Richard York Director, Telecommunications Australian Competition and Consumer Commission GPO Box 520J Melbourne VIC 3001 By email: richard.york@accc.gov.au Dear Sir, INTERNET INTERCONNECTION ENQUIRY Thank you for providing ISOC-AU with the opportunity to present a submission to the ACCC's Internet Interconnection enquiry. The Internet Society of Australia (ISOC-AU) is a non-profit, user-focused organisation, which promotes development of the Internet in Australia to benefit the whole community, including business, academic, professional, and individual Internet users. ISOC-AU is the Australian chapter of the worldwide Internet Society, the parent body of the Internet Engineering Task Force; the large, open community of network designers, operators, vendors, and researchers which actually creates the protocols and standards fundamental to Internet operation. See http://www.isoc-au.org.au The Current Position ~~~~~~~~~~~~~~~~~~~~~ ISOC-AU supports establishment of an effective competitive market for Internet interconnection because that provides the most effective basis for generating user benefit. ISOC-AU has received reports that the competitive market does not operate effectively. In a situation where the incumbent maintains a dominant position, there are concerns that this position may not allow competitive operation of the market. In addition, the previous response of the ACCC in declaring the 'Gang of Four' peering arrangement among Tier 1 ISPs has prevented competitive flexibility in the price of bandwidth and limited the diversity of ISP offerings. Members of this group have gained significant market advantage over smaller ISPs that cannot negotiate comparable traffic savings. ISOC-AU is of the view that multifaceted peering arrangements can be established that will provide diversity in the industry and significant benefit to users. The primary Australian example of this approach is the WAIX peering point, which involves many large and small ISPs, and has provided substantial, well-quantified cost benefits both to the connected ISPs and to their customers. ISOC-AU Recommendations ~~~~~~~~~~~~~~~~~~~~~~~ * ISOC-AU is in favour of the declaration of Internet interconnection services. * Interconnection agreements may be either bilateral or multilateral, and declaration should not favour or exclude any particular method of interconnection. * The ACCC should establish pricing principles for interconnection, such as cost-based, which also recognise the practicality of zero-settlement peering. Discussion ~~~~~~~~~~ There are two approaches to interconnection: bilateral and multilateral. Bilateral interconnections occur between two ISPs on specific links between them, and may require ACCC pricing regulation over a mesh of individual agreements. Multilateral interconnections are based on peering points, or Network Access Points (NAPs), with links to multiple ISPs. The infrastructure for data exchange is shared between the ISPs, and because the incremental cost of linking to another ISP at the same NAP is essentially zero, interconnection may take place on a settlement-free or zero-settlement basis. The financial and technical barriers to entry for establishment of a NAP peering point are very low, so while commercial interconnect points are viable, any potential market dominance would be balanced by the easy availability of alternate not-for-profit peering points. ISOC-AU believes that membership of a peering point should not require any ISP to offer transit of traffic outside the specified region; that is, ISPs are free to offer transit services at a NAP at whatever cost the market might dictate. Yours faithfully, Tony Hill For the Directors of the Internet Society of Australia