APEC Moves on Data Deficit

The Australian Government has endorsed a set of principles on
international Internet charging arrangements which aim to break down the
“de facto monopoly” on the cost of data traffic between the US and Asia
Pacific Economic Countries (APEC).

The principles, reached at the fourth meeting of telecommunications
ministers in Mexico, maintain that international Internet charges should
reflect the contribution by each country to communication activity on a
user pays basis.

The principles advocate that Internet charging arrangements between
network service providers should be commercially negotiable and determined
through use by each party of the interconnected network resources and the
end to end costs of international transport link capacity.

“While the principles make it clear that government need not intervene
in private business arrangement on international Internet charging, they
state that where there are dominant players or de facto monopolies,
government must play a role in promoting competition,” the Minister for Communications, Information Technology and
the Arts
, Senator Richard Alston.

Currently, the cost of Internet access sourced from the US has
effectively been paid for by other countries, including Australia.

“It is estimated that the annual opportunity cost of the existing
arrangement for Australia runs into the hundreds of millions of
dollars,” he said. “While per-megabit international Internet charges are
falling rapidly, the current charging arrangements have meant that
Australian Internet users pay more for Internet access than they would
under a more competitive regime.”

Senator Alston said that the current 30 per cent of traffic between the
US and Australia which emanated from the States should be reflected in
commercial cost-sharing agreements.

“Affordable Internet access prices are critical to the widespread uptake
of electronic commerce by business and the wider community, and this
decision provides the opportunity to lower Australia’s already
internationally competitive Internet access rates,” said Senator Alston.

Despite the agreement, national ISP peering cooperative Ausbone has warned that the oligopoly
which exists in the Australian Internet industry may prevent the price
reductions from being passed on to smaller ISPs, and in turn to Internet

Ausbone chief executive officer Paul Montgomery said that in the past,
smaller ISPs have had to rely on government regulators like the Australia
Competition and Consumer Commission (ACCC) to gain benefits from
competition in the telecommunications industry.

The majority of wholesale data access is dictated by four carriers:
Telstra, Optus, UUNet and AAPT. Smaller ISPs have so far had to deal with
these ISPs for data capacity.

“Our fear is that smaller ISPs will be left out of the exclusive inner
circle of the oligopoly,” said Montgomery. “This would not only be a slap
in the face to the lower tiers of the industry and their customers, but it
would entrench the dominance of the larger providers”.

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