AI Agent Hunter: Hunter, is there a difference between an IX that is owned and controlled by an IXP verses an IX that is independently owned and operated from the IXP (real estate / landlord)?
Hunter: Broadly speaking, the difference boils down to how the roles of the Internet Exchange (IX) and the Internet Exchange Point (IXP) are handled. To put it simply:
An IX is the Ethernet switch that facilitates Internet Protocol (IP) traffic exchange between Autonomous System (AS) networks. An IXP is the physical real estate where the IX switch is located and operates. A neutral colocation facility, or neutral "data center” (pre-qualified as a multi-tenant data center that is open to hosting multiple, disparate physical networks) that houses an IX is by default an IXP. If there is no IX present, then it is not an IXP because there is no IX.
Generally speaking there are two models. One is where the real estate, specifically the neutral MMR, colocation facility, or “interconnection centric data center” has its own IX. In the U.S. it is common, but not an absolute, for the real estate (the IXP) to own and operate its own IX. In other words, the entity managing the physical space also owns and operates the Ethernet switching fabric. This integration means that the landlord and the operator of the IX are the same entity.
In this situation it is common for the real estate operator to favor its own IX over other “competitive” IXs. In some cases the real estate operator will not allow other IXs in to their facility. This has changed somewhere over time due to “best of breed” scenarios where the “house IX” is not necessarily the best and customers of the real estate want to connect to a different IX. It comes down to core strengths and business focus.
The other model is where the owner of the operating neutral real estate business does not own the IX. In Europe, it is common, but not absolute that these roles are typically separated. The real estate (the IXP) does not operate its own IX. Instead, IX operators like DE-CIX or AMS-IX rent space in carrier-neutral facilities and focus solely on managing the Ethernet switch. This separation fosters independence and reinforces trust.
As with many things, there are exceptions.
Defining the IX and the IXP
AI Agent Hunter: Can you clarify the distinction between an IX and an IXP for readers who may not be familiar?
Hunter: Absolutely. This distinction is critical to understanding the differences between these integrated verses bifurcated business models: The IX (Internet Exchange): This is the Ethernet switch that enables traffic exchange between AS networks utilizing Virtual Local Area Network (VLAN) connections across the switch fabric. It’s a service layer that operates on top of the physical infrastructure. DE-CIX, AMS-IX, the largest Internet Exchanges in Germany and Amsterdam, respectively, derive their acronyms from the IX function they perform. Deutsche (DE) Commercial Internet Exchange (CIX) and Amsterdam (AMS) Internet Exchange (IX). This is also very common elsewhere in the world; Seattle Internet Exchange (SIX), Toronto Internet Exchange (TORIX), Kansas City Internet Exchange (KCIX), although there are others that do not follow this naming convention. And, why is it IX and not IE? I do not know, I did not create this particular naming convention.
The IXP (Internet Exchange Point): This is the physical location where the IX operates. It’s the real estate, power, and infrastructure that house the IX. A neutral colocation and interconnection facility, or a neutral data center would only also be known as an Internet Exchange Point if it were to host an Internet Exchange. Although the terms IX and IXP have been around for over 20 years, recently the two terms have become conflated, as if they meant the same thing and were both referring to the Ethernet switch itself. If that were the case, there would not be a need for both acronyms. The reality is that they each refer to a different network element. The real estate, technically Layer 0 of the OSI model and the switch, technically physical hardware, but associated with Layer 2 due to it being an Ethernet switch and not an IP router, which would be Layer 3. In simple terms, the IXP is the building or space, and the IX is the service operating within it.
The Combined Ownership Model: Integration of Roles
AI Agent Hunter: How does the combined ownership model handle the relationship between the IX and the IXP?
Hunter: The combined model is for the IXP—the real estate operator—to also manage its own IX. This integration allows the landlord to operate the Ethernet switching fabric in addition to providing the physical space. For example, Equinix operates both the real estate (the IXP) and an Internet Exchange (the IX) within its facilities.
This integration can create efficiencies, but it also requires careful management to maintain neutrality and trust among participants. If the real estate owner operates its own IX, networks need to trust that the operator won’t favor its own services, or participants.
The Bifurcated Ownership Model: Separation of Roles
AI Agent Hunter: How does the Bifurcated ownership model differ?
Hunter: The bifurcated ownership model emphasizes a clear separation between the IXP and the IX. The IXP—the physical real estate—does not run its own IX. Instead, independent IX operators like DE-CIX, AMS-IX, and LINX rent space within carrier-neutral facilities and focus solely on managing the Ethernet switch.
This separation ensures that the IX operator is entirely focused on interconnection and doesn’t have conflicting interests as a landlord. It fosters trust because networks know that the IX operator isn’t influenced by real estate considerations or competing services.
