KINX Peering Forum - A Brief Overview of Regulation of Interconnection

A Brief Overview of Regulation of InterconnectionTom PasekaKINX Peering Forum [email protected]

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Interconnection

Interconnection

Interconnection. Interconnection is the linking of two networks for the mutual exchange of traffic.

• As defined from US Code of Federal Regulations (CFR)• Peering? Transit? IX? • What’s regulated?

Australia

Australia• No regulation.• Australian Competition and Consumer Commission (ACCC) is responsible for

ensuring no anti-competitive behaviors• In 1998, The ACCC initiated action against Telstra for anticompetitive behavior

with regards to interconnection. Was done at request of Optus, Connect.com.au and OzEmail.

• No formal action taken, Telstra reached peering agreements with the other three networks.

• https://www.accc.gov.au/media-release/accc-welcomes-peering-arrangement-between-telstra-and-optus

Australia• Remains relatively open market• Consolation of ISPs reducing players in the market, but competition is still there

and cost still declining.• Regulation intervention on

Interconnection pricing hasn’tbeen needed to foster technologygrowth, provider investment or improved customer services

1995 1997 1998 2002 2006 2008 2012 20151

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10000

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1000000

Price of Transit in Australia

Price

Australia• Most ISPs in Australia are peering at an Internet exchange• Around 45% of end users have their internet traffic made available at an

Internet Exchange. • For a new ISP, 80%+ of Internet Traffic can be received at low or no cost from

an Internet Exchange Point.• High cost of last mile, government building broadband network to help with the

last mile technology

Hong Kong

Hong Kong• Very open market with vigorous competition.• Open, non-for-profit Internet Exchange (IX)• No regulation for for interconnection, however:

OFTA have the power under the Telecommunications Ordinance to regulate the terms of Interconnection, including technical, commercial and financial terms.

and

Interconnection fees are monitored by OFTA which has the power to regulate them if considered necessary

Hong Kong• All ISPs in Hong Kong are connected to to the Hong Kong Internet Exchange

(HKIX). • All available to exchange traffic at very little cost.• Continued aggressive growth in last mile access technologies. • Most households in Hong Kong passed by multiple fiber providers• Lost Cost, high speed availability without market intervention

United States

United States• No currently enforced regulations• Federal Communications Commission (FCC) oversees Interconnection, however

hasn’t made any industry-wide rulings about it.• Net Neutrality a big issue.• Some competition/merger rulings, example: Charter and Time Warner Cable• FCC Chairman Tom Wheeler said in a statement: "New Charter will not be

permitted to charge usage-based prices or impose data caps. Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of Internet traffic to broadband customers."

United States• Continued growth in last mile services. • Fiber to the Household growing in many cities, by multiple providers, including

new market entrants (eg. Google).• Some consolidation, mergers, changes.• General good outlook in growth and freedom for interconnection.

Korea

Korea• Interconnection (IX Policy) managed by MSIP (Ministry of Science, ICT and

Future Planning).• ISPs classified in different tiers • Traffic charged for traversing between Tier 1 and up or down Tier tree• Proposed to help eliminate monopolization of traffic / abuse of market position• Weakens competition. Tier 2, 3 and OTT providers are penalized while Tier 1

providers rewarded.

Korea• Unique situation in the world• Requiring “Sender Pays”• What about “Receiver”?

• An access customer (ISP Customer) is one who requested traffic• Subscriber already pays for internet access

• KINX (Korea Internet Neutral eXchange) is a example of a real IX, consistent with other countries.

Concerns

Concerns• How should market and governments value network neutrality?

• The most extreme definition requires that all traffic be treated equally• In contrast, in the Korean example, there is differentiation between tiers • Some Net Neutrality rules forbid preferential pricing

• Senders pay doesn’t help investment in networks^

• High cost is a barrier to entry for newcomers in the Korean market• Limiting competition >> reduced investment and innovation^

http://mercatus.org/sites/default/files/Telecom_Dourado_v1-0.pdf

Concerns• High Cost

• Overnight, “Market Rate” for traffic in Korea has increased by 3x +.• Local Market Protectionism• Termination Monopoly still exists• Some providers, including transit and OTT may exit Korea Market• Cost of services increased for Korean users only, rest of the world still declining• Economic Impact?

Questions?

Thanks!