business aspects of internet exchanges afix technical workshop session 7

Business Aspects of Internet Exchanges

AFIX Technical WorkshopSession 7

AFIX Technical Workshop: Session 7

Outline of Content What makes a successful IXP? Setting up an IXP: Key business decisions

Co-op or independent? What kind of business entity? Should the IXP offer additional services? Who owns the assets? Ensuring financial sustainability

Managing relationships: 90% of the work! Case study: the Kenya IXP


What makes a successful IXP? Neutrality

With respect to carriers, ISPs and co-location providers

Should never be perceived to serve interests of one stakeholder at the expense of others

IXP operated by ISP association or non-profit is ideal – but not always achievable

Robust and secure Can scale in size Financially sound and stable


The simplest model of all

“A box in a cupboard under the stairs”

Cheap, easy and not to be scorned The questions to follow still need

answering!


Key business decisions NB: There are no universal solutions:

right choices depend on your circumstances!


Co-operative or 3rd party? Co-op can be cheaper

and easier to manage NB to avoid “tragedy of

the commons” – everyone wants to use it, no-one want to pay for maintaining it!

Careful cost accounting is crucial

3rd party easiest for preserving neutrality

For-profit operation is possible – but not desirable in a market with only one IXP

Can be good option where govt / regulator must be involved

Whichever option is chosen: Who manages the IXP and on what terms?


What kind of business entity? Answer depends on choice of co-op /

3rd party / other What legal structures are available in

your country? Aim for: Easy and cheap to administer Have sufficient status to deal with

regulators & stakeholders Be able to enter into legal agreements


What services to offer? IXP by definition must offer shared switched

infrastructure so members can exchange traffic

Other possibilities: Route servers Facilities for private interconnect agreements Facilities to provide access to transit services Hosting and other co-location services Non-technical services eg lobbying & networking


Who owns the assets? Many IXPs start out with borrowed or

donated equipment – but clarity is still needed: Who owns the physical infrastructure? If not the IXP, what are the terms of use? What happens if the owner merges with another

company, is liquidated, withdraws from the IXP, etc?

Who is responsible for insuring and maintaining equipment?


Financial sustainability IXP costs can include:

Premises Power & utilities Telecommunications Salaries Admin costs (legal & accounting fees, etc) Equipment acquisition, maintenance & insurance

How much should members pay to participate?


Funding options 1 Monthly / annual flat fee

Can be graded according to size of ISP Easy to administer Add a joining fee to cover set-up costs Can lead to dispute if some members

generate much more traffic than others


Funding options 2 Sliding fees according to access

bandwidth / traffic volume Can be considered where there is conflict

over volume of use BUT requires IXP to monitor members’

traffic – compromised neutrality?


Funding options 3 Fees according to services used

Only applicable if IXP offers additional services eg. hosting

Can be combined with flat fee OR sliding scale fee for basic IXP services


Between ISPs Should ISPs pay each other for

exchanging traffic? Short answer: NO Long answer: It’s impossible to

monitor traffic end-to-end – ISPs are not telcos! Trying to do it = admin and technical nightmare.


Managing relationships Stakeholders can include:

ISPs Regulator Government officials Policy makers Upstream transit providers Telcos

90% of the work ?


Case study: Kenya 2000: No IXP in Africa between Morocco and

South Africa ISP services open to competition – but Telkom

Kenya controlled underlying infrastructure Telkom Kenya had exclusive right to operate a

national backbone for purposes of carrying international traffic

All internet traffic in Kenya exchanged internationally – estimates that 30% of upstream traffic was to domestic destinations!


ISPs organise Kenyan ISPs association (TESPOK) launched

KIXP as neutral, non-profit IXP in November 2000

Telkom Kenya complained to CCK that KIXP KIXP violated their exclusive right to carry international traffic

CCK concluded KIXP needed a licence and shut it down within two weeks


Impact of KIXP During the two weeks of KIXP's

operation: Latency dropped from average 1,200-

2,000 milliseconds (via satellite) to 60-80 milliseconds (via KIXP).

Monthly bandwidth costs dropped:64 kbit/s circuit: US$ 3,375 to US$

200512 kbit/s circuit: US$ 9,546 to US$ 650


Fighting back TESPOK argued:

KIXP was a closed user group & therefore legal under Kenya’s Telecommunications Act.

Local exchange of domestic Internet traffic did not contravene Telkom Kenya's monopoly as all international traffic would continue to flow over its links.

Telkom Kenya opposition fed by the fear of losing a significant portion of its international leased line revenues.


Victory – and a lesson CCK licence granted November 2001 Ruling: "An IXP is not an international

gateway but a peering facility that enables ISPs to exchange local traffic“

Lesson: NB to educate and have regulators on board from the start!


Discussion points What kind of IXP would work best in

your country? What is the legal and regulatory

position? Are there any stakeholders likely to

oppose an IXP? On what grounds?

business aspects of internet exchanges afix technical workshop session 7

Documents