European Experts: IP Peering Market and IXP Development in Georgia are Limited and Need Support

As part of the research carried out by the Communications Commission into the barriers to the development of IP peering services and internet exchange points (IXPs) in Georgia, it was determined that the IP peering market is restrictive for small and medium-sized operators, and the IXP development process is experiencing significant delays. These challenges hinder the provision of quality internet to consumers at a competitive price, as well as the strengthening of the local digital ecosystem and the growth of Georgia's potential to become a regional digital hub. According to the experts, in order to eliminate the identified challenges, it is important to strengthen competition in the retail and wholesale markets of fixed internet services. To this end, the European experts participating in the study presented the results of the study to representatives of telecom operators, including Magticom, Silknet, Skytel, Caucasus Online, and small and medium-sized operators. The study findings and recommended actions were discussed during the meeting. 

The study found that the current situation in the market for extended interconnection services (peering) is restrictive for small and medium-sized operators, and they are deprived of the opportunity to engage with large operators on favorable terms and have full access to the resources in Georgia. Furthermore, there are non-standard and opaque practices on the IP peering market, which hinders the development of small and medium-sized operators. Specifically, in the peering transactions, the amount is paid by the network receiving the traffic or by both parties, while free peering transactions are rare. This contradicts the European practices, where peering is often a mutually beneficial and free transaction. In addition, providers do not publish peering policies, which reduces transparency. 

Due to the high costs of accessing global internet, the placement of resources of large content providers (Facebook, Google, Amazon, etc.) on cached servers is of particular importance in Georgia. Small operators find it challenging to access these resources, which puts them in an uncompetitive situation.

The main barrier to the development of the IXP is the fact that large internet providers are not connected to it. As a result, the traffic volume is insufficient, which is why large content providers are less interested in placing their resources on such infrastructure. 

The European experts have devised recommended actions to revitalise the market and provide better service to consumers. In particular, it is important to facilitate the development of the IP transit and infrastructure access market, which will allow small operators to reach the country’s borders and independently purchase internet connections from global providers. Furthermore, the experts believe that using the Open Net initiative to establish infrastructure at borders and ensure connectivity to international suppliers will strengthen competition and ensure access to the national backbone network for local operators at competitive rates. The experts also see the development of IXP as critically important. To this end, the involvement of both the private and public sectors is necessary to increase the volume of traffic and the number of operators connected to the internet exchange point. This, in turn, will help attract global content providers and international operators providing IP transit to these locations, which will be crucial for realising the potential of transforming the country into a digital hub. 

The project is being implemented by the Communications Commission with the support of Plum Consulting Paris SAS, an international consulting company that has been working in the field of telecommunications and digital market regulation for many years. The study is led by highly qualified experts Sam Wood, Grant Forsyth and Mike Blanche.   

The development of the IP peering market and IXP improves internet quality, which is especially important for users of services such as the Internet of Things (IoT), financial transactions, online gaming, video conferencing, and cloud platforms, where even minimal latency affects user satisfaction. The IXP also reduces operating costs, as local traffic exchange replaces costly international transit, allowing operators to invest more in infrastructure and innovation. The IXP will help strengthen the local digital ecosystem by facilitating the development of local content and services, creating a platform for international content providers (Amazon, Google, Meta, Microsoft, and others) to host their servers in a neutral location, and attracting large global internet providers to Georgia, thereby increasing the country's potential as a regional digital hub.