NANOG67 - Tipping point of community and sponsor bashing?

Wed Jun 15 15:48:22 UTC 2016

Hi Dave,

Dave Temkin wrote:
> General, with the four being used as varying examples.

Then there is a problem - you only presented info relating to those four
organisations, not for any other IXP, at least outside a small number of
sponsor-supported IXPs in the US.

With respect to all parties involved in this discussion, I'd suggest
that these four IXPs are not representative of the IXP community in the
areas that you talked about, namely size, marketing budgets, corporate
profit / surplus or expansion intentions.  In addition, Job's excellent
pricing comparison sheet:

> https://docs.google.com/spreadsheets/d/18ztPX_ysWYqEhJlf2SKQQsTNRbkwoxPSfaC6ScEZAG8/edit?pref=2&pli=1#gid=0

... suggests that of the four you chose to talk about, all of them are
in the top pricing bracket.  This is an observation rather than a
criticism of this pricing, btw - I have heard people from other large US
multinationals say that LINX's outreach and policy representation alone
were worth the port charges they pay.  Netnod runs a dns root server
system (i.root-servers.net) as well as a heavy duty time service.  We're
all free to agree or disagree with whether these things are worthwhile
spending money on, but it would have been useful from the point of view
of the broader discussion to have mentioned them in the main body of
your presentation.

Regarding the pricing reduction on page 16 of your preso, the US$ and
UK£ are not much different than what they were 5 years ago, but the €
has dropped by 30% against the US$.  The transit pricing you quoted was
base-lined in £ from the Teleogeography source (but converted to US$ at
today's rate), but both DE-CIX and AMS-IX's prices are denominated in €.
 This means that the reduction in pricing in local currency for those
two IXPs is out by about 30% with respect to the transit pricing.  I
haven't worked out the figures exactly, but in the case of AMS-IX, it
looks like this would bring their price reductions over 5 years to be
~equivalent to the drop in transit pricing.

Also, AMS-IX's 2015 report shows a net operating loss of €1.3 million.
LINX made a operating loss in 2015 too, even if they were also EBITDA
positive like AMS-IX.  The EBITDA figures which you gave on page 11 are
important indicators of a company's financial health, but the net
surplus or loss needs to be given.  There's a breakdown in their annual
reports:

> https://www.linx.net/documents/www.linx.net/uploads/files/LINX-2015-Annual-Report.pdf
> https://ams-ix.net/annual_report/AMS-IX_Annual-Report_2015.pdf

You made the point that some US companies buy services in Europe using
US$, but not all do.  Plenty of US companies buying IXP ports in europe
pay from local offices using euro / pounds / whatever the local currency
is.  I'm not being a bean-counter, so can't speculate about which option
works better for which company but I'm sure there are sound financial
reasons why some US companies buy in dollars rather than local currency.

Regardless of all that, Job's pricing spreadsheet suggests that the
pricing models are substantially lower for the other IXPs in his list,
and have seen proportional reductions at least equal to transit pricing
drops, if not greater.  If your talk was about IXPs in general, this was
an important omission.

Two of the organisations you mentioned are member-owned and are bound by
formal votes from their membership.  Member votes are, in fact, legally
binding in most if not all member-owned IXPs that I'm aware of in
Europe.  Netnod, DECIX and many others are not participant-owned, so
this does not apply.

In the area of marketing budgets and expansion, there is probably a
correlation between the two, but I think it's worth mentioning that
pretty much no other IXP - at least out of those mentioned in Job's
spreadsheet - have anything close to that % of their overall budgets
dedicated to marketing, or have similar expansion plans.  I know that a
lot of european IXP marketing budgets are pitifully small.  Again, this
needs to be mentioned if your talk was about IXPs in general.

If people don't like the idea of LINX, DE-CIX and AMS-IX expanding
outside their current markets, they don't have to connect to them and
that's ok because this is a fully unregulated market: no-one has ever
forced anyone to connect to any IXP.

Otherwise, thanks for giving a great talk - it's both refreshing and
stimulating to have this discussion, and it's great to get feedback from
the community about it.

Nick
--
CTO INEX, but these are personal opinions