Of course, not every local ISP participates. The state subsidized education network doesn't connect, nor do some the dialup ISPs. But it gets a reasonable level of support from several of the larger area providers.
The same type of project was attemted in Toronto. CANIX was essentially set upto cross connect traffic rather than having to traverse the entire US network to get to the other side of Toronto. The problem was, it became an exclusive bilateral peering arrangemt with 6 players. That was 1 1/2 years ago. Currently only 2 are peered. What in fact was the point. UUnet and Sprint were the big players up here and nobody appears to want to cooperate.
But exchange points are one of those weird creatures. If I'm paying a big expensive backbone, why would I get anything from a local exchange point? And of course, the ever popular "What's the catch?" Since local exchange points are generally run on a non-profit basis, that means there isn't a large marketing organization, or a huge gaggle of salespeople trying to sell it. If you like, we can call it a "managed connection" and charge you $1,000/month. But that seems steep for essentially a port on a catalyst switch.
Damian O'Gorman