FX Networks and Telecom Wholesale today confirmed their agreement for the exchange of local internet traffic at 19 of Telecom’s points of interconnection around the country. The agreement 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.
Local internet interconnection, or peering, is important as it provides more efficient routing of national traffic, allowing traffic to be exchanged on a local or regional basis rather than transported back and forth throughout the country to be exchanged in Auckland. With the Government’s $1.5bn ‘Ultra Fast Broadband’ and $300m ‘Rural Broadband' initiatives both on the horizon, the agreement paves the way for a whole new range of competitive broadband packages to be developed by ISPs and other service providers.
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.”
FX Network's Jamie Baddeley said "The agreement means that the Government's investment of $1.8bn in urban and rural broadband 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”.
Senior industry consultant Dr Murray Milner said: “This is a very positive outcome with the industry tackling a major issue that is fundamental to the success of the current fibre roll-outs. Local peering means that internet backbones will not be clogged up with local traffic and we will see smart uses of the capability in areas like healthcare where digital X-rays can be shared simultaneously in full definition."
Ernie Newman, CEO of TUANZ said: "Peering has been on the table for a number of years as one of those 'too hard' issues, after some carriers 'depeered' from the earlier system a few years ago. 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. What’s emerging is the national digital architecture that TUANZ has been calling for."
One of the biggest challenges facing the future of the government's $1.8bn investment in improved urban and rural broadband is an issue which sounds technical but actually has a major impact on both the quality of New Zealanders broadband and what they pay for it!
The issue is known by two different names 'interconnect' or 'peering' depending on whether you come from the established telecommunications industry or the newer world of the Internet. Put simply it is about how traffic is routed between different networks and what costs if any should be incurred.
In the past when New Zealand only had one telecommunications network this was never an issue but with the rise of the internet over the last two decades and its underlying model of a network of networks a new approach was needed that is fair for users and network operators.
With today’s announcement a key building block for the new road rules is put in place. Traffic on New Zealand's two main Internet backbones will now be 'exchanged' at 19 of Telecom's 29 local peering points. That number will increase as the FX Network expands further around the country.
"The demand on New Zealand's fibre optic infrastructure is going to come from a lot more than just email and web browsing, many activities are starting to generate large files or the need to stream large quantities of data," says FX Network's Jamie Baddeley, "Today's announcement means this traffic will be routed as locally as possible which will avoid unnecessary use of expensive international links and reduce congestion on national backhaul networks. So New Zealand broadband users can look forward to better performance, potentially lower charges and even their current 'data caps' extending further.
Mr Baddeley added: “I think many 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 Wholesale's Matt Crockett added: "This is a natural outcome of the investment Telecom has made in building our next generation all IP network and it lets us bring advanced capabilities to all our wholesale customers where ever they are located or where ever they need to provide customers with services."
"Telecom has 29 exchanges now capable of peering locally and has been working with FX Networks to get this into the market." Mr Crockett added, "my team have worked closely with FX Networks to get this right; it’s a real sign of how we can operate a genuine wholesale market to everyone’s benefit."