Re: What is a regional exchange point?

Dave Siegel wrote:

>Do you feel that being connected to RenoIX offers you a competitive advantage over other, perhaps larger, ISP's in your area?

>If you had both the web sites and eyeballs, why would you connect to RenoIX to make it easier for your competitors to steal your access customers?

>Or, wouldn't it be more compelling to sell local content off servers in a high-speed colo in the Bay area where it was equally fast for everyone in Reno?

>Just playing devil's advocate...

This really is the $64 question as to why would a major network want to join a regional exchange?

It also sounds like the incumbent's argument. I can see why, if you have the local market sewed up you might not want to enter into an open market place. Incumbents will, given a choice be tempted to segregate their customers to prevent access to other sellers.

On the other hand, your company and a number of others entered the Internet market on the proposition that you can do a better job than those before you. Regional (or whatever size/focus) transit exchanges give you the opportunity to compete for a large, open market where if you are right you should succeed.

Think of transit exchanges like a mall or a sales district such as we often see in cities -- furniture or antiques or auto dealers often congregate together. This helps them to guess what -- attain critical mass -- so that rather than drive 200 miles to shop for furniture the local customers go down to the furniture district first because they know they have lots of choices and sellers to talk with. This helps them to become more informed, confident and competent consumers. That self-assurance does two things -- makes them more willing to buy their furniture without leaving town, and it also may make them willing to spend more because they feel confident that they are getting a decent deal. So, if you are a furniture dealer, would you want to locate in this district?

Exchanges have a third benefit for many of the large, newer networks such as yours that do not yet have much of a presence in markets such as ours -- it gets you access to potentially lots customers with just one or two connections, and also potentially extends your marketing reach. If you agreed to sell transit on our exchange we would definitely use that to promote our exchange to current and potential exchange members. While yours and a number of the new networks are now re-emerging from financial difficulties and are reinvigorated and ready to do battle, your marketing budgets are slim. We have potentially three million customers in our market. Do you reopen an office, try to cover it from Seattle or work with the locals who may be able to give you the eyeballs you need to establish a significant local market share?

Finally, just to bring us full circle if you have the benefits of incumbency and are so inclined, go ahead and sit back with your arms folded and watch as others who want to compete join the exchange. Then we'll see if competition really works.

Jere