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Internet Exchanges – How Does it Work and What’s the Importance of It?

Especially in Europe, independent Internet Exchanges have grown to become major Internet hubs where content providers, Internet Service Providers (ISPs), content delivery network providers (CDNs), and telcos alike from all over the world seek to deploy IT infrastructures and exchange their Internet traffic. It’s also known as peering, but how exactly does it work and how important is peering for users at IXs like AMS-IX, NL-IX, LINX, DE-CIX, France-IX, and MIX?

Internet Exchanges (IXs), also called Internet Exchange Points (IXPs), are Internet nodes meant for exchanging or trading Internet traffic. These IXs and affiliated colocation data centers are used by content providers, ISPs, CDN providers, hosting providers, gaming companies, social network operators, telecommunication providers and others to interconnect their networks and exchange traffic. The interconnected networks together make up the Internet as we know it.

The Internet globally consists of more than 23,000 individual networks, according to PeeringDB - a freely available and user-maintained database of networks worldwide. The interconnection of all these different Internet networks typically takes one of these two forms: an IP peering relationship or an IP transit relationship. IP transit entails the payment of a fee by one business in return for the right to send traffic over another network, whereas IP peering usually involves the exchange of traffic across networks for free. IP peering can be either public or private. Public peering is generally done at an Internet Exchange, where an Internet network can peer with several other networks over a single connection.

For the exchange of Internet traffic, both IP peering and IP transit make use of the Border Gateway Protocol (BGP). BGP is in fact the GPS for the Internet. It’s a protocol which aim is to pick the quickest and most efficient path to send a message from one autonomous system (AS) to another. The BGP protocol serves this basic function.

To illustrate how important Internet Exchanges such as AMS-IX, LINX and DE-CIX are for the functioning of the global Internet infrastructure and the interconnection of individual networks, we only need to look at the massive growth of the data center colocation markets in the metropolitan areas of London, Frankfurt, Amsterdam and Paris in recent years. Earlier this year, CBRE predicted that 2021 will be a record-breaking year for European data center colocation demand in the so-called FLAP markets (Frankfurt, London, Amsterdam and Paris). Due to the Internet Exchanges located in these areas and the fiber infrastructure being established (network fibers underground and/or sea cables coming ashore), these cities have become aggregation points for co-located network operators/providers, creating a snowball effect of even more network operators arriving and establishing data center colocation presence at these Internet traffic hubs.

Public Peering vs. Private Peering
Public peering at an Internet Exchange allows organizations with Internet networks to peer with a variety of other networks over a single connection. IXs such as AMS-IX, DE-CIX, and LINX provide network operators like broadband service providers, hosting businesses, CDN providers, and content providers the option to exchange traffic on their platforms with a wide range of other service providers. Peering of this kind is generally being facilitated in colocation data centers that offer connections to these IXs, like the data centers operated by Greenhouse in the Rotterdam/The Hague area in the Netherlands.

Sometimes, network providers with huge volumes of traffic choose private peering with direct physical connections over public peering at an IX. Private peering can be a viable option, but only for huge volumes of traffic while it generally takes more efforts to setup a private peering connection.

Multi-tenant data centers are increasingly offering interconnection services in addition to their colocation services, taking over some of the services also provided by IXs. The interconnection is being achieved through so-called cross-connects. With cross-connects, a cable is pulled directly from one party’s data center rack to the other party’s server and network equipment within the same data center.

The benefits of public and private peering are many: reducing network expenses, improving network reliability, increasing network redundancy, reducing latency, larger bandwidth capacity, improving end-user experience, et cetera.

There are more than 900 Internet Exchanges around the globe, according to PeeringDB, of which more than 300 IXs are located in Europe. AMS-IX (The Netherlands), LINX (UK), DE-CIX (Germany) and (Brazil) are currently the largest Internet Exchanges in the world. The LINX (London Internet Exchange) for example saw its peak traffic rise to more than 6Tbit/s this year. The AMS-IX (Amsterdam Internet Exchange) as well as the DE-CIX (Deutscher Commercial Internet Exchange) also recorded new traffic records this year, with peak traffic levels of even more than 10 Tbit/s, while the Internet Exchange in Brazil already last year tipped this 10Tbit/s mark.

European vs. U.S. Internet Exchange Model
The operating models for Internet Exchanges in Europe versus the United States are quite different. IXs in Europe tend to be non-profit, independent entities offering their peering services on a carrier and colocation neutral basis. It means that participants at IXs like AMS-IX, and LINX may choose from a wide range of data center colocation providers. IXs such as LINX and AMS-IX have been setup on a not-for-profit basis, while the DE-CIX operates in a more commercial way. From whichever colocation site they choose, users may connect to these IXs and use the peering services being delivered. As opposed to the United States, the non-profit IXs in Europe don’t have clients, they have members.

