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Promoting the Use of Internet Exchange Points: A Guide to Policy, Management, and Technical Issues

Promoting the Use of Internet Exchange Points Download File

Date: 14 May 2009

Document Type: Briefing Papers

Author(s): Mike Jensen

Tags: Access
, Development, Multi-stakeholder is: Development, WTPF

Promoting the Use of Internet Exchange Points: A Guide to Policy, Management, and Technical Issues By Mike Jensen


Internet Exchange Points (IXPs) are vital elements of Internet infrastructure that enable networks to exchange traffic with each other. Multiple Internet service providers (ISPs) can connect at a single IXP, creating the potential for a range of technical and economic benefits for the local Internet community. By keeping local traffic local and avoiding international links, local operators and users can reap substantial cost savings, provide substantial local bandwidth, and significantly improve local Internet performance. In this paper, Mike Jensen describes the role and technical operation of IXPs; explains the most common IXP operational models, including advantages and impediments to their establishment; and provides examples of successful, working IXPs in several countries.
The Internet is not a single entity. It is a large group of independent networks that agree to share traffic with each others’ customers using a common Internet protocol (TCP/IP). Without this agreement, it would be impossible for users of two different networks to send each other email. The key task of an Internet provider is to ensure that its users are able to most cost-effectively connect to any point in the world that is connected to the Internet, be it a web site on the local network or a user connected to another network in the same city or in a distant part of the world.
Internet exchange points (IXPs) are a vital part of this system. Without them, the Internet could not function because the different networks that make up the Internet would not be able to exchange traffic with each other. The simplest form of an exchange point is a direct connection between two Internet Service Providers (ISPs). When more than two providers operate in the same area, an independent switch operates more efficiently as a common interconnection point at which to exchange traffic between the local networks. This is similar to the development of regional airport hubs where many different airlines are served. At these locations, airlines exchange passengers between their flights in much the same way that networks exchange traffic across the IXP.
For Internet providers and users, there are many advantages to local routing of Internet traffic via a common exchange point:
  • Substantial cost-savings are made by eliminating the need to put all traffic through the more expensive long-distance links to the rest of the world.
  • More bandwidth becomes available for local users because of the lower costs of local capacity.
  • Local links are often up to 10 times faster because of the reduced latency in traffic, which makes fewer hops to get to its destination.
  • New local content providers and services, which rely on high-speed low-cost connections become available, further benefiting from the broader user-base available via the IXP.
  • More choices for Internet providers become available on which to send upstream traffic to the rest of the Internet—contributing to a smoother and more competitive wholesale transit market.
So far, more than 300 IXPs have so far been set up worldwide—an increase of more than 50 percent since 2006. Regionally, Latin America has experienced the fastest recent growth in numbers of IXPs, reaching 20 by the end of 2007—almost double the number of the previous year. However, developing countries have generally lagged behind the rest of the world in establishing IXPs. The Asia-Pacific region grew the slowest in 2007 at 15 percent, bringing the total number of IXPs in that region to only 67. Africa has the fewest IXPs—only 17 of the 53 nations had IXPs in 2007—and growth was only 21 percent over the previous year.
Due to the limited amount of local online content and services in many developing countries, most of the Internet traffic generated by users is international, resulting in large capital outflows paid to foreign Internet providers. Local content providers in these countries tend to operate offshore, where it is cheaper to host them due to the lack of low-cost local infrastructure of which an IXP is an integral part. Thus, the presence of an IXP helps to encourage more local content development and creates an incentive for local hosting of services. This is both because of the lower cost and the larger pool of local users, who are able to access online services faster and more cost effectively.
From a public policy perspective, ensuring the presence of local IXPs is becoming increasingly important. It ensures online services are equally accessible to all local users, enhances competitive opportunities, and improves the quality and affordability of Internet services.
In May 2007 88 countries still did not have even one IXP. As a result, networks in most of these countries must exchange traffic via expensive international links, although in some cases they may pay high prices for local transit through what is often a monopoly telecommunication provider. This occurs despite the fact that one of the largest costs for network operators in developing countries is that of international capacity, and the fact that IXPs are relatively inexpensive to set up. By one estimate, an expenditure of approximately USD 40,000 is all that is required to establish a national IXP. Indeed, some network operators have managed to set up IXPs for a fraction of this cost using donated equipment and facilities. Yet many countries without IXPs pay much more than this amount every few weeks to foreign operators for carrying local traffic—a situation that further and unnecessarily increases foreign capital outflows.
The barriers to establishing IXPs in countries where they do not yet exist are largely non-financial: there is often a lack of mutal appreciation of benefits among all stakeholders, as well as resistance from those providers with market dominance. In addition, limited technical skills and a lack of open competitive markets in telecommunication and Internet services make it more difficult to establish an IXP.
This guide provides an introduction to IXPs by outlining their role as a key component of Internet infrastructure and covering the policy, management, and technical issues, which must be considered in their establishment. An description of selected IXPs is provided, as is a glossary of terms.