Ugandan Government and regulator want to take control of local IXP – the latest in a disturbing pattern of regulatory interventions

12 July 2019

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The Ugandan regulator has proposed a new licensing framework that would allow it to take control of the country’s Internet Exchange Point. Russell Southwood looks at this latest development and a growing pattern of seeking control over the sector through heavy-handed interventions from both Government and the regulator.

Internet Exchange Points (IXPs) exist to exchange local traffic locally rather than it going out to places like Paris, London and New York before coming back to the other side of say, the capital city. There are many successful IXPs and they are run by industry stakeholders including MNOs, ISPs, government agencies and others. They also often act as a “meet point” for the data traffic ecosystem

The Uganda Internet eXchange Point was founded in 2001 by three Ugandans (Charles Musisi, Badru Ntege, and Hope Mugaga) with the active support of UCC and the internet community.

It is one of the more successful African IXPs with 26 networks connected that exchange over 8 Gbps of Internet traffic. When internet exchange points started, capacity was measured in mbps. A new data centre player called Raxio will soon enter the market and offer similar services, a sign of the growing size of the market and its potential maturity.

After several informal attempts to take control of the IXP, UCC has presented the new licensing framework – which seeks to centralize its control over all IXP functions – as a response to it being a monopoly, which it clearly won’t be when Raxio enters the market.

A blog on the IXP’s website nails the point:” In addition, the draft framework contains language which suggests that the government intends for the "Designated National Internet Exchange Point" to establish itself by expropriating an existing private operation; namely, ours”. The proposals are dressed up in the language of consultation with stakeholders but the final point of arrival is clear. Since money is not at stake, the only real issue can be control, with the Government wanting a more Chinese style of a controlled internet space which finds its echo in countries like Ethiopia and Eritrea.

The clauses in the proposed licence framework that give cause for concern are as follows:

- Establish a “Designated National Internet Exchange Point” that all other IXPs will be required to connect to (9.j);

- Require government approval of contracts between IXPs and network operators (7.4.b);

- Allow the government to arbitrarily compel IXPs to make operational and technical changes (7.5.c)

- Allow the government to inspect, copy, or remove any data related to any IXP without a court order (7.5.b.i);

- Require all licensed network operators to connect to an IXP (8.2.a).

Along with Kenya and Tanzania, Uganda has been one of the more laudable competitive markets in East Africa. The regulator has also paid attention to things like Quality of Service issues, Universal Service and consumer issues. But more recently there has been a disturbing pattern of regulatory interventions that seem to come from the “big man” at the top. These are changing the nature of the market and are worth noting:

  1. President Museveni (who came to power in 1986) decided that there should be a tax on social media. The minister of ICT and National Guidance, Frank Tumwebaze said at the time:” WhatsApp and Facebook are external products. Ugandans who are gladly using it are only consumers and are indirectly making the developers of these applications very rich. These applications are more of a luxury than a need, so we are going to be taxing your consumption of the application.” In 2016 during the elections the Government closed down the internet, a pattern now becoming familiar across the continent.

  2. The financial collapse of utl has created another strange intervention. In order to bolster its position the Government decided that all Government contracts would go through utl, a straightforward anti-competitive action. When it came to selling the company, there were eight potential buyers who were shortlisted. The country’s Financial Intelligence Authority (FIA) disqualified all of the buyers, including a perfectly capable operator, Mauritius Telecom. Its argument was that the buyers did not have the required finances to capitalize the ailing utl. The more likely reality is that the Government was not prepared to take its share of the losses. At the time, utl had liabilities of UGX900 billion (US$241.43 million). So now it has to take responsibility for utl and try and make sense of it. Part of the process has been to hand over NITA’s fibre assets (it being still responsible for running the Chinese-built fibre network) to utl. Perhaps one strategy would be to seek to re-instate its former incumbent privileges. There has also been talk of creating a state-sponsored private monopoly.

  3. The new National Broadband Policy seeks to create a very particular understanding of shared infrastructure that can only lead to the Government having to control the sector’s investment plans. The policy proposes that Government will take responsibility for rolling out fibre where it is not currently available and that existing operators will not be allowed to build-out in those places.

