CENX Unveils Inter-Exchange Plans

February 7th, 2011 by · Leave a Comment

Today CENX (news) made what I find to be an interesting addition to its Carrier Ethernet exchange model.  They introduced inter-exchange links, thus allowing a customer connected to one exchange point to connect directly to a customer connected at a geographically distinct exchange point.  That connectivity is not the interesting part, but rather it is that they aren’t actually providing it but are enabling their customers to compete for it.  The new service is callled MemberLink, and lets members offer such inter-exchange links to other members.  This is in direct contrast to the approach taken by tndm of course.

Neutral Tandem sees its growing collection of Ethernet exchange points as a single network Exchange, and bought Tinet (news) [a subsidiary of Inteliquent (NASDAQ:IQNT, news, filings)] to both connect up and extend them with an Ethernet-tuned Tier 1 backbone.  Thus, they provide inter-exchange connectivity itself by default and customers need only hook up to one exchange in order to reach customer endpoints connected to any other exchange point.  The obvious question however for some is just what it means for a carrier neutral Ethernet exchange to be providing services its carrier customers might prefer to provide.

CENX’s approach, by contrast, extends the carrier neutral paradigm to the inter-exchange connections themselves.  Thus they seek to match the functionality that Neutral Tandem offers but without the potential conflict.  They also give the carriers they work with the possibility of a bigger revenue opportunity and a bigger stake in the success of the whole idea.   On the other hand, for the small customer in one exchange who wants to reach another small customer at a different exchange, it’s a bit more complicated than a one-stop-shop with a single connection to worry about.   The first guinea pig for MemberLink is CFN Services, and they’re starting with links between NYC, Chicago, and London with connectivity to all expected by June.  

I haven’t heard of similar functionality from Equinix yet, but I’ll bet they are working on similar ideas.  What we’re seeing from both Neutral Tandem and CENX is the fleshing out of the economic model, trying to put together the one that makes the most sense and encourages carriers and services providers to not just connect to an exchange but to actively drive value by using it for off-net connectivity.  That’s what 2011 will be about in the rapidly evolving Ethernet exchange market.

Categories: Ethernet

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