Cisco, Microsoft Invest $12.5m in Internet Exchange Start-up.

Cisco Systems Inc and Microsoft Corp said today that they have backed a start-up, Equinix Inc, to the tune of $12.5m to build internet business exchanges (IBX) which the two claim will help to ease congestion on the internet. The regionally-located points of presence (PoPs) are designed to unite ISPs, web content providers, and component providers under one roof, so that electronic commerce application deployment, email, Digital Subscriber Line systems, application hosting and Usenet news can be provided and managed from one location.

The goal of the facilities, the first of which will open in Washington this July, is to minimize internet congestion and to tie internet-related businesses together in a single facility. This reduces bandwidth demands as the switch is located right next to the data source according to Equinix president and CEO  Al Avery. "The problem with existing internet exchanges is that they are very congested and have not kept up with the rapid growth of the internet, either for corporate or personal use," he said. Today, companies connect to internet services via LAN  circuits over a wide area, instead of being connected in the same building, Avery said. The company will situate its exchanges in major metropolitan areas where there are large business communities and there is access to fiber cables.

The IBX facilities will lease cabinet space for any business to come in and stack web servers, Cisco switches, Sun Solaris boxes or "whatever they need to do" said Avery, hooking together services via a Fore Systems ASZ 4000 central switch. Once the hardware has been installed, the ISPs and carriers will then link the servers into their own networks, thereby expanding their points of presence into other regional areas. Equinix will charge on a monthly basis for leasing the cabinet space, power to the central switch and management of the equipment. It also plans to offer value-added services such as consultancy on network management and eventually caching across all sites.

Avery said the reason that Cisco is investing in the business is because it realizes that if a scalable internet exchange model is not built, it will not continue to sell its switching hardware and software. Microsoft, which contributed the lowest sum to the deal, depends on the growth of the internet to sell its content "which is why it is throwing millions of dollars at so many network companies," he said. Two additional IBXs located in New Jersey and Silicon Valley will open by the end of the year and then one each month throughout 2000. The first phase of Equinix's international expansion will begin in 2000. Currently there are three other exchanges in the US that offer co-location, two from MCI Worldcom and one from Sprint.