Joel Pacheco Gonçalves
Why traffic alone doesn’t tell the full story
When people talk about Internet Exchange Points (IXPs), the conversation often starts—and ends—with cost savings. And while the financial case for peering used to be obvious, that’s no longer always true. In an era of commoditized IP Transit, the value of an IXP needs to be examined through a broader lens—one that looks beyond cost per Mbps.
At MDC, we believe the true value of an IXP is revealed through three key perspectives: financial, performance, and regional. Together, they tell a fuller story that recognizes the IXP not just as a switch, but as a platform for growth and transformation.
MEX-IX El Paso: The first internet exchange built in a neutral ecosystem
Learn more about MEX-IXFinancial Value: The Classic Calculation—Now Under Pressure
Traditionally, the most straightforward way to justify joining an IXP was through a basic cost comparison: stack up the expenses of IP Transit versus peering (port fees, colocation, switching), and the savings were clear.
But that equation has shifted.
Today, IP Transit has become so commoditized in many markets that the delta between peering and transit has narrowed or even flipped, especially at low volumes. In some cases, peering can look more expensive, particularly for networks that don’t push enough traffic to justify the port or colocation cost. This puts pressure on IXPs, especially those that invest in carrier-grade infrastructure, to maintain sustainability without sacrificing quality.As William B. Norton (Dr. Peering) outlines in his modeling work, the financial viability of peering depends on factors like traffic volume, geographic location, and the concentration of valuable peers (source). It’s still a relevant calculation, but no longer a one-size-fits-all.
Performance Value: Beyond Price, Toward User Experience
Not all networks peer to save money. Many peer to improve performance—to deliver a better user experience through lower latency and fewer intermediary hops.
When content is delivered over a direct local path instead of routing through upstream providers, it arrives faster. This matters for latency-sensitive applications like video streaming, online gaming, and time-critical enterprise platforms.
Even real-time communications can benefit from these performance improvements, especially when session signaling or path setup can be localized, or when CDN-assisted delivery supports parts of the workflow.
That said, localized traffic makes the entire user journey smoother, and peering plays a critical role in enabling that.
Regional Value: Infrastructure That Changes the Game
IXPs also have a profound regional impact. By localizing traffic and enabling cost-effective interconnection, they reduce dependency on international transit and lay the groundwork for digital growth in underserved areas.
A perfect example is IX.br. As of 2025, its 38 locations collectively move over 40 Tbps of traffic, making it one of the largest IXP systems in the world by volume. Even more telling: 87% of Brazil’s Top 1000 websites can now be accessed locally, thanks to its widespread peering infrastructure (LinkedIn Announcement Post).
Closer to home, we’ve seen how our MEX-IX in El Paso, paired with our data center ecosystem, has helped Wireless Internet Service Providers (WISPs) in northern Mexico tap into high-demand content more efficiently. Through peering, they gain access to localized traffic, while our ecosystem provides direct access to Tier-1s often unreachable through traditional transit markets in Mexico. It’s a combination that changes the economics and performance of the internet for entire communities.
A New Chapter: The Rise of Peering 2.0
Modern IXPs are evolving.
In Europe, IXPs like LINX and DE-CIX have expanded beyond traditional network peering to Peering 2.0, a full interconnection platform that includes access to applications, cloud providers, and enterprise services.
These platforms now enable private interconnection with critical services like SAP, Salesforce, Microsoft 365, and public cloud platforms via cloud on-ramps. What was once a simple exchange of routes has become a strategic interconnection layer for the digital enterprise.
This shift represents the future of IXPs—not just as traffic exchange points, but as enablers of digital platforms. Enterprises, SaaS providers, and even financial institutions are beginning to leverage this infrastructure to simplify hybrid and multi-cloud strategies, ensure compliance, and optimize performance.
Rethinking Value: It’s Not One-Size-Fits-All
Ultimately, the value of an IXP can’t be reduced to a line on a budget spreadsheet. It’s a strategic decision that deserves input from network engineering, operations, and yes—procurement. Each team brings a unique lens to understanding not just the cost, but the opportunity.
From cost savings to latency gains, from ecosystem access to digital transformation platforms, the role of the IXP continues to expand. And so should the way we evaluate its value.
At MDC, we see IXPs as a cornerstone of regional digital development—a foundation for networks, enterprises, and communities to thrive.
References:
- William B. Norton – Modeling the Value of an Internet Exchange Point
- William B. Norton – The Value of an Internet Exchange Point
- Internet Society – Explainer: What is an Internet Exchange Point (IXP)?
- Internet Society – IXPs Overview
- Antonio M. Moreiras – IX.br at 40 Tbps: A Milestone for Brazil
