Australians fight for Internet equality with non-neutral networks
When it comes to Internet usage allowances, the Internet has not been kind to most of the world’s Internet users compared to American Internet users. Americans get some of the most generous bandwidth caps in the 150 to 250 gigabyte (GB) range while most of the world gets pathetic usage allowances (see figure 1 below). Even the smallest proposed usage cap by Time Warner of 40 GB per month dwarfs the typical usage caps implemented in most other first world nations.
Figure 1 – Comparison of average usage cap allowance in the world
Source: OECD, Comcast, AT&T, and TimeWarner
Despite the fact that the Time Warner proposal in its final form meant price reductions for the vast majority of its customers, had limited overage charges, and wavers on the first month of overage charges so that customers had ample warning, the proposal was extremely unpopular and even prompted one congressman to propose a ban on usage caps.
Yet as controversial as the 40 GB Time Warner usage cap was, it would be generous for the typical Australian broadband consumer who typically gets 5 to 20 GB of usage allowance for plans under $40 (AUD) per month. Orcon Broadband in New Zealand for example offers a 1 GB plan for $70 (AUD) per month. As foreign as this sounds for Americans, it has always been this way for the average Australian since the dawn of the broadband era over the last decade.
But why has the Australians and the rest of the world gotten such a rotten deal? The reason is that the Internet has largely been American and to a lesser extent European centric because that is where most of the content lives. All the most popular sites like Google, YouTube, Facebook, E-bay, Amazon, Yahoo, MSN, etc started off in the United States. So if the Australians wanted to access that content, they had to come to the US to access that content which involves leasing or building extremely expensive fiber networks that run under the Pacific Ocean. This meant huge transit costs to reach US and European based networks which means Australians have never been able to access high quality content at an affordable price.
Note: Just one hour of YouTube 720P HD content that averages 2.25 megabits per second (Mbps) would use over 1 GB of allowance and that would exceed the usage budget of many Australian broadband consumers.
Our friends from down under are understandably unhappy with the status quo and it appears that they are finally doing something about it. Why should Australians pay long distance transit costs to the US for the honor of patronizing content companies? Why not attract content companies to build up a presence in Australia so that Australians can enjoy the affordable usage allowances that Americans have had all along?
Australian broadband providers have figured out that simply switching to a dual-tier usage cap with a generous or uncapped limit for local destinations that don’t incur heavy transit costs and tight usage allowances on long distance transit networks provides the right incentive for content providers to come to Australia. Imagine broadband for example has a “soft-cap” of 2 GB for International access and 28 GB for local access. Orcon Broadband has promotional deals with no limits on YouTube. This likely means that Google extended their edge cache to Orcon’s network with free or very inexpensive peering.
This “non-neutral” arrangement incentivizes content and application companies which are largely based in the US and Europe to extend their presence to Australian to better serve Australian customers. These peering agreements are a win-win situation that reduces the content provider transit costs (typically $2 to $9 per Mbps per month) and turns the Australian broadband provider’s transit costs into revenue. The Australian consumer is also a big winner because they can now access content at affordable local rates which gives them the same deal that Americans have always had.
Since everyone is a winner here, one would expect a happy ending but the Net Neutrality proponents have gone ballistic over this non-neutral arrangement. Nate Anderson from Arstechnica argues these peering agreements harms the smaller content providers because how can they possibly compete with big content? Anderson argues that all sites should live under the same cap regardless of whether they’re local or transit networks in order to preserve neutrality, but this would simply mean that Australians would be forced to live with unnaturally low usage allowances for all sites and it removes the incentive for content companies host content on Australian networks. Why should such an artificial limit be imposed on local content for the illusion of neutrality? Why should consumers be forced to pay through the nose in transit costs to reach content when it’s cheaper for content to come to the consumer?
Note: It is ironic that the Net Neutrality proponent’s favorite cause of municipal fiber networks (which were a disaster in reality) have the exact same kind of non-neutral arrangement that they oppose. Municipal fiber networks allow local traffic to run at 100 Mbps but Internet traffic going to other networks (which could be same city, state, or country) get capped at 10 Mbps. So if a content provider wanted to deliver content at 100 Mbps to the municipal fiber broadband customers, they have to essentially “peer” with the municipal fiber operator by purchasing a network connection from them.
Anderson’s arguments are similar to the backward logic used by the NYU study which seeks to “protect” content providers from cheaper and higher quality peering services even though it would force the content companies to pay more in transit charges. These are the twisted arguments being presented to the FCC to get them to regulate and ban peering services.
Net Neutrality proponents are essentially arguing that content providers must be forced to continue paying high transit costs, consumers should be forced to pay high transit costs and/or live with consistently small usage caps, and broadband providers shouldn’t be allowed to make any money from dotcoms even though they employ ten times more employees than the dotcoms. To make their arguments fly, they simply omit the facts and resort to scaring the public about the evils of non-neutrality.
The reality is that peering benefits the smaller content providers and it is an essential open bandwidth market that is more efficient from an engineering and economic standpoint. It has transformed the Internet over the last few years and enabled on-demand streaming video on the Internet. Without the ability to peer and bypass the financial and performance bottleneck of transit networks, large scale video streaming would have been impossible. This is the true innovative nature of the Internet that must be preserved.