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Major telecom operators demand regulatory framework for internet exchanges as exchanges remain divided

However, the telcos were not as inclined to the idea of mandatorily connecting to an internet exchange.

“…for unbiased peering, interconnection and security, there is a need for a regulatory framework whereby a separate licence may be given for IXPs (Internet Exchange Point),” Reliance Jio said in its submission filed with the Telecom Regulatory Authority of India (TRAI).

The company is among several telecom operators that have raised the need for a regulatory framework to govern internet exchanges, according to comments filed in response to a consultation paper, ‘Regulatory Framework for Promoting Data Economy through Establishment of Content Delivery Networks, Data Centres, and Interconnect Exchanges in India’, floated by TRAI.

Jio wrote that TRAI should foster an environment through light-touch regulations as a lack of clear guidelines has led to confusion causing litigation. It also added that all internet exchanges should be supervised by a single framework irrespective of the licence. “An IXP licence cannot be the same as an ISP licence in its obligations,” Jio said.

Internet exchanges play a crucial role in bringing down the transit cost of internet traffic. These comments indicate how Indian telecom operators differ from internet exchanges on the role of regulations in promoting internet exchanges. It remains to be seen how TRAI approaches the issue.

Why are telcos demanding regulations for internet exchanges?

Reliance Jio

The company argued that internet exchanges should be neutral. “They should not discriminate and refuse/delay interconnectivity to any player,” the statement read.

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Jio explained that there was a conflict of interest for exchanges operating under an ISP licence to provide internet exchange facility to their users as most of them are other ISPs. It added that the arrangement will lead to a lack of trust among competitors resulting in “abuse of their position as an IXP”.

Vodafone Idea (Vi)

Vi echoed Jio’s views as it expressed concern over the lack of a regulatory regime for internet exchanges in the country.

The company wrote that since the traffic handled by internet exchanges involves bi-directional communication, there are linked aspects of security of said traffic and a lawful interception from a “national security point of view” as it can become a “door for entry into critical infrastructure”.

Vi also said that there was a significant dependency on internet exchanges presently which is only going to increase in the future, necessitating a need for a framework.

Airtel

Airtel stopped short of taking an explicit position but it is clear from its response that the telecom carrier would like to restrict the role of an internet exchange.

“The role of the internet exchanges should be to provide only a common location or a colocation place (i.e. DC facility) where different ISPs can place their equipment to peer with each other on the commercial conditions mutually agreed.” — Airtel

It was not in favour of extending the scope of internet exchanges to cover services provided by the ISPs. “This means that no content-to-content peering should be allowed as this would be inconsistent with licensing and regulatory framework,” Airtel said, suggesting that such a move will create a non-level playing field and will pose risks for security monitoring and investments.

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Should service providers be mandated to connect to an internet exchange?

Reliance Jio

The company wrote that the decision to join an internet exchange should be left to the ISPs. “This will create healthy competition between IXPs and allow growth of efficient IXPs,” read the statement. The company explained that the success of internet exchanges is determined by the number of peering players and the ability of the exchange to attract ISPs to connect to them.

“Any move to mandate ISPs to connect to IXPs will increase the cost for the ISPs and will be detrimental to the internet ecosystem by increasing the cost burden on the ISPs,” Jio asserted, claiming that measures will “disturb the market forces” and are detrimental to the competitive landscape.

Vodafone Idea (Vi)

Vi did not support the idea of directing TSP/ISPs to connect to an internet exchange mandatorily.

“The cost of encouraging IXPs at the state level, should not be counter-subsidised through TSPs, by mandating interconnection at Licensed Service Area (LSA) level as it will bring inherent inefficiencies into the ecosystem,” Vi said. There should be a prudent commercial business model and cost/technical benefits from such interconnection instead, it added.

Airtel

Airtel said that there should not be any mandate to connect at an internet exchange “as it is a decision of ISP how it wants to peer with other ISPs”.

“Presently, there is no mandate on peering arrangement between ISPs and the market has grown substantially on its own; therefore, we see no reason for any mandate on interconnecting at internet exchanges.” — Airtel

Tata Communications

“Mandating TSPs/ISPs to interconnect at the IXPs is tantamount to providing free ride on the network of these TSPs/ISPs (at their cost) to the enterprises/CDNs/OTTs/ISPs who also connect at the IX platform and are also a customer of TSPs/ISPs,” Tata Communications said in its submissionIt said that the internet ecosystem grows and evolves without any regulatory interference under the ambit of market forces and free economies.

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“A mandate will create a non level-playing field at the cost of TSPs/ISPs and will be grossly unfair and uncompetitive.”— Tata Communications

Tata argued that the companies will have no incentive to invest in internet networks and infrastructure in India because of this move. It added that the move will be counterproductive and against the core spirit of the objective of the consultation paper.

What are the proposed measures for a framework?