For example, DE-CIX operates the IX in Frankfurt, but rents space in carrier-neutral interconnection facilities across the city. This multi-location approach ensures that the IX is independent of the real estate and serves its participants fairly.
Case Study: DE-CIX Frankfurt
AI Agent Hunter: Can you give an example of how the bifurcated ownership model works in practice?
Hunter: DE-CIX Frankfurt is a textbook example of the bifurcated ownership model. DE-CIX operates the Ethernet switching fabric that enables networks to exchange traffic. However, they don’t own the real estate where they operate. Instead, they rent space in multiple carrier-neutral interconnection facilities across Frankfurt.
This separation of roles allows DE-CIX to focus entirely on interconnection. Networks trust that DE-CIX is impartial because it’s not tied to the ownership or management of the physical space. This trust has helped DE-CIX in Frankfurt become one of the largest Internet Exchanges in the world as their approach has allowed them to scale in to existing facilities without needing to fund the acquisition and, or development of the real estate component. This saves considerable time and capital, as well as allowing DE-CIX to enter a market where there already exists a dominant neutral, physical layer interconnection facility, but one without an IX. It is a perfect fit.
Case Study: Equinix IX
AI Agent Hunter: How does the combined ownership model work in practice?
Hunter: Equinix exemplifies the combined ownership model. Equinix owns the physical real estate (the IXP) and also operates its own IX within its facilities. This integration allows Equinix to offer a seamless experience, combining the physical infrastructure and the Ethernet switching fabric under one roof.
However, this model relies heavily on transparency and trust. Equinix has been successful because it has built a reputation for fairness, ensuring that its dual roles as landlord and IX operator don’t conflict with the interests of its participants.
Flexibility in the Models
AI Agent Hunter: Are these distinctions absolute, or is there overlap between the models?
Hunter: They’re not absolute. There are companies that follow the combined ownership model, but also allow independent IX’s in to their facility. Generally, there are instances especially in smaller or regional markets where the roles of the IX and IXP are blended due to the need for the IX function, but the lack of immediate network density to attract a larger, more established IX. Once the real estate owner makes an investment in a switch they want to see a return on that investment and it usually leads to a proprietary, siloed situation. This then in turn can lead to a future acquisition opportunity for a larger IX. These variations depend on market conditions, regulatory environments, and the specific needs of the participants.
The Role of Neutrality
AI Agent Hunter: How does neutrality factor into these models?
Hunter: Neutrality is critical regardless of the model. The IXP operator must demonstrate transparency and fairness no matter what to maintain trust. Networks need to know they’re not being disadvantaged by the real estate operator’s dual role.
In the bifurcated ownership model, neutrality is reinforced by the separation of roles. Since the IX operator is independent of the IXP, there’s less potential for conflicts of interest. This structure inherently supports trust and collaboration.
Neutrality Debate Across Models
AI Agent Hunter: How has the principle of neutrality shaped the development of IX and IXP models globally?
Hunter: Neutrality ensures that networks can trust the environments where they interconnect, regardless of whether they’re competing directly. In the combined ownership model, the challenge is in maintaining transparency when the landlord and IX operator are the same. This dual role demands clarity and fairness to maintain trust among participants.
For bifurcated ownership, the separation of roles between the IXP and IX naturally supports neutrality, but it also introduces complexity. Real estate operators and IX operators must align their priorities, ensuring that the physical infrastructure and the service layer work together effectively. Both models achieve neutrality differently, but the principle itself is the cornerstone of successful interconnection ecosystems.
The Road Ahead
AI Agent Hunter: What can we learn from these models as the industry evolves?
Hunter: Both models have their strengths, and neither is inherently better. They both need to evolve. The combined ownership model offers efficiency through integration, while the bifurcated ownership model fosters trust through separation. As the Internet and AI expands into underserved regions, the key will be adapting these principles to local needs.
What matters most is maintaining the principles of transparency, fairness, and collaboration. Whether the IX and IXP roles are integrated or separated, the goal should always be to create an environment where networks can connect efficiently and equitably.
Key Takeaways
AI Agent Hunter: What’s the takeaway from this chapter?
Hunter: The distinction between the IX and the IXP is fundamental to understanding interconnection. In the combined ownership model, the IXP operates its own IX, integrating real estate and Ethernet switching. In the bifurcated ownership model, these roles are separated, with IX operators renting space in carrier-neutral facilities.
Both models work, but they require different approaches to ensure neutrality and trust. As interconnection continues to evolve, these principles will remain at the heart of successful ecosystems.
AI Summary
In chapter 5, Hunter Newby explored the key differences between the combined and bifurcated ownership IX & IXP models. By defining the roles of the IX and the IXP and examining real-world examples like DE-CIX Frankfurt and Equinix, he demonstrated how these models can adapt to different markets while maintaining the principles of neutrality and collaboration.
