Digital Exchanges

Focal points for data exchange, innovation and growth

Networks of any sort – human, trading, digital – need focal points: places where they come together and information, commerce, traffic can be exchanged. A Digital Exchange is a new focal point that can support the development of digital trading. It is an agreed place where digital businesses can install server and switching equipment with easy cross connections between their networks. Because it is agreed – and neutral – the exchange offers a straightforward way for businesses that want to:

  • Develop new applications that rely on data exchange;
  • Share the cost of a connection to an Internet peering point;
  • Attract carriers to bring in new long-haul connections.

The value of a Digital Exchange to a neighbourhood is multiplied by providing space for businesses to locate their offices – especially small digital, creative, IT and start-up businesses.

Digital Exchanges offer a way to overcome a path dependency affecting investment in digital infrastructure: the business case for new investment is often stronger where investment has already started. The business case for a new backbone link, for example, is strengthened if it can serve multiple access networks or servers. For this reason Digital Exchanges need to be neutral and open, so that they can easily be shared by different networks and carriers.

Existing hubs and aggregation points such as data centres can sometimes fulfil the same function as Digital Exchanges. Often however they are in the wrong place – too far from the business that will benefit most, or they are dominated by one provider.

An ideal Digital Exchange will be in a place where it can attract local digital businesses. It will have adequate power and security to offer co-location hosting – perhaps only small-scale but with power backup and cooling. It will have a mutual ownership model – shared between the businesses that use it.

Local authorities and partnerships can use the Digital Exchange concept as a focus for intervention and investment. The creation of a Digital Exchange can attract private investment and leverage any public commitment. Digital Exchanges are the logical next step after broadband programmes, with the focus firmly on developing the digital economy.

09. June 2014 by Shaun
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