The new exchange points we need to serve the networks of the future can provide focal points for innovation and collaboration

Summary

Full-fibre and 5G network deployment can benefit if there are neutral places for connectivity to converge and for networks to exchange traffic. A double benefit is possible if these are located near clusters of demand from digital businesses, both for connectivity and local hosting space. Using a neutral, shared governance and ownership, Digital Exchanges help competing digital businesses and service providers to capture more of the value chain and underpin the business case for investment, while at the same time encouraging collaborative innovation.

The problem and the opportunity

Full fibre and 5G networks need new, neutral exchange points

The Internet is an ‘Inter-net’, made up of smaller networks that exchange traffic using an agreed protocol (IP). This structure has been a principal factor in the rapid growth of the Internet, its capacity to support innovation, and its resilience. You don’t need permission to develop a new application using the Internet protocol, and you don’t need permission to connect a new network and exchange traffic with everyone else. Once on the Internet, packets of data can take multiple routes to their destination depending on current traffic and network conditions.

In the UK most broadband Internet services are delivered through telephone or cable TV connections - networks that were built in the 19th and 20th centuries - or through the cellular wireless networks. These are monolithic, hierarchically structured networks, generally owned and operated by a single supplier. They are less open for competition and innovation, and generally less resilient.

Now the UK is embarking on the construction of new full-fibre and 5G networks better to connect people with the Internet and serve future needs. Networks need aggregation and exchange points. To support rapid deployment of these new networks, they will need new shared, neutral exchange points where they can connect with each other and with the rest of the Internet.

Exchange points can provide a focus for innovation and collaboration

Like a marketplace or trading exchange, an exchange point is an agreed, neutral place to meet. Successful exchanges are near the markets they serve, and successful Internet exchanges in places like London, Amsterdam and Manchester have grown alongside thriving digital business sectors.

The agreement on a shared, neutral location is a crucial first step in making a successful exchange point. By agreeing on a place where local networks can meet and connect with the rest of the Internet, interested parties such as local authorities, ISPs and network investors can improve the business case for investment in new local fibre and wireless network infrastructure. By choosing a location where digital businesses can cluster, a virtuous circle can be created: demand for connectivity attracts competing carriers and ISPs, which in turn makes the exchange point an ideal location to host Internet applications and services.

This type of virtuous circle explains why some major cities like Manchester developed as Internet hubs, offering low-cost Internet ‘transit’ and hosting and supporting the development of digital and tech-creative business, and why other cities didn’t.

With the deployment of new, dense, full fibre and 5G networks, similar virtuous circles will distinguish the districts, suburbs and smaller towns that will attract innovative digital and tech businesses, from those that won’t.

The solution

A Digital Exchange is a place for Internet supply and demand to meet

The Digital Exchange concept combines three elements to kick-start and drive the virtuous circle:

  • A neutral place where networks can meet, close to an existing or potential cluster of digital and tech businesses;
  • A shared space for local digital and tech businesses to locate servers to support applications and services;
  • A mutual ownership and governance model to guarantee neutrality and support collaboration.

By providing a neutral place for networks to meet, the Digital Exchange offers carriers and larger ISPs access to local market demand for Internet and long-haul bandwidth, while offering local digital businesses and ISPs access to competitive supply. Such a place, where networks meet, is an ideal location for local hosting and cacheing of content and applications. Local digital businesses that want to capture more of the value chain can access the infrastructure they need to create new products and services. The mutual ownership model, used by major Internet exchanges such as LINX as a way to ensure neutrality, provides an additional stimulus for local collaboration and innovation in new products and services.

The outcome

Brighton Digital Exchange is the first of its kind. A small co-location facility is connected with fibre to 90 business units in New England House, at the heart of Brighton’s digital and creative quarter. The facility is ‘N+1’ resilient with battery and diesel backup and redundant air conditioning. BDX is not a substitute for larger data centres, but offers smaller businesses access to low cost and local hosting.

BDX is owned and run by a co-operative. Members can locate servers, routers and switching equipment in the facility at attractive rates. Currently members have between them commissioned three upstream fibre routes to the Internet.

The construction of BDX was was funded by central government grant through Brighton & Hove City Council, which owns New England House.

The seven members of the co-operative compete with each other to provide connectivity and hosting services to customers in New England House and Brighton. Tenants in New England House have access to un-contended 100Mbps, symmetric broadband for £15 per month. But in working together to run the shared facility they have found opportunities to collaborate, create new joint products, and refer clients.

Digital Exchanges and CBN

CBN pioneered the Digital Exchange Model and worked with Wired Sussex and Brighton & Hove City council to create BDX, including fund raising, state aid clearance, business model design, technical specification and design, project management, and creating the co-operative. CBN is now working with Tameside MBC on a second DX in Ashton-under-Lyne.

Digital Exchanges can be publicly funded as part of a regeneration initiative, or sit alongside private or public investment in data centre capacity. A Digital Exchange provides an engagement mechanism for IPSs and carriers to work with new networks and will sit ideally at the centre of a network built using the Thin Layer Model advocated by CBN.

 

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