FX Networks and Telecom Wholesale have agreed to exchange local internet traffic at 19 of Telecom’s points of interconnection around the country.
The agreement, the companies say in a statement released today, is the "culmination of years of effort by Telecom, FX Networks and other industry players, to lay the groundwork for the most efficient routing of New Zealand’s growing volumes of internet traffic".
IP interconnection, or peering, has been one of the biggest bottlenecks in New Zealand's networks. Peering used to take place freely through specially built exchanges in Auckland and Wellington, but in 2004 first TelstraClear and then Telecom withdrew their participation in the peering agreement. Local peering is important as it provides more efficient routing of traffic, allowing it to be exchanged on a local or regional basis rather than transported back and forth to be exchanged in Auckland. Matt Crockett, CEO for Telecom Wholesale and International, said initiatives like the government’s Ultra Fast Broadband plan will increasingly bring workable network interconnection models into the spotlight. "We’ve been delighted with what we and FX Networks have achieved so far and we’re looking forward to working with them, and the rest of the industry, as we continue to build our technical competences and experience base,” he says. FX Network's Jamie Baddeley says the agreement means that the government's investment will now be able to run local content in a fast and efficient manner. "This is a big step in New Zealand's digital transformation that will revolutionise many aspects of society including health, education, commerce and entertainment," he says. Ernie Newman, CEO of TUANZ was also positive, saying peering has been one a "too hard" issue after carriers depeered from the earlier system. "It was the users who bore the brunt of that with traffic 'tromboning' to Auckland when it didn't need to, or worse to the USA. I'm delighted to see industry players resolving this issue without the need for regulation or government intervention and users will benefit from better performance and lower charges'" he says. Mr Baddeley says he thinks ISPs are going to have to rethink how they charge for traffic and there will now be competitive pressure to separate international traffic from local usage and charge accordingly. Telecom has 29 exchanges now capable of peering locally.