AMS-IX CEO Peter van Burgel reflects on an eventful year
“The global digital infrastructure stands as the cornerstone of an unfolding revolution, marked by the emergence of interconnected networks of intelligent devices. As we witness this transformation, it becomes evident that we are on the verge of disruptive innovations. I firmly believe that their success hinges upon robust, secure, and sustainable connectivity to accommodate the evolving demands placed on digital infrastructure.
In the Netherlands AMS-IX is one of the largest global Internet Exchange points. Since its establishment in 1994, AMS-IX has been at the forefront of enabling efficient exchange of internet traffic and shaping the digital landscape, both locally and globally. AMS-IX facilitates connections between networks including internet service providers (ISPs), content providers, and streaming services. With the ever-increasing demand for connectivity, AMS-IX now handles peak traffic of more than 12 Terabits per second, equivalent to 100 million people playing Fortnite simultaneously or 6.4 million TikTok videos being watched simultaneously.
The international nature of AMS-IX, with 80% of our customers coming from abroad, has attracted many international companies to establish themselves in Amsterdam, making our company part of the third mainport alongside the port of Rotterdam and Schiphol Airport. The strong internet connectivity acts as a magnet and is crucial for the Netherlands to maintain its leading position as a hub for Europe now and in the future. This means that many parties bring their networks to the Netherlands to interconnect with other networks, making it one of the most well-connected places in the world.
Our perspective on global developments is nuanced. While the Netherlands continues to perform relatively well, concerns linger regarding its declining global competitiveness and innovative capacity. An imminent threat looms over research and innovation if investments in the Netherlands decline. Competitors are already emerging in neighboring regions such as Scandinavia, Germany, and Southern Europe. Political factors and public sentiment also weigh heavily on the country's competitive standing.
In my opinion it's crucial to recognize the Netherlands' unique position as one of Europe's hyperconnected hubs, owing to numerous submarine cables, a high density of Internet Exchanges, and the presence of data centers. However, economic conditions and fearmongering are beginning to influence this position. For instance, the municipality of Amsterdam's reluctance to consider constructing new data centers is troubling, posing a risk to the Netherlands' status as a data hub, especially amidst the AI revolution's reliance on such infrastructure.
To address these challenges, we engage in fact-based discussions and utilize argumentation strategies. Collaborating with organizations like SURF, ISOC (Internet Society), and the Digital Infrastructure Foundation in the Netherlands (DINL), as well as governmental bodies and interest groups such as the Sea Cable Coalition, we strive to exert influence and drive positive change. We've also communicated our concerns to the current government through a manifesto outlining the necessary steps for digital infrastructure development.
To fulfill the ambition of positioning the Netherlands at the forefront of knowledge and application of AI, accessible data centers are essential. It's crucial to thoughtfully consider the energy consumption of data centers. While it may pose challenges in certain areas, it's not a widespread issue. Locations like Almere and Zeewolde present viable options. Despite their critical role in the country's infrastructure, there's a tendency to overlook the significance of data centers.
Our mission is twofold: to enhance the technical aspects of the internet for better access and connectivity globally, and to leverage the internet to improve society and local communities. We believe in the transformative power of better internet access, which extends beyond mere connectivity to include access to information and education. To achieve this, we've developed a comprehensive strategy focused on Innovation, Optimization, and Growth.
I truly believe innovation is vital for diversification and sustainability, while optimization ensures cost-effectiveness and user-friendly experiences. Additionally, growth serves both demand-driven expansion and operational enhancements. We're also committed to supporting local communities through initiatives like sponsoring events and developing regional hubs to extend connectivity and educational opportunities. By investing in innovation, optimization, and growth, we aim to create a more connected, informed, and prosperous digital society worldwide.
The three pillars of our company story are Neutrality and Independence, Safety & Security, and Sustainability, which serve as the foundation of our identity and mission. Our strategy revolves around these pillars as we strive to create a better society through improved internet services. Ensuring growth is vital for us to continue adding value to society, considering the ongoing expansion of the digital landscape. These themes represent our core values and will remain central to our focus moving forward.
