Equinix Carrier Ethernet Exchange: A Look Ahead

Recently, Equinix held a customer advisory board (CAB) at Half Moon Bay in California. The three-day event consisted of a group of existing customers that was invited to advise Equinix’s managment team on industry trends, business priorities, and strategic direction.

Jim Poole, Equinix’s General Manager for Global Networks and Mobility, was there and the following is his perspective of how some customers are responding to the Equinix Carrier Ethernet Exchange (ECEE), a global, network-neutral service that improves quality and removes the cost and complexity of facilitating commercial transactions between Layer 2 Ethernet networks.

JP: We’ve seen very good progress to date. We are currently at 47 members in the program, and we are starting to see an increase in activity overall both with regard to customer interest to people in the follow-up, as it were, as well as the number of requests coming through the portal for lit building queries.

We’re standing right around five million lit buildings that you can do a search on, as part of that, but we have some significant interest now coming out of folks such as Verizon. From a market perspective, we view that very positively.

Currently our only real competitor in the market is CENX, and they have about ten million lit buildings, if you use that as a metric, because they’ve done a deal with Verizon. Verizon is now interested in moving forward with Equinix, so we’re viewing that very positively.

Overall, we actually are starting to see some indications that we have a clear differentiator in the market, as compared to some other companies. CENX, for instance, only really focuses on interconnecting carriers through their Ethernet exchange.

We have actually onboarded a couple of cloud companies and in our recent interaction at the Customer Advisory Board, one of the clear messages we heard from both our cloud and network customers was the value that Equinix could bring to the table by using that exchange fabric to interconnect carrier Ethernet networks with pure-play cloud companies, to the benefit of both.

So we see a very clear market opportunity there that’s complete upside to what we had originally envisioned for that platform. And we’re quite excited about that, and we’re working toward that end right now.

Ideally by the end of 2011 we’d like to double the number of customers we currently have, say in the 125 range. Obviously that’s fairly ambitious, but then again we had not originally foreseen this other use case. There’s some tweaks we have to make to accommodate the cloud community, but technically it’s not a difficult problem. It’s more process and documentation and other sorts of things, but overall, the Ethernet market is still a developing market.

We came to market with this product early, on purpose, very similarly to what we did in the peering community. If you had worked at Equinix 12 years ago when the first peering exchange was established in Ashburn, Virginia, you would have seen very similar things. There were a handful of people on the platform and not a lot of activity for the first couple of years.

These sorts of products are sort of investments in where technology is going. I think we should feel very good as a company to know that both our product organization and our senior management recognizes that, that we continue to make investments well ahead of what is today a commodity. When people think about IP peering, they don’t question that it happens and our place in that ecosystem. So we view this area very similarly.