Why Market Forces Should Drive IXP Ecosystem Growth
Overview
Uganda’s Internet ecosystem has achieved remarkable progress over the past three decades. Sound regulation, private-sector investment, and community collaboration have created one of the most competitive markets in the region. Wholesale bandwidth prices have dropped from roughly $5,000 to $0.50 per megabit in just 15 years, and nearly all networks now interconnect locally through the Uganda Internet Exchange Point (UIXP), a neutral, non-profit service that enables fast, secure, and affordable traffic exchange.
Uganda’s well functioning industry has attracted investment from infrastructure developers, international wholesalers, global content providers, and local access networks – fostering competitive pricing dynamics and sophisticated commercial collaborations. Uganda also recently attracted its first carrier-neutral data center, Raxio, which is a critical facility for hosting large-scale content, facilitating interconnection, and strengthening Uganda’s position in the regional digital economy.
Recently, however, the National Information Technology Authority (NITA-U) announced plans to launch a government-run Internet Exchange Point (IXP), while consultants hired by the Uganda Communications Commission (UCC) produced a market study which recommends the deployment of additional IXPs in secondary cities based on sources and methodologies provided by ChatGPT.
While these initiatives are well intentioned, they are based on flawed assumptions and could undermine Uganda’s hard earned gains by prematurely fragmenting the market. This would slow Uganda’s growth and inhibit its ability to develop as a regional Internet hub. Furthermore, a new government IXP cannot deliver the promised benefits of lower costs, faster speeds, or improved security because all networks in Uganda are already interconnected. It would add complexity without adding value, thereby raising service delivery costs and discouraging investment without providing a clear benefit to the industry, the public, or even the government itself.
Uganda is already on a strong path. If we stay the course, the country will naturally reach the scale where multiple IXPs can coexist sustainably based on market-driven demand. Policymakers can accelerate this outcome by reconsidering plans for a government-run IXP in favour of safer alternatives such as Private Network Interconnects (PNIs) for critical bilateral traffic flows. At the same time, the government should continue to support the existing IXP and data center ecosystem, reduce Internet taxes to stimulate demand, facilitate private investment, and work to promote overall economic development.
Preface: A Note on Perspective
As Uganda’s only existing IXP operator, we recognise that some may view our position as self-interested. However, the UIXP was founded in 2001 as a non-profit community initiative and has actively defended open market access including the right for other IXPs to emerge when market demand supports them. Our position is guided not by self-preservation, but by experience, data, and international best practice which we encourage readers to verify through the references provided.
Over nearly two decades, we have built a strong and respectful relationship with the Government of Uganda based on transparency, trust, and collaboration. Multiple government networks are now connected to our exchange and even pay to support the platform’s sustainability. Two of these networks (UTL & NITA) have partnered with us on initiatives such as the Google and Akamai caching projects. We also work closely with various government agencies on security and technical matters from time to time.
In that spirit, our hope is that this post can provide an academic and evidence-based contribution that helps the government avoid actions that could unintentionally harm Uganda’s Internet ecosystem and economy.
How the Internet & IXPs Work
The Internet is not a single network, but a "network of networks," whereby thousands of independent networks operated by service providers, governments, and content companies interconnect to exchange data. These interconnections can occur in several ways, but the most efficient and scalable way is through Internet Exchange Points (IXPs) which are neutral switching platforms where multiple networks meet to exchange data traffic directly.
A simple economic rule underpins the Internet: "Distance = Cost." The closer content and users are to each other, the faster and cheaper their communication becomes.
In Uganda, most of the content and services people access are hosted abroad. This international traffic reaches the country via submarine cables landing in Mombasa and Dar es Salaam, then travels inland through cross-border fibre connections. Because this data must traverse long distances, it is relatively costly to deliver and slower to reach end users.
IXPs like the Uganda Internet Exchange Point (UIXP) make it easier and more cost-effective for networks and platform providers to host content and services locally. This allows them to serve users from Uganda rather than from abroad. This lowers the overall cost of Internet service delivery, improves Internet performance, reduces Uganda’s reliance on international links, and makes investment in data centers and digital infrastructure more attractive.
Beyond improving performance and affordability, IXPs strengthen national resilience and security by keeping domestic traffic within Uganda, ensuring that it can continue to flow even if international links are disrupted. However, IXPs are not the only way networks can interconnect: operators can also establish Private Network Interconnects (PNIs) or exchange traffic regionally through facilities in neighboring countries. A healthy Internet ecosystem supports multiple interconnection models while letting the market determine the most effective approach.
