UA-IX may become a private company
Experts have called the change in the ownership of the Ukrainian Traffic Exchange Network a privatization of the Ukrainian internet.
The 13th congress of the InAU (Internet Association of Ukraine) is scheduled for the last day of winter, February 29, 2012. Among the issues to be considered is the reorganization of the UkrMOT subsidiary. This issue refers to changing the ownership of the UA-IX traffic exchange network. Currently a subsidiary of the InAU, the congress will discuss transforming it into a joint-stock company, or, in other words, privatizing it.
UA-IX- a subsidiary of the Internet Association of Ukraine, operating since August 2000. The UA-IX network ensures maximum connectivity among Ukrainian providers and efficient traffic exchange between them along the shortest possible route, without going abroad. As of mid-February 2012, the UA-IX network served 117 participants.
At the end of January, at a meeting of the InAU board, a strategy for developing the UA-IX network was presented, which envisaged the creation of numerous additional UA-IX technical nodes. This strategy required the acquisition of a large amount of expensive equipment and the installation of fiber optic cable. This costly modernization requires significant investment, which could be secured by selling shares in UkrMOT. Market participants estimated the cost of the modernization at $3 million, which would need to be spent over the next five years.
This was also confirmed by the head of the association's board, Tatyana Popova, who was quotedKommersant"A network development project has been developed that requires additional investment. The congress will decide how exactly to attract this investment."
The main goal of creating UA-IX is to ensure maximum integration of Ukrainian providers' networks. This has enabled providers to reduce their own connection and maintenance costs, as well as those of their subscribers.
For the user, a provider's affiliation with UA-IX is virtually invisible. If a provider is part of the UA-IX traffic exchange network, this means that when sending data to another user whose provider is also part of UA-IX, that data will not travel outside the UA-IX network, for example, through Istanbul or Paris.
The creation of UA-IX was, in fact, one of the reasons for the formation of the Internet access market in Ukraine in its current form.
Experts note that transforming UA-IX into a joint-stock company means that the barrier to entry into the internet access market will significantly increase, leading to higher internet access costs for end users. Furthermore, tariff increases could become unaffordable for smaller internet access players. This, in turn, will lead to market monopolization and the exit of smaller companies. Consequently, a few large players will be able to completely control pricing for end consumers.
It should be noted that one of the largest Ukrainian broadband providers, Ukrtelecom, is not a member of the UA-IX access network.