The focus areas we prioritize include online safety, encompassing technical security measures like anti-phishing and DDoS protection, alongside safeguarding vulnerable users and combatting malicious content. We also engage in discussions about regulatory frameworks to prevent the fragmentation of the internet, ensuring its continued positive impact. Topics such as combating CSAM and enhancing cybersecurity in the North Sea are actively promoted and discussed to foster dialogue and drive meaningful action. Recently AMS-IX, together with ECP, also published an Argument Diagram addressing the Dutch Temporary Intelligence Services Act, aiming to enrich public discourse and inform decision-making processes. I’m convinced that this initiative underscores our commitment to facilitating informed discussions and shaping responsible policies in the digital realm.
The Ministry of Economic Affairs published a favorable report on the digital sector, highlighting its economic benefits while also acknowledging societal costs such as CO2 emissions and resource consumption. Despite consuming considerable energy, the sector efficiently creates value. Moreover, the modest physical footprint of the digital infrastructure, particularly data centers, emphasizes its efficiency. Data centers, for instance, consume only 3% of the total energy and occupy just 0.8% of the land, showcasing their efficient use of resources and value contribution per unit area.
We're exploring ways to make a sustainable impact both internally and through innovation, particularly focusing on data centers and partnerships to enhance sustainability in IT and connectivity. While technologies like AI hold promise for solving major issues, our increasing data production and energy consumption present challenges to sustainability. As the digital infrastructure evolves to become faster and more reliable, we're also prioritizing energy efficiency and resource conservation. AMS-IX has achieved an 85% reduction in energy consumption at the Equinix AM5 data center by implementing new network equipment. An achievement that makes me very proud.
Furthermore, we're making progress with the Juniper migration project, aiming for completion by late 2024 or early 2025 to achieve significant energy savings across all 16 locations by implementing new hardware. These efforts not only benefit customers but also contribute to our environmental objectives.
In 2023, our main goal was to boost organizational maturity and advance our digital transformation, spearheaded by project Delta. This initiative aimed to streamline processes and elevate our expertise by leveraging external talent. Clearer KPIs were set, and industry best practices were adopted to drive execution improvements, particularly within the CTO office. This involved appointing a new management team for the CTO office and restructuring project management to focus on impactful projects. We focused specifically on finalizing the Salesforce migration, which will result in the creation of a unified digital platform linking all AMS-IX business activities and enabling centralized customer relationship management. Additionally, we have made progress with the Juniper project, completed the migration to the Atlassian cloud, and incorporated 400 Gigabit ports into our network. These efforts are aimed to bolster our execution capabilities and drive significant improvements.
A primary focus in 2023 was the seamless transition of all our customers to our new portal, ams-ix.me. This transition is essential for maintaining high service standards and facilitating the deployment of new services to enhance user experience and interaction. While not fully completed yet, we anticipate finalizing the transition by summer of 2024. I will really emphasize this aspect in the coming months, because consolidating all customers into one system will provide a solid foundation for further enhancements and progress.
Another significant focus area has been prioritizing innovation initiatives to pinpoint where we can make the most impact. The delay with migration to the new portal still poses obstacles to innovation however, by Q2 2024, we aim to introduce several new services. In the meantime, we have already launched a new Data Centre Interconnect service for our customers. This service allows customers to utilize the AMS-IX Amsterdam platform to transfer data securely and reliably between different AMS-IX Points of Presence (PoPs), enhancing network performance. Additionally, we are actively progressing with the next phases of the Fieldlab AMdEX project, collaborating with Dexes Data Exchange, SURF, Amsterdam Economic Board, and the University of Amsterdam. The project aims to develop a neutral, generic, independent infrastructure ensuring sovereignty in data sharing initiatives.
