How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ......
Transcript of How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ......
![Page 1: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/1.jpg)
HowtothinkaboutIXPsifyouareatelecomregulator
ENOGYerevan,ArmeniaOctober2016
![Page 2: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/2.jpg)
WhatthispresentaGonisabout
• IXPsexisttosolvecertainproblems;• Theyarearemarkablesuccessstory;• They,liketheInternetitself,areembeddedinanolderworldoftelecommunicaGons,whichrunsondifferentinfrastructure,economicsandideas.
• ThispresentaGondealsinpartwiththeintersecGonoftheIXPandsomeofthoseolderconceptsandmaterialfacts.
2
![Page 3: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/3.jpg)
Whatthegoalsare• Thegoalsare– toencourageregulatorstoregulatewhereregulaGonisneeded;
– TopreventthemfromregulaGngwhereregulaGonisnotneeded;
– Toknowthedifferencebetweenthetwodomains• Ingeneral,theInternetisworkingfine;leaveitalone
• Intelecomcarrierpolicy,thereisseldomenoughcompeGGon.
• RegulaGonandoversightisneededatthatlevel.
3
![Page 4: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/4.jpg)
ThesuccessofInternetExchangePoints(IXPs)
• Asrecentlyas2013itwassaidthatIXPs“hadgoneunnoGced”.
• Fromfour‘networkaccesspoints’in1995to86inNorthAmericaasof2013.
• Therearenowapproximately350IXPs,halfofwhichareintheUSandEurope– accordingtoPCH– Thetotalisalwayssubjecttosomemeasureofdisagreement
4
![Page 5: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/5.jpg)
InEurope• Sincethe1990s,theEuropeanactors(telcosturnedISPs,andnewcompeGtors)realizedthatexchangingtheirtrafficlocallybroughtlargecostsavings.
• Thenotforprofit(NFP)modelbecamestandardinEurope.DE-CIX,AMS-IX,Ecix– ThesearetypicallywhollyownedbyanassociaGon;customersprovideadvicethroughanadvisoryboard.
– MostNFPspublishtheirdata,membership,serviceofferings,&detailedspecificaGonsoftheirinfrastructure
5
![Page 6: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/6.jpg)
WhatisanIXP?
• AMS-IXdefinesanISPas– “AnetworkinfrastructurewiththepurposetofacilitatetheexchangeofInternettrafficbetweenAutonomousSystems(ASes)andoperaGngbelowlayer3.ThenumberofASesconnectedshouldatleastbethreeandtheremustbeaclearanopenpolicyforotherstojoin.”
• ThevastmajorityrelyonanEthernetswitchingfabric
6
![Page 7: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/7.jpg)
ThestunningsuccessoftheInternetmarket
• AnOECDstudy(2013)showedthat– theInternethasallowedpricedfor
connecGvitytobefiveordersofmagnitudelowerthanwhatitisforitsTDMequivalent.
– Statedastheper-minutepriceforVoIPtraffic,thecombinedcosttocallerandrecipientisUSD0.0000008perminutethanwholesaleserviceprovidingcomparablefuncGonsinTDMmarkets.
– ThishasbeenachievedwithnodirectintervenGonbyregulators
• Whysocheap?– EfficiencyofpacketrouGng– CompeGGoninInternetmarkets– FlexibilityofrouGngarrangements
7
![Page 8: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/8.jpg)
Othersourcesconfirmloweredprices
8
![Page 9: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/9.jpg)
Stunningsuccess,conGnued
• TheInternethasdevelopedahighlyefficientmarketinconnecGvity,basedonvoluntarycontractualarrangements.
• Asurveyof142,000peeringarrangementsshowedthatthetermsandcondiGonsoftheInternetmodelaresogenerallyagreedonthat99.5%ofinterconnecGonagreementsareconcludedwithoutawrikencontract.– TransacGoncostsarelow– Eachpartyagreesthatthedealaddsvalue
9
![Page 10: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/10.jpg)
Cause:economicsandhands-offregulatoryapproach
• TheparGcipantsarefreetodeclinetodobusiness– Theabilitynottointerconnectwiththosewhofailtoobservestandardsdisciplinesthemarket
• AlternaGveroutesarefrequentlyavailable,andmarketpowerofanyplayerislimited;
• NooneintheISPworldisobligedtointerconnect.
• NoregulatorneedstopromotecompeGGonatthisleveloftheprotocolstack,inthesemarkets.
10
![Page 11: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/11.jpg)
OtherEuropeaninquiriesintotheInternet
• TheBodyofEuropeanRegulatorsforElectronicCommunicaGons(BEREC)issuedareportonIXPissues[6December2012]astheyarosefromnetneutralitydebates– BEREChashighlightedthefactthattheInternetconnecGvitymarketandhosGngserviceshavegrownfromzerotoamulG-billion-Eurobusinessinfipeenyearsonacommercialbasis.
