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) with an ambiguously worded requirement for "Mandatory Domestic Peering" which suggests that ISPs may be obligated to exchange domestic traffic at the new IXP, though the scope and enforcement of this requirement remain unclear. Separately, consultants hired by the Uganda Communications Commission (UCC) produced a market study which recommends the deployment of additional IXPs in secondary cities based on uncorroborated sources and questionable methodologies provided by ChatGPT.
While these initiatives may be well intentioned, they could undermine Uganda’s hard-earned gains by prematurely fragmenting the market, slowing growth, and weakening the country’s prospects as a regional Internet hub. Because Uganda's networks are already interconnected, a new government IXP cannot deliver the promised benefits of lower costs, faster speeds, or improved security. On the contrary, forcing networks to shift domestic traffic to a new facility, instead of letting the market determine its viability, risks adding complexity without adding value. It could raise service delivery costs, discourage investment, deter new entrants, drain traffic from the existing exchange, and pave the way for a de jure national monopoly while providing no clear benefit to the industry, the public, or even the government itself.
Uganda’s Internet ecosystem is already on a successful path. If we stay the course, the country will soon reach the scale where multiple IXPs can coexist sustainably based on market demand, similar to the natural growth experienced in Kenya, Nigeria, South Africa, and other markets. 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, reducing Internet taxes to stimulate demand, making it easier to do business in Uganda, working to promote broader economic development, and continuing to support the existing community IXP and data center ecosystem.
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 compete based on voluntary market dynamics. 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 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 IP Peering Exchange (NIPX), with a "Mandatory Domestic Peering" requirement which states 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 beyond the information included in the announcement.
While we appreciate the implication that this new IXP would operate in parallel to the UIXP (and other IXPs which could theoretically enter the market in the future), we have a serious concerns about this announcement which we will elaborate below.
Separately, 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 uncorroborated recommendations in the UCC consultant's report.
These initiatives, though independent and presumably well intentioned, raise serious concerns because they would introduce significant structural changes to the market without clear evidence of demand or national benefit.
Exploring the Motivations for a Government IXP
The rationale stated in NITA’s IXP announcement sounds 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 already interconnect voluntarily via the UIXP and various Private Network Interconnects (PNIs), 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 working to promote more content and interconnection at existing facilities like Raxio & the UIXP.
- Performance & Cost: Because domestic traffic is already localised, a new IXP cannot improve national Internet performance unless it can attract content and interconnection beyond what the existing ecosystem can achieve. Since government IXPs tend to under-perform and are inherently less
attractive to network operators than private IXPs, a new government IXP is unlikely to achieve this.
Furthermore, because the cost of peering via the UIXP is a relatively insignificant
portion of overall service delivery costs in Uganda, a government IXP could not
materially reduce national Internet access costs even if it offered its
service for free.
- Security: With most domestic traffic already localised, Uganda's reliance on foreign transit networks and cable systems for internal communications is already minimised, significantly reducing the risk of external eavesdropping and traffic manipulation.
When it comes to state security, the government already has dedicated network infrastructure, encrypts its inter-network traffic, and has a wide range of tools to enforce its monitoring and censorship authority including regulatory compliance systems hosted inside Uganda's various access networks — a far more direct and effective point of control amid Uganda's increasingly complex web of interconnections.
Aside from the UIXP, Uganda’s domestic traffic flows through hundreds or even thousands of Private Network Interconnects (PNIs) which are critical for network operations and commercial businesses like Raxio. Given this complexity, it would be virtually impossible for the government to monitor and enforce compliance for any broad domestic traffic exchange requirement. As a result, a new government IXP would likely carry only a small fraction of local traffic, regardless of any mandate, limiting its technical relevance and security value.
In NITA's defense, such claims are typical in our industry and it is likely that any new private IXP would promote themselves similarly. The key difference is that a private IXP would need to prove its stated value proposition by competing for industry demand, whereas NITA can rely on its government authority to mandate connections regardless of market realities.
Beyond NITA's stated objectives, some might wonder if the government's motivation includes a desire for financial income, but we think this would also be misguided because most IXPs 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" and a government-run IXP is more likely to become a recurring cost than a source of revenue.
In light of all of the above, we believe the creation of a mandatory government IXP would have no clear commercial, public, or national benefit at this time.
The Likely Impact on Uganda’s Digital Ecosystem
Regardless of any benefits, the imposition of a mandatory government IXP could have several unintended consequences:
- Premature Fragmentation: Forcefully shifting or splitting Uganda's limited demand for network interconnection across multiple IXPs could unnecessarily dilute network effects which, in turn, could slow the growth of Uganda's data center ecosystem and hinder the country's development as a regional Internet hub.
- Higher Service Delivery Costs: Similarly, forcing ISPs to connect to a new IXP without sufficient market demand could artificially increase network complexity and inflate service delivery costs.
- Barrier to Market Entry: Mandatory peering requirements may discourage new networks from entering Uganda. Global experience shows that operators are often unwilling to join markets where they must interconnect with competitors or customers against their will.
- Reduced Investor Confidence: Sudden uncoordinated policy shifts, especially government forays into private markets, introduce uncertainty in a sector that depends heavily on stability and predictability.
- Slower Economic Growth: Premature fragmentation, increased operational costs, new market barriers, and reduced investor confidence would slow market development, job creation, and broader 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 due to bureaucratic constraints, lack of neutrality, and limited operator trust. As noted above, 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.
In contrast, when a second IXP emerges organically, a private operator enters the market, offers services, and succeeds only if there is genuine demand; if not, the market naturally filters out unnecessary facilities. This voluntary, demand-driven model avoids premature fragmentation and maintains the coherence of the domestic interconnection environment.
In summary, rather than delivering the promised benefits, a mandatory government IXP could 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 should 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 develop it further, the government should avoid unnecessary duplication and disruption. Instead, it should:
- Establish Private Network Interconnects (PNIs) between government and private networks for important connections to gain more control over critical traffic flows without incurring 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 by making it easier to do business in Uganda, by offering incentives, and by avoiding unpredictable market interventions.
- Renew collaboration with the UIXP and other community stakeholders to identify effective ways to further develop Uganda’s Internet ecosystem and strengthen its regional position.
- Promote carrier neutral data centers like Raxio by deploying government services (such as NIRA) inside these facilities, to help attract more colocation and interconnection to existing Ugandan facilities, and by avoiding actions that would unnecessarily dilute their ecosystems.
- Authorise LEO satellite systems with in-country ground stations and traffic-localisation requirements, while restricting service to non-metro areas to prevent market distortions.
- 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.
Formal Submission
In order to ensure that our views are considered by the government, the UIXP made a formal submission to NITA-U and the Ministry of ICT & National Guidance on December 11, 2025. A copy of this submission can be found on our website.
