Internet exchanges, or IXs, are where content providers and internet service providers meet, to exchange data and peer. They’re among the main reasons why fixed line broadband connections cost so little for the same amount of data as a mobile network. We spoke to Sudhir Kunder, Senior Vice President – National Sales at DE-CIX India, formerly the Mumbai Internet Exchange, about their expansion to ten data centres in the country, and the state of the exchange ecosystem in India. Below is a lightly edited transcript of the interview.

MediaNama: You are now at ten datacentres, but they aren’t all your own facilities. How does that work?

Sudhir Kunder: These two that we have recently gone live with are at ST Telemedia[‘s data centres], and these are both in Chennai and Delhi. It becomes more important for us that unlike everybody wanting to be crammed up in one space. It makes more sense to serve the ecosystem than your own interests; had it been any other company, they would have invested too many dollars in Mumbai; we still have a lot of datacentres that we can still cover in Mumbai if we wanted to.

It was a strategic call so that we could get the width and depth of coverage for larger and broader parts of India, and making things more accessible to customer bases not only in Mumbai, but in a reasonable distance to any other location from a network transport standpoint. As a result of this, we went to Delhi and Chennai.

These are not our own dedicated datacentres, we generally seek colocations at strategic locations that we feel are good for not only in Delhi but also around the country. We have ten data centres around India with the two that we have added at STT.

MediaNama: An internet exchange is only as valuable as how many ISPs it is connected to. To what extent is DE-CIX connected to the top wireline providers in India?

Sudhir Kunder: If you see from an ISP standpoint, pureplay, we have Sify [which]has their own ISP license. They are our customer and we went live on their datacentre in the shortest possible time. In a general ISP, MSO kind of setup we have the largest customer base, far ahead of anyone within India, with all live customers for anyone to do a back check when they go online. There are tools available with the majority of the folks in the industry, and you can check the number of companies we are connected with. There is hardly anybody that’s not connected with us today.

MediaNama: What is with the hesitation that BSNL and some of the wireless providers have in connecting to internet exchanges?

Sudhir Kunder: I am sorry to hear that there is this perception that is there is a hesitation. They are already our customers, and we already have 30 gigs of port capacity with BSNL. It started as a small POC, but now they are subscribed to 30G today. Wireline guys, I have so many of them who have multiple 10G ports.

MediaNama: How much traffic are we looking at the biggest datacentres, like in Mumbai post COVID-19? Other IXs like AMS-IX and Extreme publish daily and weekly stats on all their locations. How much has traffic increased?

Sudhir Kunder: We have put out some information on public forums a while back where a substantial amount of data has moved, and this has been through our sheer hard work that we have been able to be foresightful to get our networks up in Mumbai to an extent where we were able to deal with constant spurts in huge demand. Whether it was OTT with 950% growth or gaming platforms with 555%, to ISP segment where we saw 130% jump. The numbers go on and on, but we were always ready and a few steps ahead of what the market would require in terms of market consumption, both A-side and B-side.

Now that you have named some [internet exchanges], some of them have had humongous amounts of downtime where each downtime is four hours and more. In a city like Bombay, where you are the lifeblood of people, you go down for that long, that is a colossal loss to consumer confidence and to the industry, as customers feel that everybody is the same. Having had the capacity built on ground to serve customers well irrespective of the vagaries of weather that Bombay has to offer– and it’s not the first time that you’re supposed to see fibre cuts happening. Fibre cuts are inevitable in the monsoon. There are no digging or trenching operations going on due to COVID, otherwise it would have been more.

On one side, we have the large Limelights and Netflixes of the world where we did multiple 100 gig upgrades so that customers’ capacities are taken care of; and the last mile where they are supposed to pick up content from was also taken care of. These are happinesses that you derive for four or five days where you see these huge numbers, 550%, 269%, 947% jump in OTT and CDN… That is something to be happy about, and that’s where it stays. Is that going to lead to customer delight and happiness is where I think we should focus, rather than putting out data for public consumption saying, hey man, this is what I how I have been doing over the last month. We would rather be the silent workers of the segment, although we might not be too spoken about, there is a lot that goes into customers saying “[DE-CIX] was there when we needed them”.

MediaNama: You mentioned digging and trenching. To what extent is your network underground? A lot of fibre cut incidents are weather. How immune are you to that?

Sudhir Kunder: We would love to be in the jugaad mechanism, but unfortunately that doesn’t work for us, being governed by German standards we have, everything we do has to be above aboard. We are above board in terms of verifiability, and hence you can be rest assured that 90% plus of my network would be in a protected underground path.

MediaNama: Do ISPs or anyone in the CDN ecosystem demand or charge termination fees?

Sudhir Kunder: No, I don’t think we grapple with that kind of situation today. Our situation is the need for internet exchanges to be able to grow, survive and thrive. This will happen when the customers who really want to reach out to you have the ability to reach you. The last mile, between their offices and the data centres we put up is the challenge we have in India.

Poona is a fantastic place with the highest broadband penetration in India, but it’s so close yet so far. You have hardly seven to ten ISPs that are on IXs, with all others being forced to take mixed bandwidth, where people mix everything from peering, caching, and everything put together at a cost they find affordable to run their services. If you had a better delivery mechanism making it more affordable for people to come to Bombay and pick up content from here, the whole dynamic would change. It not only makes the customer happier, but also makes sure that IXs are able to serve customers better with a larger geographic penetration.

