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Start-up aims to house Net data exchanges

With $12.4 million in seed money from Microsoft, Cisco, and others, Equinix says it can free the over-burdened system of Internet exchange points.

A start-up with some serious investment weight behind it says it can make money by freeing the over-burdened system of Internet exchange points.

Equinix executives say they intend to build large facilities in various parts of the country at which content providers, services companies, and access carriers can co-locate their technology to alleviate the crazy routes Net transmissions can take. The typical Internet user fires off an email or an e-commerce order without a care, oblivious to the labyrinth of connections it must travel through to arrive at its destination.

Equinix also aspires to remove the aura of competition, providing a company-neutral setting for Internet players to install equipment such as an email server system, so that firms like America Online can operate their services more efficiently. Equinix plans to make money by leasing space, making connections between equipment, and offering support and consulting services.

The company has found believers, garnering the interest---and $12.4 million---of industry luminaries such as Microsoft, Cisco Systems, and Benchmark Capital, as well as Stanford University, among others.

"They want to see the industry move forward, and for the industry to more forward there need to be neutral exchange points," said Hilary Mine, telecommunications analyst with Probe Research.

Analysts said Equinix's opportunity is essentially to serve as a next-generation "central office" for the Net, augmenting and eventually displacing exchange points run by the likes of Sprint and Ameritech. The company will essentially provide the real estate that will be necessary for a Net-based economy to grow.

"They're the first ones to understand the real estate opportunity here," Mine said.

Equinix hopes to find cross-section of customers among the content providers, services companies, and telecommunications carriers as these various elements of the Net increasingly converge.

Equinix executives say they plan to open their first "Internet business exchange" July 1 in Ashburn, Virginia, followed by similar roll outs in Newark, New Jersey, in September and in San Jose, California, in November, according to Al Avery, chief executive of the firm.

Avery said his company will augment its initial funding with debt financing to fund a road map that includes the opening of an "exchange" per month through the year 2000, bringing the domestic total to 15 facilities.

Avery said the company, which has 37 employees at the moment, plans to have 100 by the end of the year.