New Study Reveals How Internet Exchange Points (IXPs) Spur Internet Growth in Emerging Markets

Analogous with the role that international airports play in airline traffic, IXPs serve as critical hubs for data traffic exchange in the global Internet infrastructure. Over 350 IXPs around the world enable local Internet Service Providers (ISPs) and Internet backbone carriers to efficiently and cost effectively exchange Internet traffic between them. Many emerging markets do not have well-established IXPs, forcing domestic Internet traffic onto long-distance international links, resulting in significantly higher costs and latency.

The new study quantifies for the first time how IXPs enable Kenya and Nigeria to save millions in telecommunications costs and raise additional revenues in these countries while simultaneously speeding local data exchange, and encouraging the development of locally hosted content and services. For example:

— The Kenya Internet Exchange Point (KIXP) has dramatically reduced latency of local traffic, speeding data from 200-600ms to 2-10ms on average, while saving local ISPs nearly US$1.5 million per year on international connectivity charges.

— In Nigeria, the Internet Exchange Point of Nigeria (IXPN) has experienced a similar reduction in latency while currently saving operators over US$1 million in connectivity costs per year.

— In Nigeria, the presence of the IXP has encouraged the repatriation of financial platforms for online banking that were previously hosted overseas, while in Kenya the IXP has helped speed citizens’ access to online tax and customs services offered by the Kenya Revenue Authority.

— The presence of effective IXPs induced Google to place a cache in both countries in Spring 2011, which has significantly increased the amount of locally distributed content (notably YouTube videos) at faster speeds.

— Improved access to local content has increased usage, helping to increase the mobile data market by at least US$6 million per year in Kenya.

“This study puts into clear context the commonly accepted but seldom quantified proposition that IXPs are essential for any country aspiring to tap into the global Internet economy,” said Karen Rose, senior director of development strategy at the Internet Society. “Offering more than just cost and performance benefits, well-run IXPs serve as a catalyst to dramatically enrich a country’s Internet ecosystem, opening a new world of possibilities with comparably minimal investment. We hope that this study will help inform the dialogue among government, business, and technology leaders of emerging countries still struggling with cost and bandwidth issues to show them, in no uncertain terms, the benefits IXPs can yield for developing the most fertile ground possible for Internet growth.”

Michael Kende, Analysys Mason partner and lead author on the study, said, “Thanks to the leadership of the Internet Society, this is a unique study that documents and quantifies the benefits of two growing and regionally important IXPs in sub-Saharan Africa. It demonstrates the central role these IXPs have had in developing the Internet ecosystems in each country and how they are paving the way for future growth, including for advanced services such as cloud applications.”

Commenting on the study and the growth of the Internet in Africa, Fiona Asonga, chief executive officer of the Telecommunications Services Providers Association of Kenya (TESPOK), stated, “This year marks the 10th anniversary of KIXP and we are proud to have contributed to the tremendous growth of the Internet in Africa during that time. We are pleased that this independent study illustrates the practical value that KIXP currently brings to its members, as well as the important contributions it is making to the broader Internet economy in Kenya.”

Muhammed Rudman, chief executive officer of the Internet Exchange Point of Nigeria (IXPN), shared his thoughts on the future of the Internet in the region. He commented, “The mission of IXPN is to localize Internet traffic and reduce routing costs, thereby improving the efficiency and effectiveness of the Internet in Nigeria. At the same time, our eyes are very much set towards the future of the Internet in the region. I believe we have only scratched the surface of what IXPN will be able to do for the growth of the Internet in Africa.”

The study was conducted as part of the Internet Society’s Interconnection and Traffic Exchange Programme, which aims to foster robust, efficient, and cost-effective Internet interconnection environments in emerging economies, and in furtherance of the Internet Society’s overall mission to promote the open development, evolution, and use of the Internet for the benefit of all people throughout the world.

The full study is available for download at http://www.internetsociety.org/ixpimpact .