Affordable internet pricing elusive as telcos, ISPs shun N35m IXPN

Ben Uzor Jr

Nigeria’s prospects of reasonably priced internet services, increased broadband penetration and the possibility of developing local content on the cyberspace may be unattainable due to the refusal of some Internet Service Providers (ISPs) and telecommunications companies (telcos) to connect their internet traffic to the Internet Exchange Point of Nigeria (IXPN), BusinessDay can now reveal.

This is inspite of the coming in of Main One and Glo-1 cable which are expected to crash the cost of internet access and bring about the desired digital revolution that Nigeria has been craving for. An IXP is a physical infrastructure through which ISPs and telcos exchange domestic internet traffic locally without having to send information across multiple international hoops to reach their destination.

Lamentably, three years after the Obasanjo administration established the N35 million exchange; a sizeable number of ISPs and telcos are yet to interconnect their internet point to the infrastructure designed to facilitate the keeping of local traffic within the country’s telecom network as well as foster digital inclusion. Muhammed Rudman, managing director of the IXPN had earlier told Business Day that the exchange could reduce capital flight in the economy as transit charges paid to upstream (foreign) ISPs could be redirected towards provision of better local infrastructure and services to customers.

“If more operators connect their traffic to the IXPN, internet users will pay less for access and this will enable more individuals sign up. The internet infrastructure will also enhance local connectivity and improve the internet experience of end users. Also, businesses will use the internet to offer more services to their customers”, he explained. However, investigations have revealed that internet exchanges can lower the operating cost of telecoms operators by ensuring that domestic traffic uses only relatively cheap local connections rather than expensive international links.

Besides, some telcos have blamed the delay on security issues on the part of the exchange which if not addressed before connecting could lead to compromise of subscriber information and revenue loss. A senior executive of one of the telecoms companies who spoke to Business Day on the basis of anonymity said: “I think the reason for the delay in connecting our internet traffic to the exchange point is that there are house keeping issues with the IXPN. Most importantly, there are security issues as well. Telcos spend lots of money on anti-spam software and believe me they are expensive to acquire.

“If we connect to the IXPN and these security issues are not addressed then the big international carriers would stop accepting e-mail traffic from us and that would ultimately mean that we would lose millions of naira in revenue. I strongly believe that connecting to the exchange is something that would come on stream in no distant time. This is because there is a strong cost advantage with keeping local internet traffic within the country”, he posited. It was further learnt that Global Systems for Mobile Communication (GSM) operator, MTN Nigeria has connected its internet traffic to the IXPN.

Some ISPs who have expressed willingness to connect have disclosed that they are constrained by the enormous cost required. Currently, about 30 percent of the over 70 functional ISPs in Nigeria are connected to the exchange. Also, there are over 300 licensed ISPs and 12 voice telecoms operators.

Moreover, Lanre Ajayi, president, Nigerian Internet Group (NIG) does not think that security issues and financial limitations are some of the problems hindering operators from connecting their traffic to the IXPN. Ajayi who spoke to Business Day, revealed: “I think the biggest challenge ISPs and telcos face with respect to connecting to the IXPN is the way internet service delivery emerged in the country. We started with VSAT (satellite) services and majority of the internet hubs are located outside the country.

“They are located in places like the United States (US), Israel and parts of Europe. These hubs are not connected to the IXP in anyway. This means internet traffic goes directly to these hubs abroad. Until we move all our traffic from satellite to terrestrial, it would be difficult to aggregate all the traffic to the IXPN. With Main One, Glo-1, WACS and ACE cables coming into the country and the existing national optic fibre backbone, I hope we would be able to achieve this in no distant time”, he explained.

Industry watchers have also warned that there was serious security implications involved in allowing the exchange points remain outside the country’s shore. This, they explained was because information travelling through multiple international points could be intercepted by cybercriminals or unfriendly nations. But more importantly, connection to the IXPN was expected to improve the security profile of Nigerian internet traffic by ensuring that only international traffic leaves the country.

In the preceding year, the Nigerian Communications Commission (NCC) had directed all ISPs and telcos to connect to the exchange before July 31, 2009 or face stiff sanctions. More than 10 months after the expiration of the directive, they are yet to route their traffic through the IXPN. BusinessDay learnt that the monthly cost of hosting a gateway or interconnect point is about $5, 000 depending on the country and each content sent out to the interconnect point is paid for.

On the other hand, the initial cost of connecting to the IXPN stands at about N500, 000, it was gathered. Analysts say that an IXP could amount to 20 percent or more since local traffic often constitutes significant portion of operator’s overall traffic. According to them, connecting to the exchange could result in an immediate drop in latency from 900 milliseconds to 60 milliseconds for local content.