Thanks everybody for replies here and off list, and especially
Jonathan for that Pacific island case .
Summary I got:
1. Spark is not government owned, my bad, so they can do whatever they want as a private business.
2. Vodafone do actually peer at NZ IXs, and that's cool.
3. It still looks... sub-optimal. Traffic still goes between Spark NZ and <random ISP>, and instead of using cheap IX link it's using expensive NZ-AU cable. Yep, cable is used with a different in/out ratio for Spark and <random ISP>, but approach "we suffer a bit but they will suffer more"�� seems to be lying too far in a "business area" from my purely technical sit..
To Nathan Ward:
I would dream of an official Spark letterhead paper saying "We don't open peer in NZ because we are big and the rest are small" to show any inquiring customers...If it is painful for your customers to reach Spark/VFNZ, then you need to find out how you can reach those networks, and if the cost to do so is worth it to reduce that pain. There are a number of options for doing so. If you have a 50ms RTT to Sydney from Auckland, something is wrong. Expect 25-30ish.