“As I write this, the world is trying to recover from the global Covid pandemic with restrictions still in place in various countries, resulting in supply chain problems and shortages driving up prices. At the same time, a war has started in Europe with Russia invading Ukraine, resulting in more uncertainty and sanctions against the Russian government and organizations. Fair to say we are not just living in a time of change, but in changing times.
The internet in a time of crisis
For many years, the internet has been a utility. The pandemic and the war in Ukraine are both underlining its importance. During the pandemic, the internet proved its value by allowing people to work from home, or remotely, and stay connected with family and friends, as it was practically impossible to travel. The robustness of the internet allowed this shift to happen almost overnight without major problems. Of course, the increased traffic requires additional investments, but in the early days of the pandemic the internet at large was coping quite well with the increased demand. Conversely, the lockdowns also showed the importance of real-life social interaction within organizations, companies, and schools as well as in everyday life. This touches on how we interact with each other through social media, but also how we respond to fake news and malicious content, laying bare some of the challenges society must find the answers to.
As the world is getting to grips with Covid, Russia invaded Ukraine. In doing so, Russia not only attacked a sovereign state but also challenged international legislation, treaties and agreements. The global community responded with heavy sanctions on Russia and support for the Ukraine. More than anything, this is another human tragedy in a short space of time. Like many industry organizations, AMS-IX has people from Ukraine and neighboring countries on its team, who have friends and relatives in Ukraine and Russia. AMS-IX condemns war, and our thoughts are with the victims, while we try to help our employees and their families as best we can. AMS-IX also supports humanitarian programs to help the victims of the conflict.
Again, the internet is an important utility and a source of unfiltered, practically unlimited information. Throughout the short history of the internet, this has proven to be an invaluable (re)source in times of conflict, and this is true again now. The flipside is the possibility of fake news and socalled Cyber warfare. This, in turn sparks debate around blocking certain parties or even entire nations from accessing the internet. AMS-IX believes that simply stopping parties or entire nations from accessing the internet is the wrong thing to do.
Do we care?
At the start of 2021, most of us felt Covid would disappear at some point during the year. Unfortunately, we were proven wrong and Covid was with us for the entire year. During that period, we started discussing our purpose and ‘story’. We care about the internet and stand for neutral and open internet, but what does that mean?
Internet should be available and accessible to everybody, wherever you live or happen to be. Moreover, we’re committed to protecting the governance of the internet and making sure that no single entity (or just a few entities) can dictate the way in which the internet develops. For almost 30 years, the decentralized nature of the internet enabled tremendous innovation. One could argue it is the best invention ever. A place where the world can meet and exchange ideas freely. Unfortunately, there will always be forces that want to abuse the technology or open nature of the internet and do harm, or influence or drive market dominance.
Because we care about the internet, AMS-IX increased its efforts to address some of the flaws and challenges we see today. We care about an open and neutral internet, we care about a safe internet and we care about the increasing ecological footprint of the machinery that makes up the internet. We do not have all the answers, nor the means to fix it all, but we do have the resolve to join in public discussions and initiatives to protect the original values of the internet, while hardening it against bad actors and developing solutions to address the sustainability concerns.
Two examples from last year showing our commitment to join in the public debate on what a responsible internet should look like are AMS-IX joining EuroISPA and AMS-IX developing an ‘argumentenkaart’ (debate overview) about the use of encryption by OTTproviders. The ‘argumentenkaart’ was presented to representatives of Dutch parliament during the ECP-congress and received a great deal of positive attention. Every party that mattered participated in the creation of the ‘argumentenkaart’ which boosted the quality of the discussions and the final document. Moreover, the overview triggered debate about the use of encryption on many levels, and how authorities can fight crime, without having to tap into encrypted communication. AMS-IX will continue to develop more of these overviews in partnership with ECP to help the open and constructive debate on important internet-related topics.
Looking back at business developments in 2021, total traffic volume grew by 18% compared to 2020, with traffic peaks approaching 11 Tbps. For the first time in AMS-IX history, two new Dutch POPs were opened outside Amsterdam, one in Rotterdam and one in Naaldwijk. Internationally, AMS-IX continues to build on existing partnerships like HGC in the United States and Sify in India. The partnership with Batelco has resulted in numerous traffic peaks during the year and Manama-IX becoming the largest and fastest growing Internet Exchange in the Middle East.
As part of investments in innovation, AMS-IX is one of the founding members of the Amsterdam Data Exchange – AMdEX. In this innovation field lab, parties collaborate to develop and test trusted, fair and scalable technologies to support the emergence of data markets in which its members can freely decide with whom to interact and under which conditions.
Lockdowns and travel bans made it difficult to interact with customers and partners, specifically new ones. AMS-IX participated in many virtual events and organized the first fully virtual MORE-IP event in June, which was well received. As a result, a number of new customers joined the platform. We are looking forward to meeting many of our customers and partners in person again in the months to come.
With Henk Steenman retiring in January the search for a new CTO began. In March 2021, Ruben van den Brink joined AMS-IX and the Management Team as the AMS-IX CTO. Ruben joins AMS-IX from Surf and brings a wealth of experience in developing technical teams, specifically in a fast-changing market with many stakeholders. In a short space of time, Ruben established himself in the role as AMS-IX CTO, bringing new energy internally and externally and focusing on developing AMS-IX technology stack and solutions which are underpinning the services we provide and will develop in the future.
Despite the pandemic continuing, 2021 was a successful year in terms of financial results. However, several underlying trends remain a cause for concern. Revenue was up by 10% on the back of strong public peering business, but gross margin was slightly lower, underpinning the trend of prices dropping. Competition is strong, with multiple alternative solutions and providers in the market, but also with changing traffic patterns as a result of investments in sea cables in the South of Europe and Southern hemisphere. With The Netherlands and Amsterdam as the strongest market, there is concern about the Dutch government’s ‘Digital Strategy’ showing a growing negative sentiment towards Datacenters, whilst aiming to drive innovation with quantum technology and AI.
The continued pandemic also meant travel and events were minimal for another year, resulting in lower costs than budgeted. The additional effort going into the Digital Transformation combined with an increase in staff and temporary support resulted in higher personnel cost and other operational cost.
Finally, accounting for the deferred tax asset of € 0.8 million as a result of losses incurred in the (liquidated) subsidiary AMS-IX, Inc. increased the net result by that same amount. So, a strong financial performance, providing the means for continuing our strategy to Innovate, Optimize and Grow.
I would like to thank our members, customers and partners for the continued support and trust in AMS-IX. Furthermore, a big thank you to the AMS-IX team and AMS-IX Board for continuing to provide a high-quality service in difficult circumstances.
Peter van Burgel