Basic Guide to Building an Internet Exchange Point (IXP)

English Authoritative Version 0.2

June, 2014

Bill Woodcock

(Original version co-authored with Philip Smith, August 2003)

About This Guide

This guide is for people who want to build an Internet Exchange. This guide assumes that you already have a basic understanding of Ethernet switching, Internet Protocol routing and addressing, and the Domain Name System. If you need further information about any of these, more references are listed at the end of this guide.

This guide is written in simple English so that it can be easily translated. If you can translate it into a language which isn’t here, please translate it and send the translated version in ASCII or HTML to document-editor@pch.net. Please contact us to report anything unclear.

The most recent version of this document may always be found at [here.](https://www.pch.net/resources/wiki/Basic Guide to Building an Internet Exchange Point.md)

Reasons to Build an Internet Exchange

Internet Service Providers (ISPs) sell access to the Internet to their customers. But the Internet is not a thing elsewhere. The Internet is all of the Internet Service Providers and all of their customers, all over the world. So what ISPs are really selling to their customers is access to other ISPs and the customers of the other ISPs. ISPs must have a way to receive traffic from their customers and deliver it to other ISPs, so the other ISPs can deliver it to the other ISPs’ customers.

There are two ways for an ISP to deliver traffic outside the ISP’s own network. The ISP can buy transit from another ISP that peers, or the ISP can itself peer. Peering is done at Internet Exchanges. If there is no Internet Exchange near the ISP, the ISP is forced to buy transit. If there is no Internet Exchange in the whole country, the ISP is forced to buy transit from an ISP which operates at IXes outside the country. That means that both money and Internet traffic leave the country, but only the traffic comes back.

The cost of delivering Internet traffic is the product of the capacity and the distance. It’s inexpensive to move a small amount of data a short distance, moderately expensive to move a large amount of data a short distance or a small amount of data a long distance, and expensive to move a large amount of data a long distance.

The value of Internet traffic is usually measured as a function of the capacity, the latency, the loss, and the jitter. The capacity is the number of bits that can be passed through the link in a period of time. For example, one thousand bits (a kilobit) per second, or one million bits (a megabit) per second, or one billion bits (a gigabit) per second. The latency is the time it takes for packets to reach their destinations and replies to come back, which is a function of distance and the number and performance of devices between the two ends. The loss is the portion of packets which fail to reach the other end, which is a function of the degree of congestion (competing traffic from other sources) on each portion of the path between the ends. The jitter is the degree to which the loss and the latency vary over time.

Having an Internet Exchange near Internet Service Providers decreases the average distance between endpoints, which decreases the cost of delivering the traffic, or increases the capacity of links, or both.

Decreasing the distance, which also decreases latency, loss, and jitter, also increases the value of the traffic. Increasing the capacity also increases the value of the traffic.

So: having an Internet Exchange near Internet Service Providers both decreases the cost of Internet traffic and increases the value of it.

Reasons Not to Build an Internet Exchange

If there are fewer than three Internet Service Providers in a region, an Internet Exchange is unnecessary. If there are two Internet Service Providers, they can peer by connecting to each other directly, instead of both connecting to an IX. If only one Internet Service Provider exists, there is no other ISP to peer with.

If there are few Internet users in a region, there will be little local Internet traffic to exchange, and an Internet Exchange is not necessary.

Required Conditions

Three or more ISPs.

Users with local traffic.

Location everyone can agree upon.

Required Participation

Three or more ISPs, agreeing to arrive at the same time.

Required Internet Protocol (IP) Addresses

/24 of IPv4 address space, available from RIR, NIR, or through the commercial transfer market.

/56 or more of IPv6 address space.

Required Equipment

An Ethernet switch, sized for 12-18 months growth, probably a 24-port Ethernet switch, available from PCH or equipment vendors.

Required Space

Building everyone can agree on, which won’t charge rent to the IX itself, and has enough space to accommodate all ISPs at a reasonable price in the near term, and enough availability of other adjacent buildings to accommodate future ISPs without crossing difficult rights-of-way.

Required Services

Someone to look after the switch.

Someone to supervise connections to the switch.

More Reading


Transit: The relationship between a customer (which may be an ISP) and an ISP, in which the ISP agrees to accept and deliver traffic in both directions between the customer and the entire world, in exchange for payment.

Peering: The relationship between two ISPs, in which each agrees to send traffic addressed to customers of the other directly to the other, with no exchange of payment.

Internet Exchange: A switch which interconnects the networks of three or more Internet Service Providers.

Internet Service Provider: A company which provides transit. That is, a company which can accept Internet Protocol traffic, and takes responsibility for delivering it to its destination.

Colocation: Putting equipment into a building operated by someone else.