On 30 November 2017 at 11:21, Dmitry Konchanin <dmitry.konchanin@dtsanz.com> wrote:

> I maybe missing on some last century/decade history, but what's the current
> story with Spark/Vodafone public peering in Australia but not in New
> Zealand?

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 pleases them.

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 by Telecom)

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.