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Make the Future Different
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6/12/2010 Ver.1.2
THE CASE FOR A TRUE NATIONAL INTERNET EXCHANGEFOR THE PHILIPPINESBackground
Currently 15% - 23% of all internet traffic is domestic. Domestic traffic originates in thePhilippines and terminates in the Philippines. The origin and destination may be as faraway as across the country or as close as across the street from each other. However,instead of remaining local, 40% - 70% of this
“local traffic” is
being sent out of thecountry to Hong Kong or LA before returning.
Customers suffer delays and time outs on their applications and games
The lack of a proper Internet exchange means that accessing and interacting with localweb sites and the performance of many applications and games can take more thantwice as long as it should.
This is a result of the long “round trip” the information has to
take to go to the U.S. (primarily) before return to the Philippines. In other cases, thetraffic is routed locally but due to the insufficient local bandwidth the local delays can
result in even longer delays or “time outs”. It also makes the country dependent on
international cables. As was experienced during the major international cable break in2008, even access to local sites, government websites and local email can bedisrupted. International cable diversity has significantly improved over the past twoyears. However, internet traffic has also exploded and with it the dependency ofbusiness, commerce and personal communications on the internet has similarlyincreased.
Telco’s can save costs.
Some “peering links” do exist between telco operators but these tend to
be relativelysmall and congested. A proper Internet Exchange allows internet traffic, particularlylocal traffic, to flow without delay or diversion over the shortest route. Instead of
connecting locally, carriers are paying for international bandwidth they don’t need.
Even though international bandwidth has become cheaper, a true exchange reducescosts for the carriers. It is still far more expensive to pay for international bandwidth thanto connect locally.
The lack of an Internet Exchange continues to cost the country foreigninvestment and job creation
The current situation is a disincentive for foreign companies or providers to locate theirwebsites, services and businesses in the Philippines. The reason for the disincentive is
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that the network connecting servers and services in the Philippines are slower and morecongested than the international connections. Therefore if companies locate theirservers in the Philippines even their local customers will experience more delays than ifthey located their servers and services in the U.S.! Several examples exist where ahosted application provider moved their servers to the Philippines to get better responsetime, only to face an angry customer after several weeks of slower and degradedperformance!
No significant cost is involved
In terms of cost, what is mainly required is for all participants to bear their ownequipment costs to support their network traffic. This is mainly made up of common IProuters and switches. In fact, the more equipment required the bigger the internationalbandwidth saved. In general, the payback for any incremental equipment should bethree to six months or less.
The
“myth” of “we will cooperate but others will not”
A broad spectrum of industry players agree that the lack of a true National InternetExchange is a significant problem that is holding back the industry, investment andcustomer experience. There is also broad agreement that it can be fixed relatively
easily. Many of the players assume that although “they” are willing to cooperate others
will not. However, t
he many of the “others” also assume the same!
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