Telecom's Netgate begins to win back IP business

Telecom is winning back the international IP business it lost last year to Telstra and Clear. ISPs flocked last year to Telstra in particular - and away from the then-Netway service - attracted by the Australian company's aggressive pricing and angered by service failures at Netway. Now, the situation seems to have completely reversed, and some ISPs are marvelling at Telecom's performance.

Telecom is winning back the international IP business it lost last year to Telstra and Clear.

ISPs flocked last year to Telstra in particular - and away from the then-Netway service - attracted by the Australian company's aggressive pricing and angered by service failures at Netway. Now, the situation seems to have completely reversed, and some ISPs are marvelling at Telecom's performance.

Netway's Netgate IP service was late last year absorbed into Telecom Services, which also runs the nationwide IPNet access network, "basically to get some focus back into business and take better opportunity of the growth potential that it had," according to Telecom's manager for future technologies, Graham Rowe.

At one point Telecom's own Xtra ISP and the Internet Company of New Zealand (Iconz) were the only major ISPs still using Netgate. Anecdotal evidence suggests that Iconz has performed particularly well in recent months, but that Xtra does not seem to have matched the improvements of its upstream affiliates.

Clear's alleged poor performance has since March been the subject of a dispute with ProNet, a national IP network whose shareholders include Wellington ISP Actrix and the founders of Auckland's Internet Prolink.

Clear spokesman Ross Inglis says the company terminated service to ProNet on July 31 - about the same time as Actrix and Iprolink went to Telecom. He says ProNet has "a large outstanding account with Clear. The matters at issue are currently before the High Court and it would be inappropriate to comment further."

Sources say ProNet sued Clear in March claiming it had not complied with a service agreement calling for "99.8% delivery" and won an injunction requiring Clear to continue supply, even though it had not been paid. The disputed payment is believed to be held in trust.

Telstra's service reached a nadir last Wednesday, with the failure for several hours of its outbound link to Sydney leaving major ISPs such as Netlink and Voyager cut off from the world. A number of ISPs are said either preparing to cease doing business with Telstra, or taking up parallel accounts with Telecom.

Telstra spokesperson Julie Stragalinos says the outage was due to an international router failure in Sydney and was not connected with earlier complaints of congestion problems. She says those problems may have been due to routing changes and have been remedied, and says Telstra's trans-Tasman link has been beefed up by 50% with the addition of 45Mbit/s of bandwidth.

Corporate and government specialist Netlink, whose move from Netway to Telstra last year was seen as a humiliation for Telecom, has reopened its business with Telecom after its Telstra-provided national backbone between Wellington and Auckland failed two weeks ago.

In the wake of the international outage, Netlink's Gary Connolly says Telstra "does not appear to have all its soldiers in a row." He says he is particular concerned by the lack of redundancy exposed by last week's failure.

"You pay a premium price, you expect a premium service, and I think this has shown that we don't have the backup that I personally would have expected to be there."

David Dix, managing director of KC Internet Services says the common denominator may be the two companies' US link with MCI.

Craig Anderson of Iprolink, who a remains shareholder in ProNet, says Iprolink has parted company with ProNet recently due to the dispute and "because of very poor performance over Clear's links. I know of several other ISPs that have left for the same reasons since the beginning of the year.

"Almost all of them have moved to Telecom and have seen large improvements in performance after switching - as measured by real download speeds."

Inglis says Clear has not received performance from its ISP customers "for well over two months".

Inglis says CLEAR has introduced two international bandwidth augments this year, and plans a third by early September. "But demand both fluctuates widely and, on average, virtually doubles every year. Even with regular and substantial upgrades to international bandwidth, any supplier will occasionally deliver variable performance."

Anderson concurs with this theory, noting that "telcos tend to have cyclic patterns of performance" but both he and Actrix director John Vorstermans cite Clear's installation of Packeteer's Packet Shaper bandwidth management software in March as the trigger for "very interesting and hard to quantify changes in bandwidth which we were not happy with."

Inglis says Clear uses PacketShaper only to monitor, rather than control, traffic to its ISP customers.

Vorstermans and Anderson also insist that Clear's international bandwidth began to become oversubscribed after it brought its retail ISP Clear Net online.

Vorstermans says performance over Actrix's new Telecom link has been "amazing".

Telecom's Rowe is cautious on the question of regaining more of its lost ISPs customers.

"That's not really our strategy," says Rowe. "I'm not playing the competition game in terms of price wars and that sort of thing. My focus is really on improving performance and growing our customers. We've done things with the customers that remain with us to help them grow and to improve performance and to make the Internet more user-friendly."

Telecom has also established its own POPs in the US, and Rowe says it "shops around" for US providers to connect to, "and that's not necessarily price, it's also performance.

"Telecom has a mandate to be competitive, and to offer the best all-round value, so that's a mix of not only price, but price versus performance."

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