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Re: Telecom and Telstra attempt to restrict peering to each other - media coverage

Uncle StoatWarbler
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On Sat, 19 Jul 2003 22:59:03 +0000, Uncle StoatWarbler wrote:

> Someone was asking for the cite:
> Story is by Paul Brislen. The journo who approached me isn't him..

There's more in Paul's Friday Fryup (which isn't on the main IDG website
yet, this came via newsletter)


- Peers of the realm

Peering is an odd thing. This is an agreement between ISPs to send traffic
back and forth between them without charging each other ISP for the

Why do it? Well it makes sense to extend your network to as many users as
possible (networks generally speaking can be said to double in worth for
every user they add) with as little fuss as possible. If I'm on an
Auckland ISP and want to send an email to a user in Dunedin I don't expect
to have the traffic routed via Honolulu, bounced off satellites over the
Middle East or any other inefficient solution.

To that end there are a couple of peering exchanges here in New Zealand,
one in Auckland and one in Wellington. These are effectively black box
arrangements. The ISPs pay a monthly fee to connect to the box and are in
turn given access to all the other ISPs that connect. This means they
don't pay too much for national traffic, everyone's on the same footing
and we, the subscribers, get our data sent over the most efficient route.

Of course, not all ISPs are equal, and there are two that are much larger
than the rest. Telecom and TelstraClear account for a huge number of users
between them and, more to the point, they have built their own networks.
Why then, so the reasoning goes, should they not charge other ISPs to use
the network? It's cost billions of dollars to build this latticework of
pipes; that money has to be recouped somehow. And so it is that
TelstraClear is rumoured to be floating the idea of charging ISPs to
connect to its network. TelstraClear denies it, but doesn't rule out
changing its billing model in the future in an "evolutionary" manner.

I'm no expert on the machinations of telco business models. I look at the
mess that is the interconnection agreements between Telecom and the other
players over the years and shake my head in wonder at it all. To my way of
thinking, peering makes a lot of sense and avoids those same pitfalls
we've seen elsewhere. You get traffic on your network, your own network
reach is extended, users are getting the optimal routes for traffic and so
on. The alternative seems quite troublesome. Some of the system
administrators I spoke to are talking of a blanket ban on connecting with
TelstraClear should the telco start charging. That would mean traffic to
and from TelstraClear customers would take a more circuitous route,
possibly out to Australia and back in through TelstraClear's international
connections, and we could see bottlenecks forming in new and usual places.

That would certainly make some customers, and I'm thinking of large
corporates, sit up and take notice. The idea has been raised that perhaps
they would simply ask a couple of the giant US telcos whether they would
come to New Zealand and peer with the exchanges in Auckland and Wellington
for a low flat rate (around $2000 a month, say) to offer international
bandwidth. The corporate customers could then peer with the exchanges
themselves and pay far lower traffic costs than they would using local

All told it's a tricky one. Surely if you build a network you should be
allowed to charge customers to use it? But having said that I'm sure
Telecom and TelstraClear aren't about to starve if they don't charge ISPs
to connect - they've got all those lovely end user wallets open and at the
ready, haven't they?

You also have to wonder whether the telecommunications commissioner would
be interested in the matter should Telecom and TelstraClear decide to peer
freely between themselves but charge other ISPs for the same service. That
would surely raise a few eyebrows in Wellington.

No plans to charge for peering says TelstraClear - Computerworld Online

> WRT comments about anticompetitive behaviour, etc, it was made
> abundantly obvious by Clear and Clearnet that their longterm veiw was
> that they only wanted telco-owned ISPs in NZ.

I forgot to mention that this was in the context of a small consortium of
ISPs approaching Clear to get better pricing.

Similar things happened with BCL. They openely agreed it would only cost a
few hunred dollars to move E1 circuits up and down the country, but would
only charge 10% below Telecom's $20k/month rate. The given reason there
was that if pricing was "too low" and Teleocm got wind of it, mysterious
technical problems started affecting their interconnect circuits until the
offending pricing was gone...

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