Internet interconnection allows customers of an Internet service provider (ISP) to send and receive e-mails and access Web sites that are connected to other networks. Currently, the Tier 1 service providers -- Telstra, Optus, Connect.com and WorldCom/Uunet -- have peering arrangements with each other which allow traffic to flow over each company's infrastructure at no charge.
However, when the Tier 1 ISPs supply smaller ISPs with access, the predominant arrangement is "transit", where traffic flows are measured and a charge is imposed for passing traffic across another ISP's network.
Throughout 2002 the ACCC received complaints from ISPs that were excluded from domestic peering arrangements, centring on the fact that while they were charged for using the infrastructure of a Tier 1 supplier, the larger ISP didn't pay to use the infrastructure of the smaller ISP.
According to Ross Jones, the ACCC Commissioner for telecommunications, this results in "some anomalies".
"For example, if I am connected to a smaller ISP and I send an e-mail to my friend at one of the four larger ISPs, the larger ISP may charge my smaller ISP for sending the e-mail. However, when my friend at the larger ISP sends me a return email, my smaller ISP will have to pay the larger ISP once again," said Jones.
If the ACCC decides to regulate Internet interconnection all ISPs would have to provide access to the relevant parts of its networks to all other ISPs, and any disputes would be arbitrated by the ACCC.
"Any regulation of Internet interconnection services would need to have consideration of the legitimate business interests of all ISPs providing Internet services, especially those of the major network providers who have invested heavily in rolling out Internet backbone networks," said Jones. "The ACCC is also aware that substantial investment in telecommunications infrastructure by both Telstra and other industry suppliers is required to provide Internet interconnection services."
The discussion paper is in response to the Broadband Advisory Group report which called on the government to "request the ACCC to investigate and report on industry concerns regarding domestic Internet peering arrangements and provide the Minister for Communications, Information Technology and the Arts with recommendations on how this matter may be appropriately addressed", which the government subsequently did.
The Tier 1 suppliers don't have it all their own way -- they have "expressed concerns" to the ACCC that US ISPs give them a raw deal in terms of trans-pacific traffic. The Australian ISPs provision and pay for the network right up to the relevant US ISP's Internet node in the US, and receive no compensation when the US ISP uses it.
The ACCC has called for comments on its discussion paper by 20 June.
