I had wondered when we would see something like this. At PTC this week, Carrier-neutral colocation giant Equinix (NASDAQ:EQIX, news, filings) and wholesale IP, Ethernet and voice provider tndm have announced plans today to connect their respective Ethernet efforts. Customers of the Equinix Carrier Ethernet Exchange and the EtherCloud will be able to leverage each other’s respective strengths.
The Ethernet Exchange business is continuing to evolve rapidly. Two years ago, four geographically expansive Ethernet exchange businesses emerged: CENX, the independent; Equinix, the carrier-neutral colo giant; Telx, the IP interconnection specialist, and Neutral Tandem, branching out from voice. But the pure exchange model has been difficult to monetize, and each effort has been looking for the right angle.
Following its purchase of Tinet, Neutral Tandem was the first to stop using the word ‘exchange’ by unveiling the EtherCloud. They hoped to leverage the underlying technology and carrier-to-carrier interconnection model to simply sell more Ethernet services. By offering the functionality of an Ethernet exchange on an international platform that featured NNIs with incumbent providers in hard to reach places, they aimed at offering a one-stop shop for Ethernet connectivity.
Equinix, on the other hand, has always viewed the exchange business as simply a service that can help them sell more colocation and other core stuff. While that meant the exchange business was not likely to be as nimble or aggressive as the others, the financial backing and indirect benefits meant that direct monetization has been less of a concern for them. They have largely kept the faith in the pure interconnection model.
Neutral Tandem’s decision to move in with Equinix seems like a natural evolution for both. Neutral Tandem’s EtherCloud needs more opportunities to shoo tat and therefore more endpoints in places where potential customers are already. They have many of course given the pre-existing relationship with Telx’s Ethernet Exchange, but of course Equinix is Equinix. And for Equinix, a relationship with Neutral Tandem brings in all those hard to reach global destinations which are often far from the hubs where they build those IBXs of theirs. For the global backbone and the colo giant to team up seems like a natural way forward.