Telco's refusal to peer angers providers

, posted: 25-May-2004 23:12

TelstraClear's recently announced policy of charging for peering with its New Zealand network has met with anger from internet providers, some of which threaten to take their business elsewhere.

Under the new peering regime, data traffic sent to TelstraClear's network would be charged for at an unknown rate, even if TelstraClear customers had requested the data from other networks and had paid for it in the first place.

This led some providers to accuse the telco of "clipping the ticket both ways".

As reported in the Herald today, Auckland internet provider Maxnet threatened to cancel its $250,000 a year contract for circuits with TelstraClear. However, Maxnet network manager Alastair Johnson contacted the Herald to say that the figure only covers the provider's cost of data transit. Johnson said Maxnet would "look seriously at all our circuits from TelstraClear" hinting that the money value of the lost contract would be considerably higher.

Other New Zealand providers vented their frustration on an internet mailing list. Referring to the Herald article, network operator Simon Lyall said that it "looks like Telecom and Telstra are trying to put on a squeeze in order to make a couple more thousand a month."

Lyall also suggested that large organisations in New Zealand should start to peer with each other, so as to avoid sending data through TelstraClear and Telecom's networks.

TelstraClear's argument that it was forced to charge for data sent to its network fell on deaf ears amongst the providers. One pointed out that the circuits to the peering exchanges are a fixed cost, with no charge for the
traffic, only the speed of the link. TelstraClear operates 1Gbps (gigabit per second) links to the Auckland and Wellington peering exchanges, and has several 2.5Gbps links between the North Island residential centres, which represent fixed costs for the telco.

Both Telecom and TelstraClear argue that they have to expand capacity in order to serve their customers with content requested by them, and thus, operators of popular internet sites that generate lots of traffic should pay for this on top of what the telcos charge their customers.

However, this argument too was shot down by the internet providers. Citylink's Andy Linton drew a simile to film making, saying it would be like Peter Jackson having to pay the cinemas because the popularity of Lord of the Rings meant more sessions had to be run, with increased costs to the theatres.

Linton added that the message this sends from telcos is that high volume content providers should move offshore to host their content. Richard Naylor, Wellington network pioneer and Citylink technical manager operates several video servers, and gave estimates of how much the Lord of the Rings "Return of the King" premiere Webcast would have brought in for TelstraClear from its customers.

"We didn't get paid," Naylor said. "But looking at the traffic flows and using TelstraClear's traffic charges, we
estimate they earned $250,000 in five hours. Other providers earned around $250,000 in traffic charges, Naylor estimated. He said Telecom would have pulled in some $500,000. Telecom refused to peer for the Lord of the Rings Webcast, however, so its users could not see it.

Other related posts:
The problem with VDSL2, part 2
The problem with VDSL2
The mysterious Dynamic Line Management on VDSL2

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