Australia's Telstra and Optus outed as two of the world's six most expensive ISPs

Cloudflare says they just won't peer so it has to pay 17 times European data prices in Oz


Content delivery network Cloudflare has outed Australia's Optus as one of the six most expensive internet service providers in the world, and says the other major local player Telstra is rubbish too.

CloudFlare's measuring transit costs for its assessment: as a CDN it is more concerned about shuttling data over carrier backbones, known as “transit”, than it is the cost of domestic or or business downloads. Big bandwidth users get around the cost of transit by “peering”, an arrangement whereby network operators let data flow between each other at no cost. Networks who peer more or less decide that what goes around comes around, so don't bill each other for carriage.

The company's new analysis of global transit costs sets a benchmark of 10 units based on the cost of moving data around Europe. The continent offers CloudFlare “a large number of Internet exchanges, typically non-profit, where we peer around 60% of our traffic.” It therefore gives the region “an effective cost of four units.”

Oceania, by contrast, scores 170 on CloudFlare's index, down to 85 once it accounts for the 50 per cent of traffic it can peer.

But here's CloudFlare's kicker:

If you exclude Optus and Telstra, then the price falls to 17 units — because we peer with nearly everyone else.

In other words, Australia's other internet service providers peer but the dominant players don't.

Australia's not the only hot spot for bandwidth: CloudFlare also singles out Taiwan's HiNet, Korea Telecom, Telecom Argentina and Telefonica as carriers that won't peer with it.

CloudFlare can't understand why carriers don't peer with it, so has "... made the decision that the only thing that will change these providers’ pricing is to make it clear how out of step they are with the rest of the world."

"To demonstrate this, we’ve moved our Free customers off these six transit providers. Free customers will still be accessible across our network and served from another regional cache with more reasonable bandwidth pricing."

"Ironically, this actually increases the cost to several of these providers because they now need to backhaul traffic to another CloudFlare data center and pay more in the process."

"For instance, if Telstra were to peer with CloudFlare then they would only have to move traffic over about 30 meters of fiber optic cable between our adjoining cages in the same data center. Now Telstra will need to backhaul traffic to Free customers to Los Angeles or Singapore over expensive undersea cables. Their behavior is irrational in any competitive market and so it is not a surprise that each of these providers is a relative monopolist in their home market."

CloudFlare's clearly far from entirely altruistic with its post, which includes pre-populated pestering emails for all the carriers mentioned above.

Yet if its the CDN's analysis is correct, it may open up another front in Australia's debate over local internet costs. Regulators are currently under scrutiny for arrangements that make it hard for internet service providers to make more than a pittance from connections on Australia's National Broadband Network (nbn). If Optus and Telstra are contributing to higher consumer prices, or making life hard for competitors, it'll be an even better time to be an antipodean telco lawyer. ®


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