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

Discussion in 'NZ Computing' started by Uncle StoatWarbler, Jul 20, 2003.

  1. 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...
    Uncle StoatWarbler, Jul 20, 2003
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