Utility regulator OfReg has issued a determination on the regulatory framework to establish internet exchange points (IXPs) in the Cayman Islands.

As a result of the determination, local internet service providers will be obligated to exchange local internet traffic between themselves so that such traffic remains within the country.

“As a means to meeting the obligation, [internet service providers] may choose to connect at a common IXP,” the regulator said. “This obligation shall come into force 60 days after the date that this determination is issued and may be extended at the sole discretion of the Office.”

OfReg said it was in the public’s interest to facilitate the establishment of, and ultimately regulate, the terms and conditions under which infrastructure and services are provided through use of ‘peering points’ or ‘IXPs’.

IXPs are physical locations with the technical infrastructure to exchange internet traffic between the different networks of internet service providers, mobile operators and content delivery networks like Google, Facebook, Netflix or YouTube.

The main purpose of an IXP is to enable networks to interconnect directly rather than via one or several third-party networks. This reduces cost, latency and the need for bandwidth.

Currently, the closest internet exchange point is in Miami, Florida, which means even local Cayman internet traffic between different service providers has to be routed through the United States.

The regulator said IXPs or peering points are a key part of the internet ecosystem and represent a vital way to increase the efficiency, affordability and quality of connectivity.

OfReg’s determination follows a public consultation to seek the views of operators and other interested parties on peering obligations, ownership, licensing, participation, operations, international cable landing point access, additional services, costs, and the appropriate regulatory model to guide operations.

Prior to this determination, there were no IXPs, no peering between internet service providers nor obligations to peer in the Cayman Islands.

“As a result, local [internet service providers] routinely route locally generated traffic/data destined for local users through a third-party network or switching centre offshore to another country, all before it then returns and is delivered to the intended local user,” OfReg said.

The regulator added that placing data on a third-party network can increase service costs and could make the transmitted data vulnerable and susceptible to interception.

In its final determination, OfReg sets out the obligations for internet service providers to keep local internet protocol traffic local and also establishes its proposed regulatory measures to stimulate the entry of IXPs in the Cayman market.

According to the basic principles of the regulatory framework, internet service providers will work together to establish and maintain peering for local internet traffic. The IXP will be hosted by a neutral party and operated on a not-for-profit basis with all costs shared equally by the parties.

The regulator believes the establishment of peering obligations and IXPs aligns with OfReg’s governing legislation, as well as Cabinet’s directive to ensure local internet communication remains on island and the government’s overall vision for innovation and development in the ICT sector.

“At OfReg, we seek to protect the interests of consumers and the resiliency of our local networks and infrastructure,” said Sonji Myles, the acting executive director of information and communications technology at the regulator.

“Peering and the use of IXPs through balanced regulation encourages secure and efficient use of infrastructure and increases the attractiveness of the local digital ecosystem in support of facilitating investment, innovation and development for the country.”

OfReg’s CEO Malike Cummings said the regulator intends to promote public awareness of the contributions that peering and IXPs can make to the development of Cayman’s internet infrastructure.

“The presence of IXPs is likely to reduce local dependence on digital infrastructure and enterprises outside of the jurisdiction. This, in turn, should generate cost savings for the local internet service provision, resiliency and improved internet performance for customers,” he said.

In its determination OfReg noted that, between June 2016 and February 2017, the regulator hosted industry working group meetings with internet service providers to discuss the implementation of an IXP. These discussions led to agreement and acceptance of a set of high-level principles that should govern the operations of the IXP. These are now part of the regulatory framework. But at the time service providers were unable to come to agreement on establishing an IXP.

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