Internet Exchange Points (IXPs) IXPs can improve Internet quality and affordability in local communities. Introduction The Internet is not a single entity. It consists of thousands of independently owned, managed, and operated networks. In order to exchange data between users across the Internet, through a process called Internet interconnection, these networks agree to share traffic between customers using a common Internet protocol (i.e. TCP/IP). It is when these networks connect with one another that they create the global Internet. Without these agreements, it would be impossible for users of two different networks to exchange data (i.e. send each other an email). Internet eXchange Points (IXPs) are one of the building blocks around which this system is built. IXPs are a common interconnection point at which different Internet Service Providers can exchange traffic between their local networks. They work much like the hub-and-spoke system that airlines use where, when you want to travel from A to B, you board a flight in A to regional hub C, at which point the airline exchanges passengers in regional hub C, where many different airlines are served, on to a codeshare service to get you to B.

Internet eXchange Points (IXPs) are: Definition Internet eXchange Points (IXPs) are: Physical locations where different networks connect to exchange Internet traffic via a common switching infrastructure; Usually dispersed across countries to enable local networks to efficiently exchange information, thus eliminating the need to exchange local Internet traffic via expensive international links; and A vital way to increase the affordability and quality of connectivity in local communities. Definition: Internet eXchange Points (IXPs) are physical locations where different networks connect to exchange Internet traffic via common switching infrastructure. They are usually dispersed across countries to enable local networks to efficiently exchange information. As countries, cities, and towns establish their own IXPs, more local Internet traffic is exchanged and routed locally, thereby eliminating the need to exchange local Internet traffic via expensive international links. This also reduces network delays, increases content upload speeds, and encourages the growth and distribution of local Internet content. As a result, IXPs help strengthen local Internet connectivity, develop local Internet industries, improve competitiveness, and improve Internet quality. They are vital to making the Internet more affordable.

Key Considerations IXPs can be instrumental in developing the local Internet ecosystem because they… Lower Internet access costs for end-users, Encourage the development of local and regional communications infrastructure, Are not expensive to start, Build a community of technical experts, Attract a variety of other services, Incentivize the creation of local content and applications, and Facilitate value-added services. Key Considerations: IXPs lower Internet access costs for end-users by: decreasing Internet Service Provider (ISP) operating costs. Thus, they have the potential to make Internet access more affordable for a greater number of local Internet users in a country, and ensuring that traffic between local senders and local recipients passes through relatively cheap local connections, rather than expensive international links. The cost savings can be significant, as local traffic can make up a large portion of an ISP’s overall Internet traffic. IXPs encourage the development of regional communications infrastructure (i.e. national and international fibre optic cables, local data centers) because they: create efficient interconnection points that encourage network operators to connect in the same location in search of beneficial peering arrangements, cheaper and better traffic exchange, and other information and communication services, and attract out-of-country service operators because a single connection to an IXP provides out-of-country service operators with lower collective access costs to multiple potential local customers. IXPs can be instrumental in developing a local Internet ecosystem. They can: attract a range of local and international operators, which in turn can trigger innovation and more business opportunities, improve local users’ quality of access (i.e. faster speeds) by providing more direct network connections for local content producers and consumers, and improve the level of stability and continuity of access on the network (i.e. if there is a breakdown in international connectivity, an IXP can keep local traffic flowing within the country). Generally, IXPs are not expensive to start: The cost of the equipment required to establish an IXP is usually minimal, making the establishment of an IXP an affordable local project. Under a sustainable funding and management model, ISPs and other network operators can usually cover the initial start-up and monthly operating costs. When establishing an IXP, external assistance in the form of setup advice and training may be helpful. IXPs should have working guidelines and internal policies devised collaboratively by the prospective participants. Such internal agreements can ensure better distribution of benefits among participating operators, and can alleviate concerns about competition via neutrally-agreed practices. IXPs encourage local hosting and local content and application development. Once an IXP is established: It can create a local environment that attracts a variety of other services, including domain name servers, root server mirrors, time servers, and content and web caches. These localized services reduce connectivity requirements (bandwidth) and improve the speed and reliability of Internet access for local users. Improvements in access speed often incentivize local developers to produce more relevant local content and applications.

