- Peering through the gloom
- Peering through the gloom
It's a tricky business this whole internet thing.
The idea was that we network things to make it easier for the end points to get along. The most efficient network design was cherished and held up above all other considerations.
Well, that looks likely to be coming to an end. Rather than holding efficiency up as the ultimate goal, and making profit from having the most efficient network, making money has become the primary focus and if that means routing traffic through another country, then so be it.
That's what's been happening this week. A disagreement between ICONZ and TelstraClear has led to TelstraClear cancelling its peering arrangement with ICONZ. Traffic from TelstraClear customers to ICONZ customers has taken the Number 7 bus route that sees it go out from Auckland, over to Sydney for a little shopping and then back in (probably in Auckland again) and off to ICONZ.
Needless to say, the engineers in the crowd will now be gasping and pulling their hair out in frustration at the idea.
However, it's not all that straight forward. Peering, according to TelstraClear and Telecom, is something that only happens between, well, peers. Only companies that are sending and receiving similar amounts of traffic can truly be said to be peers and it only makes sense to not charge for such traffic if the billing itself would end up costing the companies more than it would make.
With me so far?
The rest of the industry says "bunkum" to that theory. To them, peering is what you do to make network connections more efficient. If you want to allow your customers to talk to mine then you peer so everyone's traffic takes the shortest, most direct, least inefficient route. You don't charge each other for it because you're already charging the end user for the traffic.
That's fine, say Telecom and TelstraClear, that's called interconnection. Remember interconnection from the voice world? It's silly. It's also very costly. Telecom and Clear had a huge falling out over interconnection charging, we ended up with free ISPs and the new 0867 numbering scheme. Legal opinions were sought and it all went badly for the end users.
Telecom's head of internet stuff, Chris Thompson, gave me an example to back up the carriers' point of view.
What do you do if a company in Wellington wants to send a lot of data to Auckland? Do you let them peer with you in Wellington at the peering exchange and then carry the data to Auckland for them for free? Why would you do that? Instead, you'd make them peer in Auckland and charge them to carry the data that far.
That seems to make sense to me. But hang on, aren't the customers, the end users, also paying for data? If you think about JetStream for a moment, I'm paying 20 cents per megabyte (I'm always over my cap in these examples, have you noticed?) to send traffic to you and you're paying 20 cents per megabyte to receive it. Now the ISPs involved will also be charged to send or receive the traffic as well.
Anyway, ICONZ has complained to the Commerce Commission which is looking at it under the Commerce Act provisions to see if it's anti-competitive or breaches some other piece of legislation. I imagine this is better handled by the telecommunications commission as a request for determination on interconnection.
Over in Australia the ACCC is trying to work out if such agreements that exclude smaller players are illegal. Peering between the largest telcos and charging everyone else does sound a tad anti-competitive if you ask me, but I'm at the bottom end of the food chain when it comes to bandwidth so what do I know?
ICONZ and TelstraClear are sitting down today some time to discuss it all. However that meeting turns out you can bet you haven't heard the last of peering.
Ah, they certainly knew how to announce their annual financial results did SolNet. Helicopters were usually involved as were secret locations (usually within easy reach of a glass of fine wine) and once, and once only I might add, shotguns. I think they decided giving business journalists shotguns was a bad idea. I think I agree.
SolNet was New Zealand's sole agency for Sun Microsystems in this part of the world. It's always been horribly successful for Sun - ranking in the top five worldwide on more than one occasion.
Things haven't been cosy though for quite some time. First of all, in April 2001, SolNet founder Murray McNae flogged off 51% of the company to his management team and left the day-to-day running up to them. By September of that year they were denying any rift, despite the appointment of a Sun Microsystems account manager for New Zealand.
In April this year, one of the three new shareholders, John Hanna, left the company after a difference of opinion over its future. Sun changed the terms of its agreement with SolNet and Computerland dusted off an old reseller contract and began flogging Sun kit on the same terms as SolNet. Hanna resurfaced as Computerland's Sun man and now Sun has cut off SolNet entirely.
SolNet is expressing surprise at the decision. Horror might be a more accurate term. Most of SolNet's revenue over the past 10 years has come from selling Sun gear and without that income, there can't be much call for a staff of 120 in New Zealand. SolNet says most of those are engaged in its software and services division but there will no doubt be layoffs in the months ahead.
Kudos to editor Anthony for scooping everyone on this one. You know you've scored one when the company has to put out a press release because they know you're onto the story.