An Interview with Ivo Ivanov, Chief Executive Officer, DE-CIX International

Editor’s Note: DE-CIX provides premier network interconnection services with facilities in many of the key global submarine cable hubs.  The company made an announcement during ITW that it would collaborate with Telxius to improve the global interconnection landscape.

I had the pleasure to meet with Ivo Ivanov, Chief Executive Officer of DE-CIX International, to discuss the company’s success and future plans.  Mr. Ivanov also made a number of very interesting observations about the changing dynamics of traffic patterns with the development of new submarine cable routes.  His comments are below.

Mr. Ivanov: DE-CIX operates Internet Exchanges in 18 different markets.  These are major data traffic hubs, as well as in some cases international submarine cable hubs.  DE-CIX was established in 1995 in Frankfurt, where the company operates the largest peering ecosystem on the planet.  Since then, we have expanded over time outside of Germany.  We started creating ecosystems in different markets – in North America in New York and Dallas.  In Southern Europe in Madrid, Marseille, Lisbon, Palermo and Istanbul.  In Dubai in the Middle East and in Mumbai, Chennai, Calcutta and Delhi in India

We believe that a physical geographic presence is important to meet the interconnection needs.  We also see a serious and very relevant link between sea cable capacities and creation of new telecommunications hubs and interconnection demand.  Today, DE-CIX operates in these markets, and it’s growing like hell – now covering 1,600 networks of more than 100 nations.  We have a total connected capacity of 50 Terabits and a live exchange capacity of 12 Terabits across all Internet Exchanges. 

We believe that sea cable investments and developments will change the traffic flow today and in the future.  As a result, submarine cables will support the creation of new hubs and new interconnection capabilities will appear.  Sea cable capacity and investments change how traffic flows and will change the traffic flows even more in the future.

Let’s have a look at our world today.  We have historically seen a highway from the east coast of North America to London and Amsterdam.  We know that this traffic moved between America and Western Europe in the past.  Then we saw that extend to the Far East.  But still the axis was east and west.

Now, however, we are also seeing the creation of new traffic routes that follow a north-south axis.  Why?  Because Latin America, Africa and Asia have huge markets with tremendous potential.  They have huge populations and a lot of local content.  They want to ideally be served locally and operators in these regions want to interconnect to European and American operators on the shortest path possible. 

This is the reason we see a lot of new submarine cable projects out of South America to the West Coast of Africa and directly to the South of Europe.  These avoid the hub of Miami.  We have seen how sea cable deployment has helped create new hubs in the south of Europe, such as Lisbon and Madrid, where DE-CIX is an early adopter and is very much involved.  And New York, where we see a new trend of South American networks going directly into the broader New York metropolitan area – New Jersey and Long Island – rather than landing in Miami.  We’re seeing direct subsea cable connectivity from these regions to the south of Europe, avoiding the London loop.  I’m not saying that the legacy highway NY-London-Amsterdam route will disappear.  In fact, this will grow further.  But we will see new highways.  And these new highways will support the creation of new hubs. 

Madrid is the fastest-growing Internet exchange on our map.  We created the exchange only two years ago and now it has more than 170 networks connected.  That’s amazing.  This is a story you can’t find in the history of Internet exchange development.  We will see the hubs in the south of Europe continue to grow because the sea cable capacity in this region will see more investments.  We will see a lot of different demarcation points possible to pick up traffic from Africa, from India, from China and even Australia.  Investing in northern Europe is also interesting but you don’t have this variety of different hubs to the north and to the south.  So building this highway serving the north-south traffic allows you to have many more options to serve the billions of people along these routes. 

DE-CIX is well aware that Africa is underserved today.  This will change.  We will be involved in Africa as well.  We will be involved in Southeast Asia and Latin America.  We haven’t announced which markets we will be entering, but we have been looking at this and it will be our next step.  I’m saying that in the current situation in Africa, a lot of African operators have no choice but to connect in London.  We will change that and it has already started.  African operators will need to connect to the Iberian Peninsula or in Marseille.  Why?  Because, they save 35-45ms just because of geography. 

Latency becomes very important with the growth of the gaming industry.  When gaming, if you have latency up to 35 milliseconds (ms), you can run games properly.  With latency over 35 ms, you can’t.  So a 40 ms saving by going to Madrid or Marseille rather than London can be gold.  The Iberian Peninsula is very important for Africa and we see that content – from the big content providers and from the gaming industry – is coming down the road to the south.  It’s not just because of the nice weather in Madrid.  This stuff is very attractive to the users from Africa and South America.  There are cultural and language connections with the Spanish- and the Portuguese-speaking populations in West Africa and Latin America.  As the demand gets bigger and bigger, why should they do the loop from the North?  We operate in the north, in Hamburg and Frankfurt, but decided not to stay just there but to go to the south and help build infrastructure where users want to use it. 

They save milliseconds by interconnecting in the south and they save money in data center costs and other services, which are much more attractive in the south than in London.  A rack in London costs almost twice the price as in Madrid and Lisbon.  So the south is extremely attractive and will grow like hell. 

India is amazing.  It is growing so fast.  We operate in four Indian markets.  The submarine cable connectivity here is important.  Chennai is a sea cable city.  So is Mumbai.  These cables bring traffic from Southeast Asia and Europe and have created the need for interconnection at these new hubs. 

The big content operators are investing heavily in submarine cable infrastructure for one very simple reason -- if they don’t they will not be able to deliver their product properly.  This is for me, by the way, a dramatic change in how submarine cables will be monetized.  In the past we had carriers investing in sea cables like they were a product.  Now we see the OTTs and the content guys investing in sea cables as a feature or tool to deliver their products to their customers.

At the foundation of DEC-IX is a service world that goes far beyond peering.  We offer a variety of services in all the platforms we offer access to.  Not just for peering but, for example, a cloud exchange with five cloud operators worldwide where a customer of an exchange can just run VLAN to create a customized selection of different connectivity options and use it directly and securely.  We have created remote solutions where, for instance, Marseille is connected to Madrid, so now enterprises in Spain can use the big Microsoft Azure node that is located in Marseille. 

The future will be designed by the needs of big enterprises.  The processes behind the products are digital or will soon become digital.  They will have the need for interconnection.  The “connected car” strategy will lead to a huge amount of data that has to be collected.  For this reason, DE-CIX introduced the option of platforms for private federations.  Let’s say a car manufacturer can run a private federation based on its requirements and interconnect directly with the networks of all the suppliers of data for their cars.  So not just all of the data going into the car, but also all of the data going out of the car by the sensors in the car, will be included in this private platform.  Data wanted by insurance companies or by authorities who manage maintenance and security on the streets. 

The car companies are interested in getting control of this data.  The CEO of Mercedes said a few months ago, “I don’t want to say hello, Siri.  I want to say hello, Mercedes.”  They want to control this data and not give it up to Apple, Google, Microsoft, etc.  They want to be the gatekeeper.  So we offer private federations where they can design a club with members that they want to do business with in terms of data.  This is extremely attractive and not just a dream.  The first car manufacturers are connected already.  DE-CIX is proud to announce that it has Porsche and Mercedes connected to its exchanges already.  Many different segments can use this option.  The automotive industry is just a very early adopter. 

We do this on disaggregation hubs but we are looking into interconnection options.  Because of 5G we will see a huge demand for interconnection closer to the users.  What does this mean?  5G has been designed primarily to interconnect with billions of sensors and this will produce a lot of data.  We will see the IoT talking to each other.  We see our role in providing flexible and highly efficient small solutions located close to the edge in mobile towers and highway crossroads.