The country's two largest internet service providers are continuing the bizarre and expensive practice of routing New Zealand website content via the United States as a stand-off over internet "peering" drags into its second year.
Peering is the free exchange of network data between operators through local hubs such as
the Auckland Peering Exchange and the Wellington Internet Exchange, both owned by CityLink.
The practice means local data takes the shortest route to its destination and is a cheap and effective way of boosting the performance of the internet.
"It's the equivalent to a telephone exchange, if you want to think of it that way," says CityLink managing director Neil de Wit.
Last year TelstraClear stopped peering, saying the practice was costing it "tens of thousands of dollars a month" because of the imbalance of data being exchanged with smaller ISPs. Telecom also cut connections with the Wellington Internet Exchange.
The telcos argue they are subsidising smaller ISPs because they carry more traffic over their networks and will now only peer with competitors if a commercial agreement can be negotiated.
The result is that local website content channelled through the Wellington Internet Exchange by sites such as Radio New Zealand is not directly accessible to Telecom and TelstraClear internet customers.
The two telcos must instead retrieve the content from a mirror CityLink server in California and pay for expensive international bandwidth to pipe it back to New Zealand.
De Wit described the telcos' stance as "classical incumbent behaviour", but said a positive result of publicity around the issue had been increased awareness of peering and how it drives network efficiency.
"The net benefit for us has been that more people than ever - the non-big guys - have joined the exchanges and have peered. It's a very rich ecosystem."
Although the situation was less than ideal, "it's a pretty normal construct that the telcos like playing in most countries".
InternetNZ executive director Keith Davidson said the society would wait for a Government report on the issue before it commented.
