March 13, 2001, 5:41 PM — Economists like to study the telecommunications and Internet industries because they both nicely illustrate one of their pet theories. The theory, called the "network effect," holds that the addition of one more user to a communications ecosystem adds to the value that every other user assigns to the same ecosystem.
Think about it: One of the main reasons you reach for the telephone when you have a question is that you're quite sure that any person you might want to reach is also attached to the telephone network. The same thing now goes for e-mail -- you use it because so many other people use it, too.
Now some networking professionals are building Internet-oriented businesses based on higher-end attempts to harness the network effect and multiply the benefits for everyone involved. A prime example of this is Equinix, which builds and operates fortress-like "Internet Business Exchanges," or IBX centers, around the country.
Because Equinix interconnects local and backbone providers along with Web-hosting companies, the easy approach is to lump Equinix in with the growing category of neutral collocation providers. But Equinix officials blanch at this categorization, and haul out many examples of how their customers go well beyond collocation and actually rely on one another to boost the value of their own offerings.
Naturally, Equinix begins with the idea of offering ASPs, MSPs, content distribution providers and Web-centric enterprises multiple carriers for their basic connectivity and transport-diversity needs. A sophisticated overhead system of fiber, coax and copper connections running throughout Equinix's centers means customers "don't have to grope around in the dark to find each other," says Margie Backaus, Equinix's chief marketing officer.
For the network providers, this opens up private peering opportunities outside the jammed MAEs and NAPs, but that's just the start of the peering story at Equinix. Content distribution providers can also do internetworking arrangements among themselves. And even content providers themselves -- major portals, news and entertainment organizations, and others -- can do "content peering" at the Equinix IBXs.
One example of this is how Yahoo is using its participation in the Equinix ecosystem. In the Silicon Valley, Dallas and Washington area IBXs, Yahoo has established what it calls Yahoo Internet Exchange (YIX) points. The idea is to allow numerous ISPs to directly peer with the Yahoo Broadcast streaming-media service.
That's a particular benefit especially for Tier 2 ISPs, notes Jay Adelson, Equinix's co-founder and chief technology officer. Instead of paying for network transit to reach Yahoo Broadcast at a remote location, they can directly connect to Yahoo via a cross-connect -- or through Equinix's own recently installed Gigabit Ethernet in-building networks based on Foundry's BigIron 8000 switches.