Getting Started | IXP toolkit

1. Determining the Need

The first step in considering the establishment of an IXP is determining the need. This would be based on a provisional assessment of the number of providers (most likely at least three) that are willing to support and use the IXP, the amount of traffic that would be exchanged, and the likely cost of setting up and connecting to the IXP. A meeting of local network operators and technical advisers should be sufficient to establish this. It is worth noting here that setting up an IXP is “90% political and only 10% technical” - without an environment of co-operation between ISPs, an Internet Exchange will not be successful.

2. Building Support

If the outcome of this assessment proves positive, the next step would be to build support for the project among all stakeholders and identify any potential policy problems or market barriers to the establishment of an IXP. These usually arise from either the potential members themselves, or as a result of inappropriate government policies.

The establishment of a local IXP is often seen as a threat by competing commercial providers who may not be aware of the full advantages of collaboration and local traffic exchange. There can be lack of trust and a fear of making business cheaper for (or even subsidizing) competitors, and concerns that “interconnection” means stealing of customers. These issues will need some time to be discussed, supported by awareness-raising on the role of IXPs, before all the relevant parties may be in full support of the IXP. This stage can take months or even years in some cases.

There may also be outstanding issues regarding participation in the IXP when there is a dominant commercial Internet service provider in the market. These may be resistant to participation, or they may participate but severely under-provision the link to the IXP. This is known as the 'Thin Pipe Stratagem'. Here, the customers of competitors encounter slow connections to dominant provider’s customers and understandably, they fault the competitor for the poor connection. This creates a strong incentive for users to switch to the dominant service provider. If unsolvable by other means, this problem may be cause for regulatory intervention.

Some network operators may also be concerned that IXPs could be overly complicated for their needs. This is especially the case for small networks with only one connection to the rest of the Internet who may not have the technical expertise to implement multi-path routing. This may be amplified by contact with large developed country IXPs which have more sophisticated switches and powerful routers. Equipment marketing agents can also contribute to this view, selling equipment that may not be appropriate for the needs of a small IXP. To address these issues, further awareness raising and training activities may be necessary. At a minimum, potential members will need a staff member familiar with the Border Gateway Protocol (BGP), used for routing between the networks, and each network will need to have a publicly registered Autonomous System Number (ASN) for their traffic exchange, obtained from the relevant Regional or National Internet Registry (RIR/NIR). Considering that the switch from IPv4 to IPv6 is currently taking place, familiarity with IPv6 configuration and IPv6 capable equipment will also be required.

In most markets, exchange points are not regulated by any form of government policy, and most activity within an exchange is considered entirely private between the parties, free from government regulatory oversight. In many developing countries government policies can restrain the establishment of an IXP in a variety of direct and indirect ways. Because IXPs only exist where there are many providers needing to exchange traffic, in many countries the presence of a monopoly service provider is probably the major reason for the lack of an IXP.

Alternatively, the lack of an IXP may indicate the existence of a single player with monopoly power over certain infrastructure or rights of way, such as international gateways. If low levels of competition exist, networks may have little choice but to exchange domestic traffic via the dominant player rather than directly between themselves. In the immediate term, there may be little that can be done by potential IXP members to address this problem, however continued lobbying of government policy makers and regulators should ultimately help to open markets and relax restrictions on new market entrants. There have also been instances where the regulatory body has played a more active role in helping to establish IXPs, such as in Lesotho and Costa Rica, by protecting it either through a regulatory determination to “allow” it, or through the support of the regulator to host the exchange.

Even where the market is more open, incumbent telecom operators may still resist the establishment of an IXP. Unfortunately the incumbent operator's views often carry great weight with regulatory authorities, for a variety of reasons (ranging from close personal relationships to state shareholdings in incumbent telecom operators, or even outright corruption). The strategy of the incumbent operator also influences many developing-country policy makers whose governments are often heavily dependent on revenues from state shareholding in the operator, and are therefore reluctant to sanction activities which are thought to limit profits. Some policy makers may even see IXPs as a form of anti competitiveness on the part of industry. Often, statutory or other licensing requirements exist which can arguably be applied to IXPs and in most cases, the regulatory authority is, at least initially, unfamiliar with the technical and economic aspects of Internet facilities and ISP traffic exchange.

In these cases IXP founders need to ensure that policy makers, regulators and incumbent operators are aware that reducing the cost of Internet connectivity for domestic consumers will generate much greater investment, more users, and thus greater international leased line revenues. Increased use of the Internet, also leads to greater use of international telephony to foster the commercial and personal international relationships that are supported through the Internet.

In view of these factors, some governments, such as in Chile, have made it mandatory for networks to establish a common peering point (see www.nap.cl). Superficially this may seem like a good policy, but it can actually hinder growth by removing the incentives for a commercial network operator to competitively expand its connections beyond a single exchange.

Other government policies that may need to be examined for their dampening effect on strategies for the establishment of an IXP include any limitations on self-provisioning of links between network members and the IXP. This could also include limitations on use of radio frequencies and on use of space on telephone poles, or rights to dig up streets and lay cables (rights-of-way).

3. Creating a Management Structure and Finding an Appropriate Site

Once the IXP's founding members have addressed these issues, it will be necessary to decide on the appropriate management structure and policies, as described above. Following this, the required technical expertise will need to be identified and a technical committee established to design the IXP, cost it, and find the most appropriate location to host it. This would be likely to include an assessment of existing facilities which could be used and then comparing this to the cost and effort involved in setting up a new independent facility. In many countries, costs associated with leasing space, purchasing power, and hiring staff can be high, and hosting the IXP in an existing datacentre or carrier facility can substantially reduce startup and operating expenses. Existing facilities that might be considered include the premises of telecom operators, university networks (particularly suitable as neutral locations), carrier-neutral datacentres or city emergency services.

The most important features of potential sites that would need to be examined are:

The most important point is that all involved parties agree on the location to host the IXP. Without that any of the other points below are moot.
Proximity to the networks of the potential members. This may also depend on whether the IXP is to be centralised in one room, located in a campus of adjacent buildings or more widely dispersed across a broader area, such as by using fibre channel switched fabric.
Availability of electric power, including backup supply or generator.
Availability of air-conditioning.
Availability, capacity and reliability of telecommunication links to the site
Access to fibre facilities or rights-of-way.
Ability to build antenna towers or dig trenches for fibre.
Ease of access. Independent 24X7X365 access for IXP member staff is highly desirable.
Quality of security. CCTV, 24 hour monitoring, fire and break-in detection is desirable.
Availability of ancillary equipment and services - equipment cabinets, telephones, etc.
Finally, once the design of the IXP, the institutional structure and the site(s) have been identified, a more detailed business plan can be developed which covers set-up and maintenance costs, and proposed revenues/cost recovery projections.

To help establish IXPs in developing countries where they do not exist, financial support may be available from appropriate development agencies or donors. The World Bank, and the Latin American Development Bank already have a track record in this area. Since the financial assistance needed for the start-up costs of an IXP are relatively modest compared with the potential long term economic benefits, a strong case can usually be made for development assistance. As the majority of IXPs are non-profit facilities, financial aid can be seen to be assisting the growth of the market and not distorting its natural development. Thirdly as the majority of the expenditure is on the initial training of staff, to establish and maintain the facility, it meets the objective many donors have for local capacity building. In fact the major problem with development finance can be the reverse – 'gold plating' the exchange with too much funding can make it less sustainable in the long run. At a minimum, the requirement to set up an IXP is around $100 for an Ethernet switch. Initially, everything else on top of that is “nice to have” and “gold-plating”.