“The idea for LU-CIX was born out of improving Luxembourg as an e-commerce centre,” says Marco Houwen, President of this country’s new commercial internet exchange. Although it was founded this year, and was formally inaugurated in mid-October, the concept of establishing the exchange had been germinating for some time in both Houwen’s and LU-CIX CEO Claude Demuth’s minds. There are existing commercial internet exchanges in other countries, and commercial centres like London and Frankfurt, and LU-CIX will follow those models: as Houwen states, “an internet exchange can only work when it is an open and neutral platform. Where they have failed in the past, it has been because they have been set up by one organisation, for example.”

To that end, Houwen and Demuth convinced all of the major players in the Grand Duchy’s telecommunications industry to get involved: the exchange can, after all, benefit everyone. The agreements were formally signed in March 2009, and once that was done, “we then just had to make everything happen! There was a huge amount of work to be done. And in his position as CEO, this was coordinated and driven by Claude. We already have 700 megabit of bandwidth. I would refer to it as lean and clean,” continues Houwen.

Going back to the beginning though, what is a commercial internet exchange, and why does Luxembourg need LU-CIX? Houwen is keen to give the background. “An internet exchange is the place where content meets eyeballs. The aim for Luxembourg is to attract a maximum of e-commerce, IPTV or whatever content applications to Luxembourg, to create a vibrant economy. However, we had a chicken and egg problem. We didn’t have the content and we didn’t have the people who want to come and look at this content. Thus, you have to start somewhere, and this is where the internet exchange comes in. It is the crossroads, where the content can meet the users.” With LU-CIX, the content can be accessed more easily in other markets, and traffic will be easier to exchange. As Demuth points out, LU-CIX is thus a business enabler.

“In the last four to five years, we saw all these big names come into Luxembourg, like Amazon, Microsoft and Skype. That was a nice success. However, small and medium-sized enterprises are what give an economy substance. The e-commerce industry has to diversify, and this will boost that – income is generated by creating substance,” says Houwen. LU-CIX is required because “every vibrant e-commerce turning point in Europe has a commercial internet exchange. Having one here is proof that we have the technical know-how to manage good e-commerce.”

The missing link

This emphasises the double role envisaged for LU-CIX. While on one side it promotes itself, on the other, it serves to promote Luxembourg as an e-commerce headquarters. “This is why we have two entities,” continues Demuth, about the management structure of LU-CIX. “There is the LU-CIX economic interest group (GIE), which runs the technical backend of the exchange, while there is also a non-profit organisation to promote the new structure as a major internet platform. There are technical, financial and legal reasons to keep these two entities separate. Neither are focused on making money. They are both focused on enabling our members, internet service providers, to do business. We are one team though.”LU-CIX represents a step forward for Luxembourg. “Before, if I wanted to attract business to Luxembourg,” says Houwen, “I had to talk to CEOs and CFOs of companies, not the technical people. Today, we have the technical infrastructure, and can stand a technical benchmarking or screening. We can talk directly to the technical side, and be chosen because of our good infrastructure.” This is another reason Houwen and Demuth believe LU-CIX is so important. It enables technicians to talk to technicians, and simplifies processes. “Previously, I spoke to some technical decision-makers from large ICT companies and they knew Luxembourg as a financial centre with a stable economy and being a good place to do business. I said that we now have big data centres. The exchange point acts as the missing link between these and the less technical side of things. Now we are ready technologically, as well as for everything else,” remarks Demuth.

This recognition by and for professionals is important and beneficial in general, and he elaborates that “LU-CIX is like a key performance indicator, where technical decision-makers can look at the exchange point in this country and see how much traffic we have, how many members we have. And for this small country, the numbers will be impressive, showing that this is a good place to do business. If those numbers are small it could be a negative point, but this can act as a shop-window for Luxembourg.” He brings up the story of another country, which he chooses not to name, which has a strong ICT industry, but the exchange point is not growing, suggesting business in that country is stagnating.

Thus, it can be seen where e-commerce is evolving and growing by looking at the development of the internet exchange. “Markets can be too fragmented,” says Houwen. “That is why, for us, it was key to have all the major players involved in this idea. Because that is what we have, we can attract everybody and gain approval from the wider international technical community that we are capable of doing e-commerce out of Luxembourg.” It was out of these demands that further opportunities for this country came to light. Says Demuth: “what we saw at the fairs was that some German companies, as well as other northern groups, want to do business in the South of Europe. But they might not speak French or Spanish, for example. Similarly, some French people are not so strong in German or English. Luxembourg is like a gateway between the South and the North. We are a transit country in this sense, in the centre of Europe, and we have a multinational and multilingual society. This is a very useful card for us to play.” Moreover, as Houwen points out, Luxembourg has not just recently become a transit country, but has been for centuries. “We can be a transit country for future generations as well. If you look at how Europe is connected for the major fibre ducts, you see that, before the investment from LuxConnect, all the major ducts were running through Amsterdam, Dusseldorf, Frankfurt or Paris and Strasbourg. Today, we can have a shorter and better technical connection running through Luxembourg. It is a new route, and therefore is not overpopulated.”

The Grand Duchy is interested in becoming an alternative to these other locations, and the major carriers will take note of this: “in the coming years, I am convinced we will bring them all to Luxembourg,” insists Houwen. “This will provide a boost to LU-CIX,” he continues, with Demuth adding, “it really is a smart alternative.”

The plans for LU-CIX in the coming months involve being seen, according to Houwen. They are raising awareness about the exchange by getting the logo out into the public domain and presenting it at fairs. “Now, it is about spreading the word that Luxembourg has at least the same, if not better, technical knowledge about e-commerce than other cities in Europe. We have a lot to get back, and that is what we are doing,” he says. Demuth continues, “we want to be proactive. Our focus is not on raising business for LU-CIX, but for Luxembourg as a whole. Any money left over at the end will be reinvested back into LU-CIX. It is the business enabler.” Houwen agrees: “this is an investment by the industry as a whole, and an investment in our economy for now and for the future.” The expertise of a whole industry is behind LU-CIX. Now it just has to take off.