The State of the Internet in Uganda
For three decades the government, industry, and local community have fostered healthy competition and growth. Today, Uganda’s Internet ecosystem is strong, resilient, and sophisticated:
- Multiple cross-border fibre routes connect Uganda to the global Internet via the Kenyan and Tanzanian coast, and inland to Rwanda, South Sudan, and DRC.
- The backbone and metro fibre markets are open and competitive with robust infrastructure sharing. Advanced offerings including dark fibre are available from multiple operators including C-Squared.
- The access service provider market is vibrant with both local, regional, and global operators covering mobile, wireless, and fixed-line communications. Competitive dynamics have led to rapid retail price reductions and Uganda now boast some of the lowest access prices in the African region.
- Tower and data center infrastructure has diversified, culminating in the recent launch of Raxio, the country’s first carrier-neutral data center.
- The non-profit UIXP interconnects all networks within the country, operates with excess capacity, and has strong community support. The UIXP is considered a model IXP within the region and plays a leading role in various pan-African institutions. Its success has attracted regional networks and global content providers including Akamai, Meta, and Netflix which now host their data locally, directly improving user experiences and keeping value within the country.
But Uganda does not operate in isolation. It competes directly with Kenya, a more established regional hub where open policy and market demand have naturally produced several private IXPs and data centers. Kenya benefits from coastal access and a larger economy, so Uganda must capitalise on every competitive advantage it has and avoid policy missteps that could weaken its attractiveness to investors, content networks, and other players.
What Is the Government Proposing?
In October 2025, NITA-U announced the creation of a government-run IXP called the National Internet Peering Exchange (NIPX), stating that networks would be "encouraged and, where applicable, required to exchange domestic traffic at the NIPX." The stated goals include improving performance, reducing international dependency, and strengthening "digital sovereignty." Yet no industry or public consultation appears to have been conducted prior to the announcement, and the referenced National Peering Policy is not publicly available.
While we appreciate the implication that this new IXP will operate in parallel to the UIXP (and presumably other IXPs which could enter the market in the future), we have a number of concerns about this action which we will elaborate below.
In addition, the UCC recently engaged consultants who generated an extensive market analysis report that recommends building two more IXPs in secondary cities based solely on population-based formulas cited from an uncorroborated ITU report. Alarmingly, this recommendation and the wider report appears to have been generated by ChatGPT, casting doubt on its methodological rigor. We understand that the UCC conducted a validation workshop for this report, but we were not included in that process and do not know if they intend to pursue this specific recommendation.
There is clear evidence that ChatGPT was used
to generate the consultant's report.
to generate the consultant's report.
These initiatives, though seemingly independent and presumably well intentioned, share a common thread: they overlook the current realities of Uganda’s Internet landscape and risk destabilising a market ecosystem that works extremely well.
Exploring the Motivations for a Government IXP
The logic behind NITA’s IXP announcement and the UCC consultant’s recommendations sound appealing — increased digital sovereignty, faster speeds, lower costs, and greater security — but in Uganda’s case, these issues are already addressed:
- Digital Sovereignty: All networks in Uganda interconnect via the UIXP, which means that domestic Internet traffic is already localised and local hosting is already viable. Instead of trying to duplicate this capacity, the government should try to build on it by promoting content and service deployments in Ugandan data centers like Raxio.
- Performance: Because domestic Internet traffic is already localised, a new IXP cannot provide additional performance benefits. Deploying IXPs in secondary cities would not benefit networks or users in those areas because they mostly access content and services hosted in Kampala, Nairobi, and beyond where network effects and economies of scale are large enough to accommodate them.
- Cost: Creating a new IXP before the industry needs it — and forcing networks to connect — would increase operational complexity and cost without adding value.
- Security: The government has dedicated network infrastructure, and its inter-network traffic is (or should be) encrypted. Re-routing inter-network traffic through a government-controlled IXP would provide no additional security benefit which could not otherwise be achieved by establishing Private Network Interconnects (PNIs) for critical bilateral traffic flows.
Beyond the stated objectives, some might wonder if the government's motivations include a desire for money or control, but we think these would also be misguided:
- Most IXPs are non-profit for a reason: they are not money-making ventures, and the opportunities for profit in Uganda are extremely limited. The UIXP, for example, operated entirely on volunteer effort and donations from 2001 to 2017. Even today, with around 30 connected networks, it only earns enough to cover operations, pay salaries, and ensure long-term sustainability. Simply put: There is no "gold mine" in running an IXP, and a government-run IXP would likely become a recurring cost rather than a source of income.
