On 1/31/2012 2:31 PM, Jay Daley wrote:
I'm thinking some kind of statement around
market power abuse with regards to peering, but ultimately it is a commercial/market issue
and for the most part it seems entirely manageable in New Zealand at this time (and in the
I have an inkling as to why this keeps being raised as an issue. The logic goes like
Broadly, I agree with you - hence my comment around (ab)use of market
power, but let me add a couple more comments to your explanation.
What concerns me around the peering-is-an-issue flag being raised is
that it is often raised a serious issue, possibly overshadowing more
significant issues. There also seems to be a general lack of
understanding about peering, and the current market situation.
Step 2: If the cost of this transit is sufficiently
high then the next step is to look at what routes carry the most traffic and see if those
routes are local and can be connected to by cheaper means. One way of doing that is with
a direct contract with the network that has those routes but the most common way by far
is peering with other networks for exchange of *local* traffic.
To be clear, peering often involves contracts.
- We have market segmentation and differential
charging between national and international transit, when places like the US and UK just
have one product called IP transit that gets you everywhere.
- Our transit costs are very high in comparison to the US which is only a cable hop
This makes peering potentially a very effective cost reduction strategy in NZ.
Agreed, although from what I understand, peering is less about cost at
this point than it is about performance. With the costs of international
transit dropping dramatically while apparently domestic transit is not,
it can be cheaper to push domestic-transit-destined traffic via
international paths -- yet I am not aware of anyone actually doing this,
despite it being an oft-repeated myth that domestic traffic can trombone
'via LA' or 'via Australia'.
Recognising this, our ISP/content provider from Step 1
sets out to peer locally to reduce their transit costs and find that in NZ that the market
looks like this:
a. Two of the biggest ISPs don't peer, not even with an extremely tight definition
of local, though one of them does offer  above.
At least one of those operators does peer as far as I can tell. They
might not peer openly at the traditional IXPs, but they do peer, on a
Operators that don't peer, well, short of regulating it, what can you
do? I suspect their position in the market might change over time post-UFB.
b. Those same two ISPs are major transit providers in
a very small market of suppliers.
In this case I think you mean they're 'major ISPs' rather than 'major
transit providers' -- supplying international transit (or not) is not
really relevant to domestic peering. Holding a domestic customerbase
captive is an issue and we've seen that happen in the past with some of
the peering stand-offs that have occurred, and certainly those happen in
the global market too.
And hey presto, that's where the problem with
Yes -- although I'm not sure whether it's really a cost issue, or a
performance issue. Or a mix of both. Right now there are options for
those operators who want peer with the majority of the NZ marketplace.
What should be clear from this though is that peering
is a second-order problem and the first-order problem that should be tackled is the high
cost of transit and the ridiculous market segmentation. In the US transit costs are so
low that many transit buyers don't need to bother with peering.
Agreed for the most part. I don't think it's entirely feasible to draw
direct parallels between the US market and NZ. That said international
transit doesn't seem to be as significant an issue in recent years than
in the past, so progress is definitely being made on that front.
 by prefixes, and probably by traffic.