Our lead on international backhaul, Senior Policy Fellow Abu Saeed Khan, has been talking about data centers along with fiber cables for some time. Here is the back story, as explained by APNIC’s Geoff Huston. The original motivation of the exchange was to group together a set of comparable local access providers to allow them to directly peer with each other. The exchange circumvented paying the transit providers to perform this cross-connect, and as long as there was a sizeable proportion of local traffic exchange, then exchanges filled a real need in replacing a proportion of the transit provider’s role with a local switching function. However, exchange operators quickly realised that if they also included data centre services at the exchange then the local exchange participants saw an increased volume of user traffic that could be provided at the exchange, and this increased the relative importance of the exchange.