With a robust infrastructure initially established in Amsterdam, AMS-IX has expanded its presence across various continents in recent years by launching internet exchanges in major cities across Southeast Asia, the Middle East, Africa, and the United States, aiming to enhance local connectivity. AMS-IX now operates 14 internet exchange points worldwide. The international expansion continued steadily in 2023, achieving our goals of establishing locations such as AMS-IX Manila, AMS-IX Bangkok, and AMS-IX Lagos. The latter holds significant importance for us, as it serves as a crucial gateway to providing low-latency, affordable Internet access in the West African region. Additionally, partnerships have been announced for an Internet Exchange in Oman, aiming to revolutionize digital infrastructure services across the Middle East and beyond by interconnecting leading organizations, networks, data centers, and cloud services.
In our international strategy, we focus on reinvesting profits in the international regions, aligning with our mission "Better society through better internet." However, I recognize that this mission presents challenges; we must generate sufficient margin to facilitate profit reinvestment. It is crucial to enhance the internet by improving data transport capabilities, speed, and cost-effectiveness for end-users. Notable efforts in the Middle East demonstrate infrastructure improvements, facilitating increased competition and new entrants to enhance services for end-users. Similarly, initiatives like AMS-IX Djibouti, launched in partnership with data center specialist Wingu, aim to provide better internet access in Africa by consolidating existing networks and fostering new developments in the region.
I am cautiously optimistic about our financial results, which, despite being somewhat subdued, are close to our objectives. However, with a significantly lower net result after tax of EUR 0.9m in 2023 compared to EUR 3.4m in 2022, optimization is crucial for 2024. With that, we aim to gain more control over our metrics, emphasizing a data-driven approach. Overall, we remained resilient in 2023. Our net revenues grew by 2.0%, driven by a strong public peering business, although our gross margin experienced a slight decrease. Strategic investments were made in personnel and fixed assets, such as the changes in our CTO office and deploying Juniper across the different locations. I am confident about our ability to navigate the challenges ahead, given our robust financial reserves.
Our strategy for 2024 stays consistent: Innovate, Optimize & Grow. Expanding on the progress of 2023, our primary goal for 2024 is to leverage our accomplishments. We will complete our internal digital transformation, boost productivity, and launch new offerings. While we have made strides in internal optimization, our aim is now to heighten productivity further. To ready ourselves for emerging opportunities like advancements in quantum technology and the swift evolution of AI, we've conducted internal scenario planning sessions, empowering us to react swiftly to new developments.
In 2024, our international focus extends to both establishing new locations and maximizing value at existing ones. We're investing in ecosystems and fostering compelling content to broaden our reach across regions. Collaboration with international partners remains essential for our success. Regarding sustainability, we're proactively engaging in discussions within and beyond AMS-IX. We believe environmental stewardship involves not just reducing, but also innovating and doing more. Thinking outside of the box with initiatives like establishing 'AMS-IX forests' could catalyze our journey towards a carbon-neutral business model that will also benefit our customers and members. Exploring the idea of a carbon-neutral exchange is also on our radar. Furthermore, it is also my personal mission to ensure that we stay committed to assessing our energy consumption and advancing sustainability throughout our supply chain.
As we reflect on the past year, I want to express my sincere appreciation to our members, customers, and partners for their steadfast support of AMS-IX. I also want to acknowledge the dedication and hard work of our AMS-IX team, who have shown remarkable resilience and determination in navigating various challenges. Despite these obstacles, we have reached significant milestones and moments of pride. I am deeply grateful to the AMS-IX Board for their unwavering commitment to guiding our mission and keeping us aligned with our objectives.
Our engagement in public affairs discussions, alongside industry partners, NGOs, and governments, has allowed us to make meaningful impacts and shed light on crucial issues within our sector. Additionally, our commitment to community involvement remains strong, with AMS-IX actively collaborating with industry partners to promote knowledge exchange and educational initiatives.
As we release this annual report, we also celebrate AMS-IX's 30th anniversary, a remarkable milestone and I want to thank the many people that have been part of that incredible 30-year journey. I take great pride in our daily efforts to enhance internet connectivity worldwide, driven by our mission. Looking ahead to 2024, I am confident that together, we will continue to achieve remarkable milestones and make a positive impact on society through the transformative power of the Internet.”