IXs located in the United States are mostly for-profit businesses operated by the colocation firms that house them, although the European, colocation neutral IX model has made its appearance in the U.S. as well for some time already. We’ve seen AMS-IX, DE-CIX, and LINX opening up new Internet Exchange Points at a variety of locations worldwide including in the United States while they are still expanding their presence across the globe.

IP Peering vs. IP Transit
As an IP transit client, you’re provided with a network service through which you are charged a per-megabit-per-second (Mbps) unit price. IP peering on the other hand needs both entities to offer access to each other’s equal-proportion networks and traffic destinations. While IP peering provides for a barter way of exchanging traffic, establishing an IP peering agreement is not entirely free of charge - as data center colocation expenses, electricity to routers and switches and cross-connections for peering connectivity are involved. These costs are negligible compared to the costs for IP transit by the way.

Most network operators will tap IP transit in one way or another by providing that crucial connectivity to reach any destination on the global Internet, as it is not possible to peer with all networks on the globe. However, there is a huge distinction between IP transit use for most traffic versus purchasing it for last resort use.

IP peering through Internet Exchanges may remove potential network routing issues attached to IP transit by flexibly amending the routing process to avoid troublesome network segments. IP peering also helps to maintain Internet traffic as local as possible, substantially improving performance and providing quicker network connections. This may boost high-speed data transport, decrease network latency while increasing bandwidth volume as well as network fault tolerance. For companies including content providers, ISPs, CDN operators, gaming companies, and telcos it will provide for higher service levels and greater infrastructure efficiencies.

Internet Exchange Expansions
Formerly just located at Internet hubs like Amsterdam, London and Frankfurt, Internet Exchanges such as LINX, AMS-IX and DE-CIX nowadays have been expanding their presence all across the world including Europe, Turkey, the United States, India, the Caribbean, Middle East, Malaysia, Singapore, et cetera. AMS-IX has also developed an IX-as-a-Service (IXaaS) solution to enable partner organizations worldwide to achieve an easy setup and run a local Internet Exchange. In Egypt for example, AMS-IX has deployed an IXaaS-based Internet Exchange this year in partnership with Telecom Egypt. Through its IXaaS offering, AMS-IX has deployed four new Internet Exchanges in India as well this year, in partnership with Sify Technologies.

DE-CIX has developed a likewise offering with the launch of DE-CIX as a Service (DaaS), a partner program which too enables partner organizations worldwide to setup an Internet Exchange locally. Expansion of these Internet Exchanges does not only take place on an international scale though, as powered by this DaaS offering the Ruhr-CIX in Germany was taken into operation in 2020, thus outside the Frankfurt area.

Not powered through its IXaaS offering but a direct physical PoP deployment instead, AMS-IX has also expanded its presence in the Netherlands this year into the Rotterdam/The Hague area. AMS-IX has deployed a physical PoP in Greenhouse Datacenters, next to another data center close by.

The fact that AMS-IX selected the Rotterdam/The Hague area for its expansion in the Netherlands in 2021 is partly due to the perfect placement of the region on the international fiber optics map. Rotterdam is an important node inside the Dutch border, especially on major fiber routes to Brussels and Paris but also on maritime routes to the United States via London. Many international optic fiber carriers thus have routes via Rotterdam. It means that Rotterdam/The Hague with its thriving and world-known harbor is a perfect place for a second Internet hub in the Netherlands, thus leading to the deployment of network PoPs by AMS-IX in Rotterdam/The Hague data centers. DE-CIX’s considerations for deploying a point of presence in the Ruhr metropolitan area features some parallels, as this region is well-known for its thriving industrial activities.

Direct Access to AMS-IX at Greenhouse Datacenters
While AMS-IX has its main presence in Amsterdam, this leading Internet Exchange in the Netherlands has now a physical network Point of Presence (PoP) available at Greenhouse Datacenters’ facility in the Rotterdam/The Hague. It’s in fact the first time that AMS-IX added a physical network PoP outside the Amsterdam metro area.

So, if you’re a network owner/operator seeking to create Internet Exchange-powered network optimization and efficiencies in the Netherlands, you might consider co-locating your server and network equipment at Greenhouse Datacenters. It comes with direct access to this world-leading Internet Exchange, while access to other European IXs is available at the Greenhouse facilities as well.