Equinix Ethernet Exchange Makes a Strong Debut

Event Summary

April 12, 2010 – Equinix launched Equinix Carrier Ethernet Exchange to support a multi-carrier environment for the exchange of data traffic among providers of Ethernet services. The platform, originally announced in October 2009, is available in five metros (i.e., Chicago, London, Los Angeles, New York City, and Silicon Valley), and the company plans to make the service available in another 14 U.S. metros through 2010. Currently, 24 telecommunications companies have joined the exchange as participants.

Quick Take

Analytical Summary

• Current Perspective: Positive on Equinix’s launch of its Carrier Ethernet Exchange service in five of its International Business Exchanges (IBX), because the new service makes interconnection more accessible and potentially less expensive for regional providers, and it gives national and international providers another avenue to reach wholesale customers and enterprise clients. Carriers always have the option of establishing bilateral interconnection agreements, but the availability of a standards-based platform that addresses the physical interconnection of Ethernet services as well as the more complex aspect of service alignment and management offers carriers a more efficient option to extend their reach.

• Vendor Importance: Moderate to Equinix, because the carrier has followed through on previously announced plans to deliver a carrier-neutral platform to support the exchange of data traffic between Ethernet services providers (see “ITU Telecom World 2009: Equinix Taps Alcatel-Lucent to Create Carrier Ethernet Platform,” October 07, 2009). The launch was the culmination of an extensive service development effort that Equinix undertook with a number of its customers to create a platform that supports simplified interconnection and service management, as well as an ecosystem that supports further collaboration among service provider members. Equinix can leverage its existing IBX centers to expand its service relatively quickly.

• Market Impact: Low on the wholesale services market, because Ethernet exchange services are at the early adoption stage. Equinix has found initial success mostly with smaller regional players, which can connect to other metros globally that would otherwise be difficult for them to reach. Many major providers that offer Ethernet services have already established Ethernet interconnections to serve customer needs, and they may opt to see how the Ethernet exchange models evolve before joining any of the emerging exchanges.

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