[LINK] Fee structure stymies online use

[Eric Scheid]

Kate Mackenzie
JULY 29, 2004 
<http://australianit.news.com.au/articles/0,7204,10273820%5E15306%5E%5Enbv%5
E,00.html>

AUSTRALIA has the highest internet traffic charges in the world and the
country's unique volume-charging regime is stifling internet use and content
development, an internet peering expert says.

The latest criticism of Australia's internet traffic environment comes from
Bill Norton, co-founder of US-based peering company Equinix and former chair
of the North American Network Group, who is carrying out a study of peering
in the Asia-Pacific region.

Peering - in which carriers, service and content providers exchange internet
traffic for a set fee, thereby potentially saving on transmission charges -
is notoriously complex and controversial.

As such, his research is partly based on anecdotal evidence such as
conversations with peering co-ordinators at telcos and service providers
around the world.

Many ISPs did not understand their own internet traffic in great detail, he
said.

"Only one in 20 of the ISPs we've worked with around the world knew where
their traffic was going," he said.

Australian transit charges were the highest in the world, he said. And
another anomaly of the Australian market was the practice of volume charging
-- charging for the amount of data downloaded rather than by bandwidth.

"I haven't seen that in any other ecosystem in the world," Mr Norton said.

Peering is distinct from normal internet traffic charges because data is
shared between ISPs for a fixed cost, in contrast to the volume or
bandwidth-based charges paid by most ISPs to upstream internet bandwidth
providers, such as Telstra.

Another feature of Australia's internet traffic landscape is the notorious
"gang of four" -- a mandate set out by the Australian Competition and
Consumer Commission in 1997 that forces Telstra, Optus, Telecom NZ's Connect
.com.au and OzEmail owner MCI to peer with each other.

The four do not peer with any other carriers or service providers, who must
instead pay for traffic they receive from them.

Several telcos such as Comindico and iiNet have argued that the "gang of
four" arrangement is no longer relevant because Connect.com.au for example,
carries less traffic than some of those companies excluded from it.

The ACCC is reviewing the gang of four arrangement but is finding the matter
complex, and a draft report has been delayed by almost a year. Peering tends
to appeal less to larger carriers, for whom the benefits of a reciprocal
relationship are smaller.

In contrast to the "Tier1" Australian carriers, which tended to place
barriers up for other companies that wished to peer, most US Tier1 telcos
had a standard peering policy, Mr Norton said.

"This was just because of the threat of regulation."

Mr Norton said peering was something of "a religious issue" in the industry.

"Telstra makes a lot of money selling transit and they want to continue
doing so," he said