Part of my role at APNIC is helping operators and service providers across the ‘Blue Continent’ to set up and run Internet Exchange Points (IXPs).
Some of the more basic strategic work I undertake is to teach network engineers and their managers what an IXP is, how it runs, and what it does for the local community. Other work includes helping during the build of an IXP or an upgrade. This work includes a lot of knowledge sharing across the Pacific region on peering and traffic collaboration.
What’s the ‘why’ for an IXP?
IXPs are key to growing a local Internet Service Provider (ISP) business and regional content eco-systems. The idea is very attractive to local providers when there is local traffic that can benefit from the operating model of any IXP — low latency, low cost, and surplus bandwidth.
Content, being anything from accessing email to watching video, is the modern use case of the Internet for end users. There are no ISP networks left that do not have most of their Internet traffic fetching text, audio, and video for their customers to consume.
So, a modern IXP is a mix of providers (we say ‘eyeballs’) and Content Delivery Networks (CDNs), cost-effectively exchanging traffic with the great network bonuses of abundant bandwidth and low latency.
Over the years, I’ve seen the peering-to-transit ratio reach as high as 85:15 for an ‘eyeball’ network, meaning 85% of traffic is served via local IXPs. With multiple IXPs in place, this approach delivers cost-effective resilience and redundancy, while also improving speed and reducing latency.
But …
There are exceptions. For example, two of the larger economies in Melanesia have a single international transit provider. This apparent monopoly has actually been placed in the market by necessity, as the amount of traffic, overall, cannot support multiple international operators in a free market.
Complicating matters, pricing submarine cable capacity at Indefeasible Right of Use (IRU) rates is beyond what most Pacific nations can reasonably afford, effectively making a single transit provider model with usage-based pricing a necessity. An elegant solution came when cable owners adopted usage-based pricing as a more practical and sustainable alternative.
Small island economies often have very little or no fixed-line infrastructure. In advanced economies and even large population developing economies, it is relatively easy (in comparison to the Pacific) to find customers to make use of your new international links.
The most critical part of these issues is that local content is substantially absent from the island networks. Most Melanesian operators are picking up their content in Sydney, and others are going further afield to the USA or Asia.
No easy solutions
The situation in the Pacific region is marked by complex and interdependent challenges. At the international level, sovereignty and geopolitical issues are already at play, further compounded by recent trade conflicts.
Costly submarine cable projects are landing on islands with little (or no) demand for more than one or two per cent of the bandwidth available. Meanwhile, one — and soon several — Low Earth Orbit (LEO) satellite providers are entering these markets, directly competing with domestic operators. This shift is raising serious concerns, as the most profitable customers are beginning to migrate to international LEO competitors.
The single most important factor determining the success of a contemporary IXP is content, and on many islands, local content is virtually nonexistent. Hosting content requires not only demand from end users (eyeballs) but also the presence of infrastructure such as cloud operators, data centres, and service providers that can support businesses and governments alike.
In reality, both of these critical elements are missing. There’s a limited audience to justify investment, and nowhere for content providers to establish a local presence. The result is a kind of infrastructural paradox — without content, there’s little incentive to build infrastructure, and without infrastructure, content won’t come.
Can we even classify this problem? It fits squarely into the realm of a Wicked Problem — multifaceted, context-dependent, and resistant to straightforward solutions.
Define the problem
It’s difficult to frame this issue as anything other than a development challenge. Internet affordability remains out of reach for many in island economies, and operators are working with severely constrained capital budgets. With low Average Revenue Per User (ARPU) and high Capital Expenditure (CapEx) per capita, largely due to sparse population densities, the economics are unforgiving. Any Chief Financial Officer (CFO) running the numbers would see a limited prospect for return on capital, which is why investment often comes only from governments, local pension funds, or philanthropic sources.
Peter Senge, in his talks on Systems Thinking, tells a story about building a football field to win community trust and eventually proposing a garden, only to discover that the real issue was about fishing. It’s a compelling reminder that the presenting problem is rarely the root problem.
Since I’ve been with APNIC, I’ve attended the PITA AGM every year — and I keep returning because it’s a unique forum where the real issues surface. The attendee list is diverse and influential: C-level executives, Parliamentarians, consultants, and vendors. If a solution is going to be shaped, this is where the conversation begins.
One consistent theme I’ve noticed — the consultants and vendors genuinely want their Pacific clients to succeed. Yes, they’re there to do business — but they understand that their own sustainability depends on helping their customers achieve long-term success. That alignment of interest matters.
Governments across the region have also begun raising the issue of Digital Sovereignty in recognition that their digital services and infrastructure are increasingly reliant on foreign cloud providers located outside the region. That’s not just a technical or economic concern; it’s one of policy. It makes the case for developing local hosting capacity stronger than ever.
Referencing Peter Senge, perhaps the football field is the PITA AGM where we can tackle the real problem.
What’s next?
Exploring the challenges around IXPs in the Pacific reveals a complex but encouraging truth — there are multiple key stakeholder groups, and they all want to build an environment where IXPs can thrive in the long term.
Policymakers are central to this effort. For IXPs to flourish within their national agendas, certain conditions need to be met, including the growth of local content, local services, local e-commerce, and digitally enabled government. All of this must sit within a broader focus on closing the digital divide.
Vendors also play a critical role. They need to develop and support solutions that directly engage with the barriers of digital access and affordability. This makes the digital divide not just a development issue, but a shared strategic challenge across the entire value chain.
Consultants are key, also. Their ability to assist with knowledge transfer, policy design, and the creation of sustainable, locally relevant business models makes them powerful enablers in this ecosystem.
To reference Peter Senge once more, there are now multiple gardens to tend. Each stakeholder has a role, and each leverages different points in the system — but they’re all working toward the same larger goal.
Does this mean IXPs shouldn’t be built in the meantime? No. An IXP doesn’t need to wait for everything else to be in place — it can grow into its role, providing value at every stage as local content and access networks begin to mature. In fact, it becomes a strategic enabler that helps stimulate the very developments required to sustain it.
Summing up
A local — or even regional — IXP makes for a good resident in the local ecosystem of operators and emerging content providers. It’s not just a technical asset, it’s a cornerstone of digital resilience and sovereignty. IXPs are important at any stage of development, but they cannot exist in a vacuum.
The core policy challenge remains the maturation of Internet access — addressing the digital divide and, from there, the deeper social and economic issues that feed into it.
Ultimately, it comes down to one thing: Development.
The views expressed by the authors of this blog are their own and do not necessarily reflect the views of APNIC. Please note a Code of Conduct applies to this blog.