One way in which broadband can be made cheaper is through Internet Peering. This is where two or more ISPs connect directly to each other instead of through their upstream suppliers, explained Stephen Baxter, technical director for PIPE Networks, an Internet Peering company just launched in Brisbane.
According to Baxter, Internet Peering offers two main benefits: increased quality of service and lower cost.
-If you have one ISP connect to Optus and another connects to Telstra, the interconnect between Optus and Telstra happens in Sydney, so the traffic [between the two ISPS] goes all the way to Sydney and back up again," said Baxtor. -We turn a 20 millisecond hop into a sub-one millisecond hop."
-It's cheaper because there's not much infrastructure," added Baxtor. -Most upstream ISPs treat a byte of Internet traffic at the same price whether it came from Melbourne or San Diego, despite the traffic from Melbourne obviously costing less. We regionalise the service so it's a lot cheaper." He said this allows ISPs to offer services such as video-on-demand and online gaming at much lower prices by connecting directly to the providers.
During the trial period PIPE Networks saved its customers between 50 and 100 thousand dollars a month, according to Baxtor, or about 15-20 percent of their traffic load.
PIPE Networks offers access at a flat rate of AU$1100 per month independent of the speed of connection or how much data is transferred. Baxtor said they are able to do this because its costs are not reflective of the amount of traffic used. -We have a switching capacity of three 8.8 Gbps switches, around 24-25 Gbps," he said. -If we flood that we'd have to spend cash to upgrade, but it would take a lot of customers to flood it. We call that a good problem to have."
You will never see the major greedy telco's have anything to do with this.