Transit cost is down but IX cost remains the same. Therefore IX is longer cost effective for a small ISP.
As an (non US) example, here in Copenhagen, Denmark we have two internet exchanges DIX and Netnod. We also have many major transit providers, including Hurricane Electric and Cogent. Netnod price for a 1 Gbps port is 40000 SEK = 4500 USD / year http://www.netnod.se/ix/join/prices. DIX is 40000 DKK = 5700 USD / year http://dix.dk/serviceinformation/ HE.net is offering 1 Gbps flatrate for 450 USD / month list price = 5400 USD /year. Cogent can match that. So why would a small ISP pay 4500 USD for a service with no guarantee of how much traffic they will be able to peer away? You need to get a 10 Gbps port and be able to peer at least 2-3 Gbps before it is even break even with the deals you get from the transit providers. But then you will notice that all the traffic is only with a few peers and you can just peer directly with those and skip the middleman. Regards, Baldur
