Thursday, 19 February 2009

A better calculation of the value of an internet exchange

Bill Norton, dr. Peering these days, has made a calculation of the value of an internet exchange . You may remember a similar article written by me a while ago. My calculation was back of an envelope type. Bill has a more scientifically sound calculation and a better list of things you need to account for. The numbers aren't too different: AMS-IX saves the industry roughly 25 million a year. Definitely worth a read and a great site to learn about peering and transit.

1 comment:

  1. Thanks for the plug!

    What has always amazed me was the volume of traffic, and the corresponding value that the large European IXes deliver.

    There have been lots of side discussions as the formula is not perfect. For example, the valuation should also take into account the value of the uniqueness of routes heard at an IX. A route that is easy to peer away is not quite as valuable as a route to a Tier 1 that doesn't peer very widely. We also ignore private peering, a key interconnect method in the US and increasingly in Europe. I've tried to enumerate the failings of the model as folks raised them in the hope that someone would build upon the base model, hopefully, without making the formula so complicated that no one can understand it.

    Anyway - thanks for the kind thoughts and this continues to be a good discussion.

    Bill

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