– [Peeringandtransit]interconnecGonarrangementsdevelopedwithoutanyregulatoryintervenGon,althoughtheobligaGontonegoGateforinterconnecGonappliestoIPnetworksaswell.TheseagreementshavebeenlargelyoutsidethescopeofacGvityofNaGonalRegulatoryAuthoriGes{NRAs}.ThisappearedjusGfiedinparGcularduetothecompeGGvenessofthetransitmarketonIPbackbones.
• TheBERECreportshowsconsiderableunderstandingoftheInternetmarketandIXPsgenerally.
11
![Page 12: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/12.jpg)
TheTDMworldisdifferent
• AssumpGonsandfactsrelevanttotheInternet(layer3)donotapplyintheolderTDMtelephoneworld(layer2and1).
• Maintainingtheruleoflaw,openmarketsandpromoGngcompeGGonisvital,butthewayithasbeendoneintelecommarketsiscondiGonedbytheoldereconomicsandphysicsofthetelephone(TDM)era.
• Solet’slookatthestricturesimposedbyolderwaysofcommunicaGng.
12
![Page 13: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/13.jpg)
DefiniGons• Inthiscontext,“transport”
signifiesmakerspertainingtolayers1and2oftheOSImodel.
• “transit”pertainstoOSIlayer3.
• ThereisplentyofcompeGGonatlayer3,andlimitedcompeGGonatlayers2and1,usually
13
![Page 14: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/14.jpg)
InterconnecGon
• IntheInternetmodel,norighthasbeengrantedbyregulatoryauthoriGestoacquireinterconnecGonwithanotherparty;– Proventobeahighlysuccessfulmodel
• IntheworldofTDM,arighttointerconnecGon,thatis,regulatedaccesstofaciliGes,isopentheunderpinningofcompeGGon–infacili6es.
14
![Page 15: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/15.jpg)
IntervenGonandnon-intervenGon• ThesuccessoftheInternetIPmarketfortrafficexchangeflowedfromabroadpolicyframeworkofliberalizaGonoftelecommarkets–thatis,infaciliGes(layers2and1).– TherehasbeenacloserelaGonshipbetweenliberalizedtelecompoliciesandthedevelopmentoftheInternet
• ThreatstotheInternetinclude– ExtendingregulatoryconceptsfromtheTDMworldintotheInternet
– extendingthelifeGmeofoldpolicygoals(e.g.equalgeographicaccess)
– Treaty-basedrevenueseklements
15
![Page 16: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/16.jpg)
SohowmuchcompeGGonisenough?
• HowmanyfaciliGesbasedcarriersisopGmal(fortransportatlayers1and2)?Whatisthenumberbelowwhichwerunintoproblems?
• HerewepassoutoftelecomandInternetideasintotherealmofcompeGGonpolicy.– WearenottalkingabouttheminimumnumberofinterconnecGngnetworksneededforanIXP,whichhasbeensetatthree.
– WearetalkingabouttransportfaciliGes.
16
![Page 17: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/17.jpg)
ConceptsfromcompeGGonpolicy
• Itisgenerallyagreedthatamonopolist(solesupplier)hasincenGvestorestrictoutputandraiseprices.
• CompeGGonregulatorsconsiderthatduopolies(2suppliers)reachcozy,unspokenaccommodaGons.– CokeandPepsi
• At3suppliers,somerealcompeGGonbegins– CompeGtor#3isseldomaslargeas#1and#2– PriceandfeaturecompeGGonbegininearnest
17
![Page 18: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/18.jpg)
HowdoyoumeasurecompeGGon?• TheUSemploystheHerfindahl-Hirschmannindex.– ItisarrivedatbythesumofthesquaresoftheparGcipants.Ascoreof.25ormoreindicatesstrongconcentraGon.
• CanadausesMergerEnforcementGuidelines.Ifthe4largestplayersinamarketwouldcollecGvelyhave>45%ofthemarket,nomergerofthemwouldbeallowed.MarketconcentraGonof35-45%wouldputthemergerintothecauGonzone.
• ThedefiniGonoftheproductandgeographicmarketisalwaysdecisive.TheeasieritistosubsGtute,theeasiertogetyourmergerapproved.
18
![Page 19: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/19.jpg)
EuropeanApproachestoTelecomsMergers
• “Thereisnomagicnumber,”ofmobileoperatorsinamarket,statedtheEuropeanCommissionerMargretheVestagerinearlyOctober2015– Afewyearsago,thenumber“three”seemedtohavemagicalpowers,whentheSwissCompeGGonCommissionblockedthemergerbetweenthesecondandthethirdlargestmobileoperatorsin2010,whichwouldhavecreatedaMNOduopoly
– effecGvecompeGGonintheretailmarketisthecriterion– areducGonofthenumberofplayersfromfour-to-threeinanaGonalmobilemarketintheEUcanleadtohigherpricesforconsumers…butnotthatitleadstomoreinvestmentpersubscriber,”Ms.Vestagersaid.