On the topic, Fred Otunu, the UCC director of Corporate Affairs, said “It is not about nationalising but aims to avoid duplication and government playing a central role in providing infrastructure. The issue of the national broadband policy should be understood in the same context like we talk about other infrastructure, whether roads, airports and so forth. ICT had been thought that it should be left to the private sector, but the world over is saying this is a sector that government should have a central interest in. If government is providing road infrastructure, why shouldn’t government provide ICT infrastructure because this is a cyber-super highway”.

The policy states that “Where the government has developed fibre or any other Broadband Infrastructure like satellite, terrestrial microwave, etc. the private operators will be regulated to use the same”, that the government will “Establish common international gateways in order to manage all international traffics originating and terminating in the Country”, and that it will “Establish Internet exchange points and ensure that all domestic traffic remains within the Country.” It emphasises that private companies “will not construct Infrastructure where it already exists.”

One industry source told us it was getting a great deal more difficult to get permits to lay new fibre.

In line with this, the policy says that the government intends to “streamline the ownership, management” of the privately run .UG domain registrar and the Uganda Internet Exchange Point (UIXP), a private non-profit organisation that provides network interconnection services.

Those with longer memories will recall that the Government commissioned a controversial fibre network from Huawei in 2012 (now run by NITA) that was both seen to be over-priced and of inferior quality. A report at the time noted that the country's president Yoweri Museveni had sent a letter to Prime Minister Amama Mbabazi that reportedly said he had "received intelligence information that Huawei used inferior cable type G652 instead of type G655". The president claimed in the article that if true, the new fiber infrastructure would not be equipped to handle the kind of traffic it was designed for.

  1. In February 2019, the Government expelled four MTN executives, including the CEO. A police statement at the time said the two of them had been engaged in “acts which compromise national security.” A day later, Elsa Mussolini, the Head of the company’s mobile money business was deported as well. Prior to her deportation, she was summoned to Uganda Police’s special investigations department. The summons letter said she was under investigation in a case of “inciting violence.”

Until his deportation order was signed, the MTN Uganda chief executive Vanhelleputte held permanent residence in Uganda (his wife is Ugandan). Uganda’s minister for foreign affairs removed that privilege by signing a letter that declared van Helleputte a “prohibited immigrant.”

In July 2018 state operatives raided its data center, in Mutundwe, a Kampala surburb. In a letter written to the telecom regulator on July 3, MTN, whose parent company is headquartered in South Africa, complained of “illegal intrusion into the data center and the disconnection of the four information servers.” Ugandan press now reports the security agencies have since been investigating the company and its staff for espionage, tax evasion and money laundering.

Industry sources say that these strong-arm tactics were designed to get the company to pay more for its licence renewal as the President publicly expressed his unhappiness with the sum negotiated by the regulator UCC. The expulsions took place a month after he complained publicly that the sum was too small.

The minister for information, communication, technology and national guidance, in a letter in response dated Dec. 14, said UCC had decided to cut MTN’s fee to $58 million from $100 million after MTN said it would need to invest about $200 million to meet the conditions of a new national broadband policy.

The policy compels telecom operators to invest in infrastructure to guarantee high quality voice calls and high data speeds across the country, including in rural areas where returns are low, the minister said in the letter seen by Reuters.

As one source told a local newspaper: “They would have a lot more control over the Internet, they would be able to switch it off internationally and domestically. Remember how [Ethics Minister Simon] Lokodo was always talking about his anti-porn machine and how it is a joke. If they wanted to do something like that, they would have to do what they are doing now first. It will be like turning the Internet in Uganda into something like China where it is centrally controlled and you can put one system at the centre of it all to control everything.”

The source added: “They could censor the Internet, they could monitor communication between users, they could monitor everything, they could control everything, and they could switch off everything with their own single wide switch. I am not saying this is their intention, but it seems likely and the new national broadband policy also actually calls for this.”

All of the above puts me in mind of the old 1970s saying:”Just because you’re paranoid, doesn’t mean that they aren’t out to get you.”


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