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International Internet Connection

Introduction
Australian Position
Consultancy
Useful links

Introduction

In the past it has been claimed that the most common charging arrangements for international Internet connection disadvantage smaller networks and developing countries generally, and disadvantage Australian industry specifically. Previous lobbying by industry has led to action internationally by the Department of Communications, Information Technology and the Arts (DCITA).

In particular peering and transit practices were singled out for complaint:

  • The largest international ISPs ("Tier 1s") operate peering arrangements for exchanging Internet traffic among themselves without charge.
  • Under transit arrangements, non-Tier 1 and remote networks are required to cover all costs of international data transport, in both directions, to points of interconnection with Tier 1 networks. Smaller networks also pay interconnection charges ('port charges'). Under the transit model, charging relates only to the relative size of the networks and takes no account of the exchange of value between networks. This arrangement is said to advantage the Tier-1 market operators, while disadvantaging smaller networks and developing countries.

Australian Position

For a number of years, Australian delegations have expressed the view that the widespread charging arrangements for International Internet Interconnection have disadvantaged smaller networks and developing countries. More recently, it appears that the Internet market has developed and that some larger carriers are now negotiating a range of interconnection arrangements that vary the basic concepts of peering and transit.

In ITU This link sends you off DCITA's websiteStudy Group 3 Australia has welcomed information about this development and encouraged its application throughout the wider international market, consistent with our view that International Internet Charging should be:

  • transparent - in that all parties understand the elements being taken into account;
  • non-discriminatory - in that all parties may negotiate on equal footing;
  • cost-oriented - taking into account relevant cost elements, separately and transparently identified; and
  • reflecting the contribution of each network to the communication and the use by each party of the interconnected networks.

Following several years of negotiations, the ITU Study Group 3 agreed in June 2004 to set out general considerations for parties to negotiate Internet interconnection. These considerations can be used to assist two parties to an interconnection agreement to negotiate on a more equal footing. Australia played an active role in achieving consensus on the general considerations and they have been adopted as an ITU Recommendation.

This approach is in no way to be considered as an attempt to regulate the Internet-the Australian Government has long held the view that interconnection should be commercially negotiated. However, the ITU Recommendation is useful in establishing common ground among parties to an interconnection agreement, even though it is not enforceable. More generally, better information should assist in the better functioning of the market.

It is expected that more time will be required to consider the developing work in the measurement of traffic flows.

Consultancy

DCITA undertook a consultancy to obtain the latest and most accurate information available on the international market for Internet connection. The purpose of the consultancy was to establish facts to support Australian policy development on Internet connectivity and charging arrangements, with particular but not exclusive focus on international arrangements.

The consultant established that Australian ISPs continue to pay most of the transmission link costs to the US, although the impact on the Internet industry is less than previously anticipated. The international connectivity costs for Australian ISPs is about 10 per cent of their total operating costs: down from an estimated $700 million in 2000 to $150 million in 2003. Costs to Australia are predicted to double between 2003 and 2006 due to growth in volume driven by broadband. A copy of the consultant's final report is available here.

Useful links


  • Document ID: 7692 |
  • Last modified: 6 February 2008, 1:59pm