Suppose Internet User A and User B have hired services from two different companies and want to talk to each other. User A sends a message to B, but if they are using different companies, how does the data get there? That’s what the Internet was made for.
The network of networks is made up of linked points, where Internet service providers (ISPs) exchange traffic to get a package, such as an email or photo, from one place to another.
In the early years of the Internet in Argentina, these exchange points were located in the United States.
“If you wanted to send information to someone who had a different provider, there was no traffic exchange in Argentina. You had to look for those meeting points elsewhere. And we were paying USD 40,000 a month to have that link,” recalls Ariel Graizer, president of CABASE—a non-profit association of key Internet providers and companies in Argentina—and owner of an ISP.
Though this system improved over time, increasing the speed of data travel between networks and reducing latency was a constant challenge. It was finally perfected in Argentina in 2010.
It was then that Internet Exchange Points (IXPs) began to emerge: neutral connection points through which different networks connect with each other.
“It’s a huge switch,” explains Graizer. Previously, providers charged for access via their networks. Through consensus, if companies can find a halfway point and meet there, everyone’s costs go down, and traffic moves more easily and locally.
It’s not just the access providers who benefit from this agreement, but also social media, news, and streaming sites. And more importantly, it benefits the customer.
Long-distance traffic is inherently more expensive, and providers pass that cost on to their customers. “If you’re able to exchange locally, you lower your costs and provide a better service,” says Carlos Martinez-Cagnazzo, Chief Technical Officer of LACNIC, the Latin American and Caribbean Internet Address Registry.
In Argentina, there are 32 IXPs. “When an accountant, a customer of any Internet service provider, is in their office and wants to upload something to the AFIP website (a local government service), they need to connect to another network. The two networks meet at a CABASE IXP (one of the exchange points managed in the country). Before, they would go through a larger wholesale supplier, or they would go outside of the country to connect,” recalls Graizer.
Grazier points to a 2010 study CABASE did to analyze traffic within the country. It wasn’t just about interconnected networks but about bringing in-demand content to those exchange points so that it could be close at hand.
“We were worldwide pioneers. So, we negotiated with Google, which at that time represented 35% of all traffic in Argentina. We got them to give us the caches to store content that was in high demand. So, the first time people access it, you bring it in from outside, but the second time, it is already here,” says Grazier.
He explains that in 2010, 92% of traffic came from abroad, leading to the withdrawal of a lot of foreign currency from Argentina. Today, thanks to these caches, 92% of Internet content is hosted locally.
But what would happen if this wasn’t done locally? The answer is simple: “It would be more expensive and slower,” responds Graizer. For example, Stranger Things was Netflix’s most-watched series around the world. How many times would the ISPs have gone searching for it if it hadn’t been cached? At what cost?
A Local Solution to Local Problems
This traffic exchange, which is used in many places worldwide, provides solutions to local problems, particularly to a key issue for Argentina: foreign exchange control. This problem has existed in various forms since the twentieth century.
Argentina has a structural shortage of foreign currency. The country struggles with this recurring issue as its economy requires more dollars than the ones produced by its exports. This trade balance deficit sometimes leads to exchange control, restrictions on products and services, imports, and government control over external commerce.
Traffic exchange provides the country with two solutions, according to Graizer. The first is the impact of no longer “importing” traffic and content. “Before, we were paying out abroad to have that traffic; now, they make it available on the IXPs. In a sense, all of us providers become wholesalers, and we pay less and have it closer and more accessible,” he says.
It’s hard to calculate the monetary value of such an impact, but Grazier gives an example: “In 2019, for a wholesaler, 1 Mbps cost USD 5. In 2022, it lowered to something between USD 1.80 and USD 2.00. This also allowed for an increase in the volume of national broadband on offer.” This policy, regardless of the government, generates profit for the country, and the private sector develops it. Lower costs for wholesale bandwidth also bring better and more affordable Internet to people in Argentina.
The second solution involves improved network capacity and ensuring that a high percentage of traffic responds to critical demand.
“The content that is on our network continues to function if an international submarine cable is cut. Having these IXPs makes you better prepared, and that’s the security of being interconnected,” says Graizer. “There have been times when cables were cut in a hurricane, and the network continued to work, not at 100% capacity, but most of it.”
In short, all of this work ensures data can travel from A to B successfully, seamlessly, efficiently, and at lower costs. That’s the magic of the Internet and the IXPs—the interconnection points that became a massive phenomenon worldwide and a vital asset in Argentina.
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Image © Andrea Leopardi on Unsplash