AMS-IX B.V.

Value of an Internet Exchange

It is often said that its connected networks define the value of an Exchange, without the ability to really quantify. Knowing that factors like the number of networks  (peering opportunities), traffic load and type of traffic (local, regional, national) they have individually and together as well as the relation between prices of the IXP  ports versus the commercial IP-transit market are important factors in the area of value.

At the Euro-IX forum in November 2003 a way was presented to rationalize the value of an IXP and the value to its customers. Although it does not take into account all factors it seems a clear measurable unit and therefore useful in comparing (some form of) value. The formula quantifying the value of the exchange to its connected networks is as follows:

The value of an Exchange = (the average Traffic Maximum * the average costs of IP traffic)/(the Average number of networks).

The theory is that as long as the value of the IX based on the peering opportunities at the IX exceeds the cost to connect, new networks will continue to apply.

Other important elements defining the value but not qualified lie in for instance: the autonomy of network connection stands for, the community attitude, the professionalism, service levels, responsiveness and accessibility, as well as the neutrality and independence of the exchange.