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Internet peering and local content cost

By Mauricio Freitas, in , posted: 25-Jan-2008 12:28

I was going through the InternetNZ mailing list today and noticed a couple of comments submited to the Internet Peering report from December 2007.

This is the Executive Summary from this report:


2. Executive Summary
2.1. Findings and Investigations


2.1.1. In March 2007, InternetNZ formed an external group (the Group) to investigate industry solutions around issues of Internet peering and local data interconnection, and hereby presents its findings.


2.1.2. Differences in what is meant by the word “peering” and emotive responses flowing from historical events can be overcome by defining as far as possible what peering means, or by referring instead to local data interconnection where possible.


2.1.3. The cost of transit appears to be high within New Zealand relative to that in comparable countries around the world. This would appear to be a significant driver of dissatisfaction around issues of interconnection, and many such issues might evaporate if the cost of transit were to reduce substantially.


2.1.4. The availability of complete and reliable traffic statistics for the Internet both within New Zealand and in and out of New Zealand appears to be impossible to obtain. Many sources have partial information, but these partial sources are often misleading and are responsible for creating much misinformation about what is actually happening in the Internet.


2.1.5. Take-up and delivery of rich media content is hampered on two levels. From the content provider’s perspective high national transit cost leads to hosting of content offshore and from a consumer’s perspective, lack of differentiation between national and international traffic charges limits the volume of rich content that consumers can access at reasonable cost.


2.1.6. There is no recognition that local traffic is cheaper to deliver than national traffic or international traffic. This may change if a local data interconnect proposal that Telecom is proposing to the market is successful. Success for that proposal would lead to a different peering model that would enable New Zealand consumers to react positively to the emergence of rich media content, and which we would expect would be supported by telecommunications firms and ISPs.



Now read one of the items in the comments submitted from Vodafone:


5. Consumer Pricing Strategies
The report suggests consumer pricing strategies that differentiate between national and international traffic might encourage a greater take-up of New Zealand-sourced content. Do you agree?

No. ISPs have done this in the past and it made no discernable difference. The cost of international content is approximately double that of national and that is not enough difference to lead to a real change in behaviour. This challenge is firmly in the hands of producers of local content.


And this is what TelstraClear has to say:


It is not clear how the creation of separatep ricing for local and intemational traffic would benefit end users, or how it could be effectively implemented.


Back to some comments from Vodafone:


2. Cost of Transit
International benchmarking suggests the cost of transit is relatively high in New Zealand. Do you agree? Specifically, is there a market failure or evidence of SMP (significant market power) with regard to the cost of transit? Should government conduct an investigation regarding the price of transit? And finally should Government regulate the price of transit?

Yes the cost is high, primarily due to lack of competition. Much of whatever competition that exists is regionally localised. However, we do not see a need to regulate price and do not see the need for an investigation unless it is done with a solution in mind, such as public investment into areas where competition is lacking.

3. The state of networking - lack of reliable data
The report highlights the difficulty in having any informed debate about the state
of networking in relation to local, national and international data interconnection in New Zealand, without access to reliable Internet traffic data and statistics.

Do you support the need for an initiative that would collect and make available on an aggregated basis, New Zealand Internet traffic flows and volumes? If so who should collect that data? Specifically; the Telecommunication Carrier’s Forum, Commerce Commission, Ministry of Economic Development, InternetNZ, or other?

Vodafone/Ihug does not see this as a high priority. If such information was collected it should be kept confidential with only high level aggregate data made public. We don’t have a strong preference for which organisation would do this but note the Commerce Commission has responsibility under the Telecommunications Act for reporting on the performance of the telecommunications market. Any such information flow could perhaps be facilitated by the TCF Information Reporting working party.


The peering report is 84 pages long, so I suggest you have a read and draw your own conclusions.



Other related posts:
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Mauricio Freitas
Wellington
New Zealand


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