Tuesday, 25 June 2019

Nationalization in Uganda: A Looming Disaster

The Uganda Communications Commission (UCC) has proposed a new licensing framework that would effectively nationalize a core part of the country's telecommunications industry; Internet exchange points (IXPs).

Introduction to Internet Exchange Points (IXPs)

This news was communicated to us in a letter from the UCC dated June 7th, 2019. The letter included a draft of the licensing framework and a call for written feedback by July 5th, 2019 -- but notably did not include a problem statement (click here to download a full copy).

Based on our analysis, the draft framework would establish a government controlled monopoly which all other market players would be subservient to. It would accomplish this with the following formula:

  • Establish a “Designated National Internet Exchange Point” that all other IXPs will be required to connect to (9.j);

  • Require government approval of contracts between IXPs and network operators (7.4.b);

  • Allow the government to arbitrarily compel IXPs to make operational and technical changes (7.5.c)

  • Allow the government to inspect, copy, or remove any data related to any IXP without a court order (7.5.b.i);

  • Require all licensed network operators to connect to an IXP (8.2.a).

Technically speaking, this policy would merge all IXPs into a single national peering LAN, with each IXP merely acting as a heavily regulated access point for the enlarged infrastructure. The resulting entity would suffer from all of the classic symptoms of a monopoly as well as significant technical challenges and security risks derived from having multiple operators control access points that form part of the same LAN. As a centralized service, it would also inherently lack the resilience that a diverse array of independent IXPs would provide.

Here are two diagrams to help illustrate the concept:

In addition, the draft framework contains language which suggests that the government intends for the "Designated National Internet Exchange Point" to establish itself by expropriating an existing private operation; namely, ours.

This appears to confirm some of our worst fears about Uganda's new National Broadband Policy; a government strategy document, reportedly drafted in isolation, that seemingly calls for a large-scale nationalization and centralization of Uganda's Internet infrastructure under the guise of infrastructure sharing.

We (and others) have repeatedly warned that such policies would have severe socioeconomic consequences for Uganda and the wider East African region. In this particular case, the UCC's planned regulatory intervention in our otherwise healthy industry has no successful parallel anywhere in the world -- and global experts widely regard the other attempts as textbook examples of regulatory failure.

In light of the obvious risks and highly technical nature of this proposal, we feel that this limited survey of the local Internet community is insufficient validation. Accordingly, we strongly urge the UCC to defer any further work on this project until there is a clear rationale and its viability can be transparently proven with case studies and corroborating input from credible global experts.

Meanwhile, we are preparing to submit detailed feedback to the UCC and will post a copy of our submission here once it is ready. We encourage anyone else that would like to submit feedback to do so through us electronically. We will collect, manually submit, and (unless anyone objects) electronically publish all that we receive in order to promote transparency.

Please feel free to contact us here: board@uixp.co.ug

[UPDATE: A copy of our formal feedback to the UCC can be downloaded here. Our general position is that the creation of a de jure IXP monopoly would be bad for our industry, Uganda, and the region. We argue that the regulatory framework should instead seek to create an enabling environment for competition.

We have also uploaded a number of supporting submissions made by the Internet eXchange Federation (IX-F), the African Network Information Centre (AFRINIC), the ICT Association of Uganda (ICTAU), Liquid Telecom, and a personal submission by Diarmuid O'Briain. A copy of those submissions can be downloaded here.]