On 30 November 2017 at 11:21, Dmitry Konchanin <dmitry.konchanin(a)dtsanz.com>
I maybe missing on some last century/decade history,
but what's the
story with Spark/Vodafone public peering in Australia
but not in New
Peering is the exchange of traffic between customers of directly connected
network operators, removing the requirement of a paid third party transit
network operator. The two networks meet and exchange traffic as paid to do
by their respective customers.
For an internet, everybody either pays for transit or peers or such mix as
Where is the question.
Legacy operators, particularly those who were monopolies, are trained to
treat new entrants in their own markets as thieves of their customers (any
you got, they lost) and attempt to dissuade competition and/or recoup the
lost revenue through peering fees.
They seek to make this extortion palatable by invoking sender-pays concepts
originating postal services and retained in telephony (termination fees),
and defining peering in a way that favours them being paid (unequal size,
unequal investment, unequal traffic flow)
Those termination fees are charges based asymmetry of traffic (and in a
well-known NZ case, when it didn't work out the way it was expected,
reneging on the payments occurred. The same way interconnection fees for
0867 calls that sank in Clear were arbitrarily and unilaterally suspected
The traffic and termination cases are easily dismissed as all traffic out
equals traffic in and vice while both operators are charging their
customers for that already. Some of us recall being metered for both in
and out traffic, the 40% left with quotas still are.
If the investment argument was valid, it would mean the premium would be on
the side of small rural ISPs who build their own infrastructure rather than
those with large market shares running on high customer density third-party
infrastructure. Oddly, you don't see that very often.
In the excellent Avaiki case study provided by Jonathan, the result is not
satisfactory and the mistake was in considering the internal costs of
either of the parties. What ever those costs, they weren't going to be
affected by peering and any attempt to recover costs from someone else's
customer is outrageous.
The regulator found the companies have dramatically different cost
structures, and so what? (If Tangaroa was inefficient, the regulator just
handed them a subsidy) The peering decision speaks of "consuming." Every
bit that is sent is received and vice versa, who is consuming on a duplex
link, who pays more when the traffic is unbalanced?
Each company would be charging its customers (before peering) to recover
their costs, and all that would arise in peering was better service.
Consumer surplus and public good could have been improved. The money spent
ignoring each other by talking through Los Angeles could have been more
usefully employed. Pathetic. There may be other incentives, acquisition
plan, mere vanity, bad-blood... who knows.
What I do know is that it's sad, inefficient and unnecessary. Customers
suffer because networks forget who they serve.
I'd have made the decision thus:
- Any competitor may request a peering session with the incumbent
- Parties must equally split all costs associated with the
It would have improved service to the customer, which should be the
regulators concern, at no impairment to the network operators.
"Peering is a meeting of equals" is a conceit to justify why if you're not
*equal* in one or other of the available dimensions (traffic, customers,
investment) you get to help pay for the service the *larger* operator is
selling to their customers.
So in the end, the bigger one wins, and sans the lustre of the feeble
pretexts, its just greedy, bullying and anti competitive.
But even if you're "Tier 1" at home in pipsqueak NZ, when you get to
Australia or the US, you're small fry and you do what the new entrants are
happy to, peer.
Its these changes in latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn't laugh we would all go insane