Net peers discuss interconnect

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State and traffic-based Internet peering may create a fairer market and cut the ties restricting broadband in Australia, industry players have argued.

Victorian ISP Request Broadband and Queensland peering provider PIPE Networks argued in submissions to an Australian Competition and Consumer Commission (ACCC) inquiry on Internet interconnection--or peering--that increased access to the network for all ISPs would stimulate competition, bring prices down and lift network performance for end-users.

South Australian ISP Internode did not submit to the most recent inquiry but drew similar conclusions favouring increased Internet interconnection in a submission to the ACCC's peering forum earlier this year.

Peering is currently restricted to the 'gang of four'--Telstra, Optus, MCI Worldcom/OzEmail and AAPT/ by an ACCC ruling in 1998.

Simon Hackett, managing director of Internode, said increased peering “had to happen” to lift Internet availability and Internet-based commercial activity across Australia. “And if the gang of four won't play, then the ACCC must step in. The gang of four is a cartel--I found the definition of cartel and the term is perfect as they're doing it for economic reasons,” he said.

He said ISPs should all interconnect for an agreed price--perhaps per megabyte--to guarantee each others' customers access to Internet traffic. Furthermore, ISPs of a certain size should be required to peer with others, while smaller companies could join together and choose to either form larger groups to offer peering or work through Internet interconnection providers such as PIPE Networks or the Western Australia Internet Exchange, he said.

“We are actually subsidising [the gang of four's] business model...If our customers access a server running on Telstra's network, we pay Telstra to deliver that data, and they charge their customers for it, so it's actually double-dipping,” Hackett said.

He said the gang of four understandably didn't want other ISPs to get a 'free ride' off their national network. However, if peering was done on a state by state basis, differences in size, number of customers and regional power could be accounted for more fairly.

Peering would be centred around each state capital, in a similar way to how state-based Internet interconnection providers already work. Each state would provide peering to other states and divide up the responsibility of exchanging traffic with everybody else. “Then nobody is freeloading off anybody's network,” he said.

Hackett said increased peering would stimulate competition, lowering costs and prices across Australia, enabling ISPs and others to lift network performance and provide better services for the effectively bigger “pipes” that resulted.

“Customers are very vocal about performance...I believe the local industry could approach US prices under a fairer system,” he said.

He said the gang of four does some inter-state peering but does not have to provide access to others unless certain conditions are met.

“Telstra has advanced the art of creative wasting of time to an amazing degree. They can have a roomful of lawyers that will talk about peering all day. They're always saying 'we might peer, except that we probably won't' and even if you try there are things that require you to be bigger than Telstra, so I don't know why they bother,” Hackett said.

He said another ISP had got its own lawyers and tried unsuccessfully “for years” to get the gang of four to agree to a peering arrangement. “[They] couldn't manage it and obviously they are big enough, so it's not going to happen by itself,” Hackett said.

Steve Baxter, technical director at PIPE Networks, a Queensland-based Internet interconnection provider, said peering hadn't kept pace with industrial change. However, market forces alone were unlikely to stimulate competition, he said.

“If [the gang of four] is left to their own devices, the people not currently peering with them won't qualify,” Baxter said. “Peering should happen on a state basis.”

Baxter said that PIPE Networks had experienced a “massive” increase in broadband traffic in recent months. DSL now represented 80 percent of the 90-100 Terabytes of traffic that PIPE managed for its 40 clients through five exchange points each month.

“The last thing we want is to pay $20,000 to $30,000 [to peer]. Telstra gets access to small ISPs' data for free and that's the problem,” he said. “Getting data costs more than if it came via San Diego. The costs should reflect the revenue.”

He said any declared peering similar to that suggested by the ACCC needed to provide quality of service at least as good as before and occur on neutral ground. “We probably can't emphasise that enough,” he said.

Baxter said peering was the most important Internet issue to be sorted out in the next two years. Fairer peering arrangements would not only promote broadband takeup by lowering costs, but would allow new applications to be developed and expensive applications to become more accessible.

“Right now, if you want a video on demand, it'll cost $6 to rent, about $70 to watch, for something that is actually worth $1...Right now, it costs $50 a bit, using broadband, which means 20GB back up will cost $1,000,” Baxter said.

Bob Warfield, the regulatory issues manager at Request Broadband, said Request believed end-users would be better served if some form of peering was offered for all ISPs.

“We've proposed that every ISP take full responsibility for at least one peering point for every end-user,” he said.

An ISP based in Albury, for example, would offer peering to all comers in that area. End-users would pay their own ISP for the traffic they get and the ISPs would connect and share costs in the interests of their customers, Warfield said

“Some people might ask for a solution based on net traffic or net flow downloaded, and if that's the case, there needs to be guaranteed charges to stop micro-ISPs gaining off a peering relationship with a large ISP,” he said.

Just seven of 20 submissions received by the ACCC by the initial June deadline were emphatically against increased peering. Telstra was one that voted against.

A spokesman for Telstra said ACCC intervention was likely to increase any inequity. Telstra believed free market forces should prevail. In its submission to the ACCC, Telstra had said peering was only fair if done between partners of equivalent size and power, he said.

The spokesman said Telstra could find such partners globally, which the company believed was appropriate given the international nature of the Internet.

“There are no other companies in Australia that match Telstra in size and market reach,” he said. “Regulation has created an anomaly which is out of step with international best practice. We are frightened that the ACCC will try to intervene again and regulate it further.”

He said an ACCC declaration for increased peering could also potentially jeopardise any 'free trade' deal with the US. “The ACCC is heading on to dangerous ground. They have got to look at the global situation,” the Telstra spokesman said.

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