Jio believed that TRAI can consider the following policy measures to support the development of internet exchanges:

  • Assuring a reliable power supply,
  • Reducing high duties and taxes on internet exchange equipment imports,
  • Not placing constraints through licencing or regulation on the operator’s ability to connect and peer at an internet exchange
  • Removing barriers to entry for internet exchange operation and peering
  • Ensuring fibre connectivity of the site location

Vi wrote that the government must help private players, including telcos, to set up local internet exchanges to ensure effective utilisation of resources. The company added there was an “absolute need of a light-touch licensing framework”. It recommended that the terms and conditions to procure a licence should cover security requirements and licence fee payments.

What kind of business models are suitable for internet exchanges in India?

Reliance Jio said that there is a presence of both the commercial and non-commercial exchanges globally. “For instance, a majority of IXPs in the United States are for-profit organisations, while the majority of IXPs in Europe, Africa, and South America are not-for-profit organisations,” the company wrote.

It recommended that India can have commercial as well as community-led open exchanges.

“We submit the model to be adopted by any specific IXP should be left to market forces and up to the discretion of stakeholders investing in IXP,” the company said.

Jio suggested that internet exchanges are needed in small cities. “The government should support investment for IXPs in Tier II and Tier III cities, along the lines of fiscal and non-fiscal incentives for setting up DCs.”

Airtel, Vi, and Tata agreed in their submissions that such a decision should be left to the market forces.

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Who does not want a regulatory framework?

  • Tata Communications: The company put forth that there was no need for a separate regulatory framework for operating internet exchanges in India. It said that only licensed exchanges should be permitted to operate internet exchanges in India. The firm, however, underscored the fact that there is a need to ensure the presence of a level-playing field between ISPs that operate internet exchanges in India and other ISPs which provide internet services.
  • Extreme IX: One of India’s biggest internet exchanges, Extreme IX, highlighted that TRAI has recommended a separate class licence for internet exchanges. “There is no evidence to show that this was accepted by the department of telecommunications. It is clear that the Indian government wants to keep Interconnect Exchanges free of any licensing,” as per their submission. “Our view is that current regulatory frameworks should be expanded/changed to accommodate requirements of operating an Internet Exchange.”

The National Internet Exchange of India (NIXI), in a notable deviation, concurred with the telcos and said that a regulatory framework is required for establishing internet exchanges in India.

‘Service providers must be mandated to connect to an internet exchange’

However, NIXI differed from telcos when it recommended that service providers should be mandated to connect to at least one internet exchange in a licensed service area. “Peering with IXPs is expected to reduce the connectivity charges and reduce the latency which ensures quality broadband to end consumers,” it reasoned.

Extreme IX said that internet exchange operations will “definitely benefit from a government mandate for interconnection” at an internet exchange, especially for state-controlled entities like BBNL, BSNL, MTNL, RailTel and PowerGrid.

What is an internet exchange?

An Internet exchange point is a physical location through which Internet infrastructure companies such as ISPs and Content Delivery Networks (CDNs) connect with each other, Cloudflare explained in a post.

Many ISPs do not have to go through telecom operators who provide the backbone of internet networks, resulting in cost savings for many content providers as well as ISPs. Small ISPs benefit much more as they can get access to popular content providers like Facebook, YouTube, Netflix, and so on without having to pay telecom operators for bandwidth.

These exchanges are vital to the development of India’s digital space and economy. The presence of local internet exchanges keeps domestic internet traffic in India. It ensures that trafiic does not have to travel outside of country which is the case today. It is also cheaper to route the traffic through India than abroad. This ends up saving money which can be reinvested by exchanges and internet service providers to improve the internet infrastructure.

Growth of private internet exchanges

India is going to witness significant demand for the internet as content consumption is set to see a spike in the future. Many private internet exchanges have set up shop in India in the past few years to meet this demand; NIXI is slowly fading into obscurity.

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Lack of capacity: NIXI was set up in 2003 to improve the interconnection between internet service providers in the country. Its relevance was affected by rules that discouraged ISPs and prohibited content providers from joining and its traffic continues to remain low. Excitel’s CEO Vivek Raina, when asked about NIXI’s significance in an interview with MediaNama, said: “Our total capacity that we deliver to customers is around 500 gigs. And NIXI is about 35 gigs from that so you can understand the relevance.”

Two of the major internet exchanges in India are DE-CIX and Extreme IX. They have both been busy building capacity in the past two years.

DE-CIX announced in 2021 that its Mumbai facility had more peers than any internet exchange point in the Asia Pacific. It also said that its traffic increased by 192 per cent in 2020, almost tripling.

“DE-CIX Mumbai currently has more than 359 networks peering at the exchange, placing it on rank one among 153 IXs tracked in 29 countries in the APAC region,” DE-CIX said, pointing to a PeeringDB ranking page.

Extreme IX, on the other hand, has significantly improved its presence by adding seven new points of presence (PoPs) in Mumbai. The company is present in at least 20 locations in India. The company told the Press Trust of India in 2020 that it plans to invest ₹15 crores in expanding its network.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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Written By

I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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