Are Internet Exchange Points increasing or decreasing in significance in the Internet Peering Ecosystem?
Internet Exchange Points are becoming the video distribution centers of the Internet.
It is on-line video that makes Internet Exchange Points (IXPs) more important now than ever before.
Video is now the dominant consumer of Internet bandwidth, and interestingly, it is unlike any other type of Internet traffic - It is fundamentally improved by the existence of Internet Exchange Points.
First, Internet Video is a high bandwidth application. Video traffic is hundreds of times more bandwidth intensive than email or web browsing for example. As a result, the cost of sending video across the Internet can be very expensive, and large volume video producers need to therefore minimize the unit cost of distribution across the Internet.
Secondly, video traffic flows are highly asymmetric, with almost all of this traffic flowing from the source to the destination. Very little traffic goes in the other direction. There might be as high as a 30:1 outbound to inbound traffic ratio for video streams for example. The access networks, those that connect consumers to the Internet, are few in number and typically show up at Internet Exchange Points. So, each of these access networks could accept this video traffic for free in one place if they so choose.
Thirdly, video streaming requires a high quality end-to-end pathway. When there are artifacts in the video stream, freeze frames, pixilations, garbling of audio, etc. the users notice. In fact, the movie studios tell me that
“Video artifacts leads to the destruction of an essential element of the on-line video experience : the suspension of disbelief.” -- anonymous movie executive
When the hero is about to fly off the pirate ship and the image is pixilated or frozen for a fraction of a second, the movie experience is destroyed. You never get to watch the movie for the first time again. Lost is the enthusiastic fan that evangelizes the movie product, buys the DVD and fan books, anxiously awaits the sequel, etc. The point is, the on-line video content companies really care about the end-user experience, so avoiding these bandwidth bottlenecks is critical to their business.
In summary, video is now the dominant Internet application and it requires a high-quality high-bandwidth highly asymmetric video traffic distribution technique, and the solution is that content providers store their video content as close to the consumers as possible - at Internet Exchange Points.
Some video content companies build or buy Content Distribution Network capacity get close to the eyeballs, and some prefer to connect their servers directly to the core of the Internet at Internet Exchange Points.
In either case, Internet Exchange Points are becoming the video distribution centers for the Internet.