MediaNama: Is it a problem that so much of the data centre and hosting business is based in Mumbai?

Sudhir Kunder: It’s a chicken-and-egg situation ultimately. I wouldn’t say it’s a problem; I think it’s an opportunity. In all locations you will have certain geographies which have humongous penetration within a short geographic area because it’s a central business district. The idea is not to look at the smaller part of the challenge, but the easier part of the challenge, where affordability of transit between A point to B point becomes a talking point among the community.

If I tell you that by taking my services as an IX, a person taking bandwidth at Rs 25 lakh can easily optimise 90% of their bandwidth consumption. Nothing stops me from charging him a handsome amount, but I still charge Rs 14,000 for a 1 gig port. Why? Because the intention is ultimately not only to make money, but ensure that you’re doing things for the ecosystem, and eventually things will grow and everyone will benefit. Internet cannot become unaffordable.

Cities which are in the peripheries of geographies like Bombay are kept away by virtue of transit costs. If the guys who own the transit routes look at it generously and see that pricing is offered to ISPs in the right fashion, I don’t see any reason why this business cannot grow at least 5x in the coming years.

MediaNama: What changes from the government would you ask for?

Sudhir Kunder: From a regulatory standpoint, the government already did its bit in bringing its license costs to one rupee per location. Ultimately, what they can offer to the transit players – today, even I need to dig in and trench to take anything from Bombay to somewhere else, I have to pay Rs 1 crore as a license fee. I need to pay that to the corporation, and that is separate from the cost of laying the fibre.

If these norms still exist, it will be difficult for people to expand in the ways they want to. Even if I want to connect my own fibre, it becomes extremely unviable economically.

MediaNama: NIXI just opened up to content players and have put out some tenders to increase their capacity. Do you see this as a sign of things changing?

Sudhir Kunder: Yes, and changing for the better. We wish them well and hope they do the catch up game as soon as possible. The idea is not to be growing on your own. The idea is to make sure the whole ecosystem grows. Anybody who does their bit to become more customer- and industry-friendly, we are more than happy to welcome.

MediaNama: Since the 2000s, we have seen a massive reduction in customer tariffs for wireline broadband. To what extent have IXs have helped in changing the economics of ISPs to this extent?

Sudhir Kunder: ISPs today can get up to 90% optimisation on costs from exchanges. The whole mathematics has changed for these guys. Some people have been able to manage their capex deployment — under which exchanges don’t come, as we are an operational expense — and upgrade all their own technology to GPON and FTTH. IXs have been one of the major reasons wherein the ISPs have been able to optimise their costs and put the right kind of money and resources in an infrastructural place where they are prepared to face competition from the telcos and become more customer friendly in delivering the last mile.

MediaNama: Did you see any changes in margin percentages when COVID hit? A lot of the ports offered at flat fees must have been working at higher capacity than usual. Or was it offset by revenue from upgrades?

Sudhir Kunder: As far as DE-CIX is concerned, we grew by leaps and bounds. In the first four months, we upgraded to the tune of 200 gigs on a port capacity standpoint from customers alone. Acqusition was also up by 70%+, and upgrades went very well. I don’t see any parameters that took a hit from COVID. Although it’s not a very good thing to say, as far as COVID is concerned, we have not had any hard times to face, except for obviously reorienting ourselves and ensuring we deliver what has to be delivered to the industry. From a business standpoint, everything was 2x and 3x.

MediaNama: DE-CIX is in markets that have highly developed IX ecosystems. What differences do you see between those markets and India, that you think are worrying or exciting?

Sudhir Kunder: The excitement is that there’s a huge amount of geographic coverage to expand to. We still have Mt. Everest to climb in terms of what we can deliver in terms of a business. As we speak, we are looking at another four data centres in the next few months, if all things fall in place. One of the major hindrances is whenever you want to grow and expand with the kind of budgets that you roll out, unlike deep-pocketed telcos, is the kind of money you need to spend to ensure that customers are connected.

The balance capex deployment is a separate proposition altogether that we do not compromise on. But the network capex is something that bites you very hard.

MediaNama: Do you see any antitrust or competitive issues in the IX market? There is ongoing litigation going on between you and another player [Extreme Internet Exchange].

Sudhir Kunder: We should be able to do things – forget about the litigation that goes on or not, because that opens up a pandora’s box in terms of how somebody behaved in a certain way that was unethical. By being a 25-year-old German organisation, that is what prompted us to take a stand. Because otherwise, as you know, you can look us up anywhere, we are more than keen to ensure that we are focusing on the positives of lifting the ecosystems and the community that we work with.

MediaNama: Do you see any competitive concerns in the industry as a whole?

Sudhir Kunder: We need to be legally compliant and ensure that anything and everything that the government expects you to do, you better do it, no questions asked. There are no jugaads that can work. I wouldn’t be somebody who would want to go and give a certain number of hand-offs to my customers outside a datacentre, creating a dirty solution, just to ensure that the customer doesn’t need to pay for the [colocation] at the datacentre’s end, and ensure that I make the customer happy.