- When it comes to control, a government IXP would provide no additional leverage. The government can already exercise its monitoring and censorship authority through systems deployed inside the network operators — a far more direct and effective point of control. During the 2021 Internet shutdown, for example, the UIXP remained online to carry essential background traffic even as public access was cut off, demonstrating that IXPs are irrelevant to the government’s ability to restrict or shape access. If anything, they help critical systems continue functioning.
The Likely Impact on Uganda’s Digital Ecosystem
If implemented now, a government IXP could have several unintended consequences:
- Premature Fragmentation: Forcefully splitting Uganda's limited demand for network interconnection across multiple IXPs would dilute network effects, raise costs, and reduce efficiency, thereby hindering Uganda's development as a regional content and interconnection hub.
- Higher Operational Costs: Forcing ISPs to connect to a government IXP without a clear value proposition would artificially inflate service delivery costs and increase network complexity.
- Reduced Investor Confidence: Sudden uncoordinated policy shifts create uncertainty in an industry that relies on predictability.
- Slower Long-Term Growth: The resulting inefficiency and reduced investor confidence would slow market development, job creation, and economic growth.
- Wasted Public Funds: Building redundant infrastructure when private solutions already exist diverts resources from more pressing national priorities.
It is also worth noting that government IXPs tend to under-perform globally due to bureaucratic constraints, lack of neutrality, and limited operator trust. Government IXPs that mandate connections can drive networks away from the market, discourage investment, and, in the worst cases, create monopolies over interconnection — the opposite of what Uganda needs.
Rather than delivering the promised benefits, a government IXP would more likely undermine the market-driven efficiency and industry collaboration that has powered Uganda’s progress to date, weakening its ability to attract investment and compete with more mature regional hubs like Kenya.
In time, as Uganda’s economy grows and the regional Internet ecosystem expands, a second IXP will become both viable and healthy for competition, but it must emerge naturally from market demand, not as a top-down intervention.
What Should Be Done Instead
The Ugandan Internet ecosystem is fundamentally well configured as evidenced by wholesale bandwidth pricing that is among the lowest in Africa and local interconnection rates that are among the highest in Africa. To strengthen it further, and to secure Uganda's future, the government should avoid duplicating what already exists and focus on facilitating growth by creating an enabling environment. Specifically:
- Establish Private Network Interconnects (PNIs) between government and private networks for important connections to achieve the same practical outcome without all of the costs and risks associated with launching a government IXP.
- Reduce Internet taxes which now account for over 50% of the cost of access in order to improve accessibility, increase demand, and improve market competitiveness.
- Facilitate investment and competition with incentives, by making it easier to do business in Uganda, and by avoiding unpredictable market interventions.
- Collaborate with the UIXP and other community stakeholders to find ways to attract more content and networks to Uganda as the government has successfully done in the past.
- Promote carrier neutral data centers like Raxio by deploying government services (such as NIRA) inside these facilities, and by avoiding actions that would unnecessarily weaken its colocation and interconnection ecosystems.
- Authorise LEO satellite systems like Starlink with in-country ground station requirements which localise user traffic and help to offset negative market effects.
- Engage in open consultation with industry and civil society before undertaking significant actions or policy changes to ensure alignment with local and regional market realities.
- Promote broader economic development because the Internet industry cannot grow unless the overall economy does.
If these steps are taken, Uganda’s market will continue to develop organically and will soon reach the scale where multiple neutral IXPs can coexist as part of a healthy, regionally competitive, secure, and sustainable Internet ecosystem.
Conclusion
Uganda’s Internet industry has thrived because it was built on market-driven investment, competition, and collaboration. A second IXP will one day strengthen this ecosystem, but only when there is enough demand to sustain it. Launching a mandatory government-run exchange at this moment would provide no clear benefit, would prematurely fragment Uganda's Internet industry, and would undermine the country's long-term growth prospects.
We encourage the government to take a step back, consult openly with stakeholders, and base its next moves on evidence and market realities. Uganda’s incredible progress over the past two decades has come from enabling market innovation, not directing it, and this strategy remains key to future growth.
International experience shows that the Internet grows best when it is open, neutral, and driven by demand rather than decree. By staying true to these principles, Uganda can protect the gains that have made its Internet industry one of the most advanced in the region.
