'Peering' changes set to hit internet businesses

By JUHA SAARINEN

Internet backbone providers TelstraClear and Telecom are changing their policies around "internet peering", spelling profound changes for the internet industry.

Peering is internet jargon for the exchange of similar amounts and types of data between networks, usually free.

For New Zealand internet providers, peering allows traffic to be kept within faster and cheaper national networks instead of leaving the country and returning via slow and expensive international links.

But TelstraClear wrote to internet providers last week telling them that from November it will stop exchanging traffic with other providers nationally without cost.

Instead, a "commercial agreement for national transit" must be negotiated to access TelstraClear's networks, the company says.

And a move last week by Telecom to alter internet traffic routing has led the head of popular internet auction site TradeMe to accuse Telecom of using peering to leverage its monopoly on internet circuits.

TelstraClear spokesman Matthew Bolland said the telco had been "losing tens of thousands of dollars a month" by exchanging free data with local providers.

But increased internet traffic had raised network interconnection costs, claimed TelstraClear.

Internet companies who buy international bandwidth from TelstraClear must also buy national circuits to access TelstraClear's network.

A manager at one internet provider, who did not want to be named, said his cost had "gone from zero dollars to $1600 a month", because he now had to buy a dedicated circuit.

Brett Herkt, general manager of Auckland internet provider Maxnet, said he was unhappy with the new terms and would reconsider his $250,000-a-year outlay on TelstraClear circuits if the telco went ahead with its new peering plan.

Neil de Wit, managing director of Citylink, which operates the Wellington Internet Exchange (Wix), said peering was of huge benefit to the internet users.

"Peering means you make a local call instead of a long-distance one," he said.


Losing a peering arrangement can be devastating for internet providers. In November, TelstraClear decided to stop peering with Auckland Internet provider Iconz.

Traffic from TelstraClear customers destined for Iconz's networks in New Zealand went via Australia instead of the Auckland Peering Exchange in the Sky Tower. The longer and slower path meant that TelstraClear customers could not reach some Iconz-hosted customers like Kiwibank and NZ Post.

Last week, Telecom removed a route that directed traffic from peers at Wix.

This hit TradeMe hard, said general manager Sam Morgan. Instead of sending data locally in Wellington to Xtra, the traffic had to go via Auckland.

"Our bandwidth bill has tripled," Morgan said

Asked why Telecom had removed the route into its network at Wix, Xtra head of internet marketing Chris Thompson said it was due to a "router misconfiguration".

Thompson said the misconfiguration allowed non-Xtra-peered networks to connect to it via a "backdoor".

He recommended that TradeMe enter a bilateral peering arrangement with Telecom wholesale.