Business hub, melting pot and world capital: New York City is all that and much more – such as a strategic hub for AI and for Internet infrastructure. Ivo Ivanov, CEO of the Internet Exchange operator DE-CIX, explains how New York is preparing itself as an AI location, what other cities can learn from the Big Apple, and the role that neutral interconnection ecosystems play in digital success.
New York is unique. Anyone who has ever strolled through the city's pulsating streets knows that. Now, in the age of artificial intelligence, the metropolis is looking to maintain its claim as the world capital. NYC is already well on its way: The city currently has the second-highest concentration of AI companies in the US and the most job openings in the industry. It is also placed third in the global rankings of the top cities for AI start-ups. What the average Big Apple visitor doesn't know: The data center and interconnection market on the Hudson River is also unique, and not without reason. Companies from the digital economy find a variety of North American and international networks in the city. Networks that are not only the lifelines for the booming AI economy in the United States, but for digital business relationships overall. These networks converge at neutral Internet Exchanges – and are doing so with increasing frequency, as the preliminary results from a new study commissioned by DE-CIX shows.
The relevance of Internet Exchanges (IXs) for the prosperity of local companies is comparable to that of the New York Stock Exchange. While Wall Street trades shares, IXs exchange data packets with connections that are direct and as fast as possible. Just like in securities trading, NYC is the frontrunner here: no other city in the US has more network connections at Internet Exchanges. Even in second-placed Seattle, 40% fewer networks come together at IXs. The new DE-CIX study shows how this came about and the decisive role played by neutrality.
Neutral Internet Exchanges are driving the US market
Data traffic within and between US cities flows completely differently today than it did ten years ago, when DE-CIX entered the market. Since 2014, the number of IXs in the US has increased sixfold. What's more, independent and neutral IXs – which long played second fiddle to the historically dominant US model of IXs owned and operated by a single data center or carrier, thus creating a walled garden forcing all participants to be present in that provider’s data center – now account for 70% of the 50 largest Internet Exchanges in the US.
Neutral Internet Exchanges, operated by a sovereign third party instead of a data center operator or carrier, have become the preferred choice for the majority of network operators in the US. This model has always been present in the US: Since the late 1990s, the Internet Exchange SIX in Seattle has been demonstrating the advantages of neutral IXs. But prior to 2014, it was one of the very few in the US. In 2014, European Internet Exchange operators such as DE-CIX, LINX, and AMS-IX, along with neutral community IXs, started appearing on the scene, transforming the North American market by opening their IXs up to a diversity of providers. The advantages of the data center and carrier neutral design are obvious: Connections are more redundant, fail-safe, and flexible, since there is no provider lock-in. Open to a greater number of networks via a variety of data centers, these IXs rapidly build network density and data gravity.
The New York model also refutes the arguments of the doubters who, with DE-CIX’s market entry in 2014, still believed that the city's market could not support another Internet Exchange. Today, network capacities are growing in data centers across the metropolitan area, provider-neutral IXs are flourishing, and also the data center-operated interconnection infrastructures continue to flourish – the feared fragmentation has not materialized. What is clear is that the distributed, data center and carrier neutral DE-CIX New York has not weakened the Big Apple's interconnection market, but strengthened it. Certainly, DE-CIX New York has been in the lead in NYC since 2017: It is now the largest IX in the Northeast, and the youngest on to enter top 5 largest IXs in the USA. However, today we also see that networks in New York place an emphasis on redundancy: 30 percent use multiple colocation data centers in the metropolitan area, and many also exchange data packets at two (approx. 30%) or even three (approx. 10%) Internet Exchanges within the city.
Both network operators and large enterprises want to be redundantly connected and benefit from an ecosystem that includes data center neutral IXs. Companies that rely on artificial intelligence cannot do without robust, highly resilient, and high performance connectivity. The kind of connectivity provided by distributed and neutral interconnection platforms, as the example of NYC shows: The development of the interconnection capital of the USA underlines the importance of complementary offerings for the development of resilient and thriving digital ecosystems that are open and provide benefits to all participants.
Thanks to AI: more than 320 billion US dollars gross domestic product in New York by 2038
In addition to access to a multitude of networks and redundant connectivity, the speed of data exchange is particularly crucial to New York's triumph as a digital location. As with the shares on Wall Street, data packages must be able to be exchanged in a fraction of a second. By connecting various data centers in and outside of Manhattan, distributed and neutral Internet Exchanges enable the growth of an interconnection ecosystem. Regardless of whether the data center is located in New York City, New Jersey, Long Island, or Brooklyn, for example, the connected networks are able to guarantee latency times in the low millisecond range.
Network operators and companies have recognized the importance of fast connections for exchanging data and know that the Internet is not merely a useful tool, but the very foundation of our economy. While we, as end users, generally perceive slow Internet as an annoyance, a delay when using AI can quickly become a critical bottleneck. With the growing importance of the combination of real-time data analytics and generative AI as a strategic driver of business growth, companies everywhere are becoming increasingly dependent on network connections offering the highest level of performance. Neutral IX platforms make low-latency data exchange accessible to all who need it – enabling untold innovations and optimizations, and enhancing profitability. Not least in NY: According to Accenture, New York State could increase its GDP by 320 billion US dollars by 2038 with the help of AI.
