Netflix Germany launch uses ECIX instead of largest player DE-CIX

Netflix, in case you didn’t know is a company that streams TV to your home over your broadband internet connection. In fact in markets in which it operates Netflix is responsible for a big proportion of bandwidth usage. Last year Netflix was reported to have 29% of all USA ISP traffic. Netflix Germany is a new venture.

There are all sorts of issues to take into consideration before Netflix can launch in a new country. Content licensing rules and local regulatory rules for example and what the competition looks like. Some countries may demand investment in local content.

From a technical standpoint Netflix also has to make sure their network can deliver the content to local endpoints. They do this through a number of methods including placing a cache inside an ISP’s own network providing that ISP is large enough and its traffic levels sufficiently high to justify the cost of the equipment. For the most part your ISP will likely carry Netflix content through its peering arrangements.

Peering in internet terms is the sharing of traffic between service providers. I’ll carry yours if you carry mine. It is by far the most cost effective way for an ISP to connect to “the internet” which is of course just a large global collection of individual ISP networks. To make this easy the industry has spawned Internet Exchanges (known in the game as IXPs). In the UK we have a number of them including LONAP, of which I am a director, LINX, London’s largest and the UKs oldest, IX-Manchester, IX-Scotland and IX-Leeds. The regional market for IXPs is an emerging one. The IXP model is that of  mutually beneficial not for profit.

Netflix Germany has put its peering arrangements in place and there is a shock in store. The natural thing for Netflix would have been to join Frankfurt based DE-CIX, the world’s largest IXP. However instead Netflix Germany has opted to join ECIX, also based in Frankfurt but much smaller than DE-CIX. In Frankfurt ECIX has 34 members compared with DE-CIX’s 580. Logically you would opt for DE-IX as doing so would make it a lot easier to connect to many more ISPs and thence to their end users.

However the Netflix entry on industry resource peeringdb shows the following message:

***NOTE ON FRANKFURT, GERMANY***

Netflix will not be on DE-CIX Frankfurt. We encourage you to join ECIX and will also allow PNI from any network that desires to interconnect with us at Equinix FR4 & FR5

This announcement has sent shockwaves around the IXP world. It’s great for ECIX as it will encourage new members. The alternative of Private interconnect through Equinix would probably come at a cost as Equinix is a commercial, for profit data centre operator.

Word has it that the decision was taken because DE-CIX pricing was far too high.

This is quite interesting as there is a tendency for the larger internet exchanges to add overhead. The internet is growing so fast that IXPs are growing almost automatically along with it. With growth comes new members, bigger ports able to handle more capacity and also more cash.

The relatively easy availability of cash is what makes the scenario interesting. It is easy to understand how an organisation with lots of cash might look around at ways of spending it. The purely mutual model might suggest that this cash is returned to the members in the form of lower operational costs and membership fees. However the European IXP market is also becoming quite competitive as organisations fight to attract new members moving into the area. For example LINX, DE-CIX and AMSIX (Amsterdam) might all be competing to be the first European peering point for North American and Asian networks. This competition demands marketing resources. With the growth of traffic over an IXP network also comes responsibility to maintain uptime and this also costs money.

Getting the balance right of where to spend the cash is not an easy one and one wonders whether, if we are hearing right that this is a pricing based move,  this is now reflected in the Netflix Germany decision to choose ECIX over DE-CIX.

Netflix Germany end users will be oblivious to all this but it does go to show that underneath it all the internet is a complex organism with lots going on to make it work. It’s also an industry that is highly interesting to work in and gets more so with each passing year. If there is anything more to report I’ll get back to you. You heard it first on trefor.net etc…