Local internet hosting is key to the development of the online ecosystem in emerging countries, according to a report by the Internet Society that used Rwanda as a case study.

The report - Promoting Local Content Hosting to Develop the Internet Ecosystem - was produced in partnership with Rwanda's Ministry of Youth and ICT and the Rwanda Information and Communication Technology Association (RICTA).

It found the development of locally relevant internet content that is attractive to users has a positive impact on internet adoption, with infrastructural challenges becoming less of an issue and efforts to increase adoption rates now focused on the development of such content.

"However, the impact of such efforts on internet adoption rates will be limited if the infrastructure and enabling environment for local hosting and content delivery is overlooked," it said.

According to the report, the vast majority of content accessed by local users in many developing countries and emerging regions is hosted abroad, meaning the content must traverse often expensive and under-provisioned international links, with a significant impact on the economics of access and user experience.

"The lack of locally hosted content can have significant impacts on the entire internet ecosystem in a country," said Michael Kende, the Internet Society's chief economist and co-author of the report.

"First, accessing any type of content abroad can be very costly for ISPs, and therefore, international links are often under-provisioned, resulting in slow access times that limit usage. Second, these increased costs for accessing international content are passed on to users, with high prices limiting usage. Finally, these limits on demand will, in turn, restrict the creation of further Internet content, keeping the entire ecosystem underdeveloped."

Karen Rose, senior director at the Internet Society's Office of Strategy and Research and co-author, said strengthening the enabling environment for the hosting of local content could have positive impacts on stakeholders and the local internet economy.

"Global hosting options have clearly been valuable for content developers, however, the local hosting environment is yet to mature in many developing countries, limiting the practical options available for content developers to host locally," she said.

"The cost and latency involved in accessing content abroad from emerging economies can depress usage, with the result that the full potential and benefits of the Internet are not realized. Additionally, depressed usage impacts content developers directly, as less user engagement with content translates to a lower potential for content and service providers to earn revenue from advertising and sales."

The report found almost all commercial websites in Rwanda are hosted abroad, and while this results in small savings for the content providers in hosting it abroad it also means significantly higher costs for the internet service providers (ISPs) to access the content. In the case of one of the larger Rwandan websites examined, the content developer saved US$111 per year by hosting overseas, though it cost the Rwandan ISPs approximately USD$13,500 in transit costs to deliver the content from abroad to local users.

Users in Rwanda also experience a delay of around five seconds or more in downloading a webpage, and this can increase for webpages composed of multiple elements.

"The cumulative effect can make the overall internet experience slow and frustrating, with a corresponding negative impact on usage," the report said.

"This can also limit the viability of interactive and data-intensive services such as gaming or video streaming, which depend on low latency."

Rwandan Minister of Youth and ICT Jean Philbert Nsengimana said: "The Rwandan internet environment has seen impressive growth in recent years due to the commitment and involvement of a range of stakeholders, including an enterprising population and business community, dedicated technical community, and strong policy leadership throughout the Government of Rwanda."

He said the report had demonstrated how the internet ecosystem in Rwanda, and other countries in a similar position can work together to bolster the environment for local content hosting.