Increased peering favoured

The ACCC earlier this year announced a public inquiry into the peering interconnection arrangements between Australian ISPs, producing a discussion paper and requesting submissions.

Just seven of the 20 submissions received by the initial June deadline were emphatically against a change to more multi-faceted peering, while the remaining two offered a qualified “maybe”.

One ISP that made an ACCC submission, Pacific Internet, has repeatedly pressed for government action on peering, which it sees as being unfairly monopolised by what it names 'the gang of four' companies--Telstra, Optus, MCI Worldcom/Ozemail and AAPT/Connect.com.au.

Those four firms do not charge each other to exchange Internet data, according to Pacific Internet. Other ISPs are charged for data their customers exchange with those four companies, who were forced to co-operate by the ACCC in 1998. Pacific Internet, along with other companies supporting a widening of the peering arrangements, argue that the current arrangement keeps the cost of data artificially high.

Iain McKimm, director of technology and strategy at Pacific Internet Australia, wrote the Pacific Internet-Netspace submission with Netspace's Stuart Marburg. “You can have the ironic situation of being based in Brisbane and paying about three times as much for that data as you would getting it in New York,” McKimm said. “Look at other countries with peering agreements...[some] have a large take-up of broadband services, such as in Korea and Sweden.”

McKimm said that the network monopoly held by the 'gang of four' was hindering competition, and thus Australian ISPs' ability to supply top-notch products and services to customers.

Phil Tsakaros, national technology manager for Pacific Internet Australia, said it was usually cheaper to source all domestic web-based content via the US. “In most cases the cost differential is at least 50 percent to as high as 75 percent,” Tsakaros said. “It is cheaper to access Australian content by sending it via the US, across the Pacific, over and back. I smell a rat.” He said he found it difficult to believe anyone would think the 'gang of four' arrangements did not have elements of anti-competitiveness. “As a company, we feel broadband take-up is hampered by a number of factors, including peering,” Tsakaros said.

Ramin Marzbani, an experienced Internet and e-business analyst and CEO at ACNeilsen.consult, submitted that ACNeilsen.consult research indicated peering was not a crucial business issue for most ISPs, with various bilateral and multilateral peering arrangements already existing in the Australian marketplace.

“Significant decline in bandwidth costs have made ISP peering even less of an issue, especially as ISPs have maintained prices for many of the consumer services, especially dial-up internet access over the past few years, he said.

Marzbani said that competition at the wholesale level meant that greater peering levels were unlikely to pass on benefits to consumers. “We are unlikely to see either residential or business product pricing decline further if more ISPs peer with Telstra,” he said.

If increased peering arrangements were forced on Telstra, ISPs currently shut out of the arrangements were likely to reap windfalls, he said, but changes were “almost certain to also result in abuse of the network as well as unintended transfer of wealth from Telstra”.

“It may even be desirable to change peering to avoid quantum technological abuses of an arrangement put in place primarily for email and web traffic as opposed to VPNs or VoIP,” Marzbani said.

A submission from global telco AT&T Asia-Pacific headquarters in Hong Kong said the telco agreed adequate ISP competition for interconnection services was important, but saw no indication Australia's relatively free-market peering regime had failed to stimulate that competition.

Furthermore, AT&T argued that imposing further Internet interconnection service regulations could actually hinder competition in Australia by restricting ISPs' ability to freely negotiate their terms of interconnection. “Because there is no proof that regulation of Internet interconnection service is necessary, and because there is basis for concern that such regulation could have harmful effects on infrastructure investment and utilisation, AT&T respectfully recommends that the ACCC not declare internet interconnection service,” the AT&T submission said.

Vodafone in Australia also voted against the declaration of Internet interconnection service, as did Optus, Telstra, AAPT and MCI Worldcom.

Submissions by Pacific Internet/Netspace, Macquarie Corporate Telecommunications, the Western Australian Internet Association, Primus Telecommunications, Request Broadband, Comindico, PIPE Networks, ATUG, PowerTel, ISOC and a law student called Lindsay MacWalker were in favour of some form of internet interconnection service being declared.

Pacific Internet's McKimm and Tsakaros said that the deadline for submissions to the Australian Competition and Consumer Commission (ACCC) inquiry on Internet peering had been extended for another week or so, with several of the initial participants still to file a response. Another ACCC inquiry on the same topic in 2000 concluded that the 'gang of four' peering arrangements did restrict competition, but led to no changes. Pacific Internet hopes the government will sit up and take notice this time. The ACCC has promised to file a draft report on the results of the 2003 inquiry by September.