TURBULENT TIMES
While public peering is a young industry, it’s moving fast and
reinvention is already on the horizon. Today, several factors are
converging that leave traditional, member-led IXs in the midst of a
perfect storm.
Pricing is perhaps the most obvious wave on the horizon. The cost
of IP transit continues to plummet, falling by around 80% since
2010 alone.iii That makes transit an increasingly appealing option
for many organisations, promising greater control over the end-user
experience and clear SLAs, with a relatively small uplift in cost
compared to public peering.
Meanwhile, skyrocketing IP traffic also means choppy waters
ahead for IXs. Global networks will need to support more than 1000
exabytes this year, but even that’s set to triple by 2020.iv
Peering platforms must be upgraded and overhauled to keep
pace with today’s data deluge, a process that demands significant
infrastructure investment from all market participants, whether IXs
or transit networks.
Amidst all this, IXs also need to keep pace with commercial
competitors and constantly evolving technologies. New innovations
may redefine what members expect from peering services and
cause a tidal wave of market disruption.
In the face of this tough competition and accelerating change,
many IXs are experimenting with new strategies and seeking ways
to adapt. It’s an exciting time, but there’s no clear agreement on the
right path to take and how (or even if) IXs should evolve.
We’ve spoken to organisations from different facets of this debate
– networks, content providers, commercial peering companies and
IXs themselves - to examine the forces driving change and how the
peering market is reacting.
Read on as we peer into what the future holds.
02 / THE FUTURE OF PEERING
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