Peering into the future


27 September 2016

By: Mike Hollands

Internet Exchanges (IXPs) have long provided simple, cost-effective access to global connectivity. As you’ll remember from our recent blog, public peering allows networks to sidestep the effort and expense of agreeing a myriad of private connections amongst themselves.

Yet, things are changing. Over the last two decades, the cost of IP transit has fallen by around 90%, making it a much more appealing option for network providers. Although European IXPs deliver not-for-profit connectivity, commercial IP transit agreements can now offer greater control over the end-user experience and clear SLAs, with a relatively small uplift in cost.

In the face of this competition, IXPs are being forced to adapt and experiment with new strategies. With that in mind, let’s glance into our crystal ball and see where today’s peering trends may take us.

World domination?

Traditionally, IXPs only operate in their country, or city, of origin. Today, this is changing fast as IXPs seek to access more networks to increase their global connectivity. For instance, The London Internet Exchange (LINX) now has local exchange points in Cardiff, Manchester, Edinburgh and - most recently - North America.

This national and international expansion is seen by some as a controversial move, since many countries regard their IXP as source of national pride, or even security. Still others see the global community of independent IXPs as crucial to ensuring a free and open Internet in the long-term.

Nonetheless, as exchanges hop across national boundaries, we’ll see competition hot up between newcomers and local incumbents. As a result, smaller IXPs may disappear or be acquired by larger players; major IXPs will, after all, wish to benefit from economies of scale. In the future then, a handful of IXPs may dominate public peering worldwide.

A transformation to services?

As public peering comes under increasing cost pressures, some IXPs are seeking to diversify and offer new, white-labelled services that generate additional revenue streams. For instance, The Amsterdam Internet Exchange (AMS-IX) recently signed a deal giving its members access to multi-cloud connectivity, while other IXPs are moving into areas like security services.

Although this steady change of emphasis from public peering to value-added services makes financial sense, it could also mean that IXPs will eventually transition into full-blown service providers, rebranding to reflect their wider range of offerings. If that comes to pass, IXPs - at least as we know them today - will cease to exist.

Serving new customers?

Another route to fresh revenue streams lies in targeting new customers. While IXPs have traditionally focused on attracting network owners, the rise of content providers offers new opportunities.

Companies like Apple, Facebook and LinkedIn increasingly require the ability to distribute large volumes of IP traffic effectively around the world and IXPs are already exploiting this trend.

Similarly, the major enterprises relying on these content providers, such as those using Google’s services, can provide a new source of revenues. By connecting to IXPs, enterprises can dramatically increase employee access speeds to essential content via more direct connections.

With such an expanding and varied customer base, IXPs will undoubtedly scrutinise their priorities and may become more linked to content management and delivery in the future.

A changing world

While no one can predict the future, the innovation being driven by IXPs will undoubtedly open up new possibilities.
Today, Interxion hosts 20 IXPs and we’re committed to helping them navigate these challenges. Above all, we want to offer the most options to our customers, ensuring they can keep pace with an evolving world and always achieve the performance and connectivity they demand.
With access to lower cost peering and a wider range of services, customers will undoubtedly have more choices when it comes to achieving their requirements – and we think that points to a brighter future for everyone.