Challenges Collaboration and Building Trust Enabling Environment Setting up an IXP is 80% social engineering, 20% technical engineering. Initiating IXPs and ensuring their efficient operation is easier in markets where more communications liberalization has taken place. Neutral Location and Management IXP location and management should be as neutral as possible, with the operator independent of outside influence. Challenges: There are practical challenges associated with organizing and establishing an IXP: Collaboration and building trust IXPs must collaborate with many different actors, including competitors who will be exchanging traffic. Some operators may initially be reluctant to collaborate with their competitors. Resolving this challenge involves building trust among participants. The technical aspects of the exchange are usually very simple, it is the development of stakeholder relationships that is difficult. Most of the time and effort required to set-up successful IXPs is spent developing trust, common understanding, and agreements within the local community. Neutral location and management IXP location and management should be as neutral as possible and agreed upon by IXP participants. The location of an IXP, and the selection of an IXP manager/operator, should be independent of outside commercial or governmental influences. IXPs that are controlled by market incumbents or governments often fail, as confidence and trust in its management and operations is not always there. Enabling environment IXPs are sensitive to local constraints associated with the lack of an enabling Internet-connectivity environment. These constraints include investment and tax constraints, the high cost of local terrestrial fibre, and complicated rules for network deployment. Initiating IXPs, and ensuring their efficient operation, is not as simple as it seems, especially in markets where more communications liberalization has not taken place. Creating an enabling environment will help facilitate a more robust overall Internet ecosystem and enable a stronger IXP environment. Not a universal solution IXPs are not a universal solution to a country’s Internet challenges. They complement and improve the functioning of other parts of the Internet ecosystem by offloading local traffic from congested and more expensive international links. In doing so, they create opportunities for a competitive environment. IXPs do not solve problems. Rather they demonstrate the untapped potential that could be unlocked by removing barriers, such as lack of competitively-priced international or local capacity, non-transparent regulation, weak cross-border connectivity, international gateway monopolization, and the high cost of terrestrial fibre. Not a Universal Solution IXPs complement other parts of the Internet ecosystem, but are not a magic bullet solving all accessibility problems.

Guiding Principles 1 Promote flexible regulatory frameworks and policy objectives to support the development of IXPs Policy and regulatory transparency are key Encourage competitive access to wired and wireless connections to help lower costs to connect to an IXP Promote local investment opportunities Learn from best practices 2 3 Government actors can play a role in championing the development of IXPs and removing roadblocks to their growth and success. Guiding principles for policy makers and regulators include: Supporting IXPs and speeding up their development by setting Information and Communications Technology policy objectives and creating regulatory frameworks that promote an enabling environment for Internet interconnection. Provide as much policy and regulatory transparency as is possible. Such transparency encourages regional and international entities to participate in the local interconnection and peering environment. Encouraging competitive access to wired and wireless connections will help lower the costs associated with connecting to an IXP. Promoting local investment opportunities via tax holidays and reduced duties on the equipment needed to build IXPs and operator networks (i.e. switches, routers, and servers). Provide clear guidance about local business rules and practices. Foster relationships with IXPs to learn more about local interconnection environments and the sustainability and technical management of an IXP. Work with existing IXPs and expert organizations to avoid the mistakes that other IXPs have made. Learn from their best practices, make available start-up assistance, seek equipment donations, and learn more about training and human-capacity development opportunities. 4 5

Download the Briefing Paper. Thank You: The presence of a local IXP is important from the perspective of fostering an enabling, local Internet economy. By delivering more connectivity, at a better quality, particularly in less-connected areas of a country, IXPs can help develop the local Internet industry, improve competitiveness, and serve as a hub for technical activity. Experience shows that policy makers and other governmental stakeholders are important partners in IXP development. They play a vital role in championing IXPs, working with local stakeholders to strengthen the interconnection and peering environment, and promoting stakeholder dialogue and much-needed training. Policy makers who support their local technical community’s efforts to create an IXP are supporting competitive Internet interconnection and traffic exchange environments.