Can Peering Work in Australia?

Are Australia's peering exchanges too poorly organized to compete with the ILEC's systems? Only organization can unseat the king.

by David Braue of ispwatch.com.au [September 5, 2000]

While many Australian ISPs complain loudly about Telstra's high charges for data peering, one peering provider has argued that the still-nascent state of the Australian peering industry — and a reluctance amongst ISPs to contribute the money and effort necessary to effect real change — will continue to frustrate attempts to negotiate the better access rates they want so desperately.

Small peer
With most local peering operators still running from relatively undeveloped data centres and lacking the organizational unity necessary for effective collective bargaining, small groups of ISPs can hardly expect to be taken seriously by larger players, says Stephen Baxter, general manager of Adelaide-based SE Net and a member of the peering discussion panel at last month's ISPCon conference in Melbourne.

"The unfortunate realization is that we haven't got a hope in hell of making it happen at the moment," says Baxter. "The obvious reason is that Telstra doesn't want to do it, but the other reason is that the peering exchanges are really lacking total professionalism. Until we meet some ground rules about what an Internet peering exchange should be, we don't stand a hope in hell of actually bringing off an outcome that we all think is true and right, when on pure technical and organisational terms they could point to us and say 'you're joking.'"

Defining a peer
Although Telstra has been repeatedly vilified for its refusal to renegotiate less onerous peering arrangements with smaller ISPs, the company's chief technologist, Geoff Huston, outlined what Baxter admits are quite reasonable guidelines for ISP peering in Huston's 1998 book Strategies for Running A Competitive ISP. In that book, Huston identified five key attributes that he says are, "considered highly desirable for an exchange facility. The exchange should be as follows:

• operated by a neutral party who is not an ISP (to ensure fairness and neutrality in the operation of the exchange)
• constructed in a robust and secure fashion
• located in areas of high density of Internet market space
• able to scale in size
• operate in a fiscally sound and stable business fashion

A continuing concern exists about the performance of exchanges and the consequent issue of quality of services that traverse the exchange. Many of these concerns stem from an exchange business model that may not be adequately robust under pressures of growth from participating ISPs."

"When you look at these criteria, [local peering providers] don't fit any of them. All of this talk about peering and the rest doesn't mean much until we meet the most basic criteria," Baxter says.

"If we fail those, nine out of ten times they'll just tell us to bugger off. The problem is, nobody wants to pay for [the upgrades necessary to provide such service levels]; you'd probably want around A$250,000 funding per year. But exchanges all started charging next-to-nothing, which is the way to get people in when it's small. And they've kept the same funding model."

Runnymede
For ISPs feeling frustrated by their inability to change Telstra's charging structure, Baxter suggests that a more constructive way of changing the situation — apart from getting better-organized — is to pursue political change through lobbying, and by simply showing state governments that local peering arrangements can save them money.

"Telstra does a very good job of acting just inside the law, but there are other ways to achieve these outcomes," he explains. "I suggest we as an industry take a bottom-up approach, as opposed to a top-down. The top-down approach is using a regulator to smack Telstra in the head, but the other way is to get ISPs to approach local and state governments, and say if they want to provide good service to their constituents that they can give [governments] a cut price. If the government has to pay per byte of information to someone connected to Telstra, they lose money. If they connect through a peering network, everybody wins."

—End