– mergerswhichreducedoperatorsfrom4to3hadpreviouslybeenapprovedinIreland,Austria,andGermany
19
![Page 20: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/20.jpg)
Whatistheproblemmergershelptosolve?
• Carriersfaceenormouscosts,thinprofitmargins,customersdis-intermediaGng,andnewbusinessmodelsthatcanmovethemoneyawayfromthem.
• Thewayoutistomerge– verGcalmergerstointegratefixedandmobilebusinessestoachievecostssynergiesandbringnewproductstomarket,
– networksharingagreements,and– horizontalmergersbetweenmobileoperatorstoreducecostsandfinancenewinfrastructureinvestments.
• Thepressureisonregulatorstofindthe‘best’numberofcarriers,withnofixedanswertotheproblem.
20
![Page 21: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/21.jpg)
Sowhyatleastthreetransportproviders?
• FromtheperspecGveoftheIXP,indeed,anyone,theexistenceofatleast3transportproviders(faciliGes,circuits)isaboutasgoodasitgets.– PracGcallimitaGons,suchascapitalinvestments,tendtolimitthenumberofcarriers;
– Morewouldbedesirable,butfewerthan3producesalltheproblemsassociatedwithunspokencollaboraGonbetween2,andmonopolywith1.
21
![Page 22: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/22.jpg)
LessonsforPolicyMakers• LiberalizedtelecommunicaGonspolicieshavesupportedthesuccessoftheInternet,parGcularlyIXPs– Ahands-offapproachhasletmarketparGcipantsdisciplinethemarket,attheIPlayer.
– InsufficientcompeGGoninfaciliGes(layers1and2)keepstransportpriceshighandretardsthespreadoftheInternet
– Byrequiringplayerstoholdgovernmentlicences,andrestricGngthem,regulatorscanupholdinsufficientcompeGGon
– Findingthe“right”numberoftransportcarriersatlayers1and2isnoeasytask;countervailingpressuresfavourmergersofcarriers
22
![Page 23: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/23.jpg)
Sources1• Chatzis,N.,Feldmann,A.,SmaragdisG.,Willinger,W.2013Onthe
importanceofInternetexchangepointsfortoday’sInternetecosystem.Availableathkp://arxiv.org/abs/1307.5264
• HaithamEl-Nakhal,Implementa6onandManagementofInternetExchangePoints(IXP),Feb2014ITU-TSG3RG-AFRReg.andEcon.Forum
• NSFImplementaGonPlanforInteragencyInterimNREN,Aiken,Braun,Ford,Claffy.May1992
• OECDDigitalEconomyPapers,No.207.InternetTrafficExchange:MarketDevelopmentsandPolicyChallenges,DennisWeller,BillWoodcock,2013
• OECDDigitalEconomyPapersNo.232,InternaGonalCables,Gateways,BackhaulandInternaGonalExchangePoints,RudolphvanderBerg,2013
23
![Page 24: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/24.jpg)
Sources2• hkps://ec.europa.eu/commission/2014-2019/vestager/
announcements/compeGGon-telecom-markets_en• hkps://www.compeGGonpolicyinternaGonal.com/magic-
numbers-and-merger-control-in-the-telecommunicaGons-sector/
• hkp://www.wsj.com/arGcles/eu-anGtrust-chief-cauGons-against-4-to-3-mobile-telecom-mergers-1443789301
• hkp://www.nortonrosefulbright.com/files/gcr-the-european-anGtrust-review-2016-uk-telecoms-130445.pdf
• hkp://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32004R0139&from=EN
• DrapBERECReportonOligopolyAnalysisandRegulaGon
24
![Page 25: How to think about IXPs - ENOG · • A survey of 142,000 peering arrangements showed ... european-anGtrust-review-2016-uk-telecoms-130445.pdf ... Acknowledgements The author wishes](https://reader034.fdocuments.in/reader034/viewer/2022050600/5fa7d589642a043bed0b2015/html5/thumbnails/25.jpg)
Acknowledgements
TheauthorwishestothankGeoffHustonofAPNIC,MikeLeberofHurricaneElectric,JohnCurranofARIN,andKonradvonFinckenstein,formerDirectorofCanada’sBureauofCompeGGonPolicy,andGernotKofler,oftheBureauofCompeGGonPolicy,forclarifyingconversions.AllmistakesofinterpretaGonaremyown-TMD
25