Many developing countries have been net recipients of payments from international settlements from international calls, and for some operators these payments have been a major source of income. This source of income is being undermined both by drastic reductions in tariffs for international calls and by increasing use of VoIP.
On top of this, developing countries may face substantial expenditures with regard to settlements paid for Internet interconnection transit services. These expenditures can be substantial. In Colombia, Internet interconnection charges constitute 33% of the total costs paid by users, and in Mexico the international rates alone constitute 23%[1]. Such costs lead to a vicious circle, where high internet costs delay penetration, and low penetration increases Internet interconnection costs.
The market for such services is not very competitive, especially in developing countries. It has been estimated that there are in total about 6000 ISPs and 60%20 IBPs on the global market[2]. However out of these only six can be termed as tier-one IBPs. In particular in developing countries the number of IBPs offering connectivity between local ISPs and the global Internet is very limited. In Burkina Faso, Teleglobe was in 2002 the only provider of a single dedicated communication link to the Internet backbone.[3]
As noted above, establishment of National access Points may be a way to reduce interconnection costs, but a trend among IBPs to refuse interconnection at NAPs instead of bilateral transit agreement has been observed[4] This is however only one out of a number of examples of anticompetitive behavior observed at the market for Internet Interconnection.
Anti-competitive behavior by large Internet backbone providers
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“Complainants about Internet interconnection services (IIS) – developing countries, Australia, Mexico and Singapore – allege inequitable and anti-competitive behavior by large Internet backbone providers (Tier-1 IBPs) at the expense of smaller IBPs and Internet service providers.”
Source: Daniel Roseman: The digital divide and the competitive behavior of Internet backbone providers. |
It is difficult to document how widespread anti-competitive behavior is, as conditions for Internet interconnection often are kept secret. Antelope suggests therefore in their study that IBP should be demanded to allow regulators to see the agreements. In addition to this, they also suggest a requirement for cost accounting and cost based prices. This implies that they suggest a regulation similar to the type enforced on circuit switched interconnection.
According to Antelope the current EU framework allows a requirement for cost-based prices, and enables developing countries to raise a case on price lifting, if this occurs[5].
China has in collaboration with other developing countries in ITU made an even more far reaching proposal in a response to the ITU recommendation on international Internet connection, claiming that it is unfair that other countries bear the full costs for interconnection to the American part of the Internet.
It is important to define a framework interconnection of IP networks that benefits all parties. If some operators lose revenue by migration from switched interconnection towards interconnection between IP-networks, and this is at present the situation for many operators in developing countries, it is likely that they will seek to delay the process. This will delay growth in use of NGN in developing countries and hamper the development of the Internet.
ITU-T Recommendation D.50
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International Internet Connection: General considerations for charging criteria and options for international Internet connectivity
I.1 Connection criteria
Administrations* may agree to interconnect their networks based on charging criteria including, but not restricted to, the extent of network connectivity and degree of reachability to Internet end users and websites.
The agreed level of traffic exchanged may also be taken into consideration, provided that
Administrations* may use suitable safeguard agreement to address any concerns that international traffic flows are not fraudulently manipulated.
Service performance is another factor that may be considered. Administrations* may agree to consider network performance, availability of contact points, trouble reporting, among other considerations.
I.2 Charging options
Administrations* may find these charging criteria helpful in establishing the method of charging. Interconnection methods, and therefore charging methods, include peering, transit, hybrid forms of peering or transit, and any arrangement as mutually agreed between them, including indirect
interconnection.
I.3 International link capacity
Where one or more international links are required, arrangements for the international link capacities required and the apportionment of cost for the international link recognize that Administrations* bring value to the connectivity agreement. In determining the apportionment of cost, multiple methods of apportionment are acceptable, as long as mutually agreed to by Administrations*, including making alternative arrangements.
China and others expressed reservation on this appendix.
Source: ITU-T |
Response to ITU-T Recommendation D.50
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WORLD TELECOMMUNICATION DEVELOPMENT
CONFERENCE (WTDC-02)
The World Telecommunication Development Conference 2002 (Istanbul 2002)
Asia-Pacific Telecommunity
CONTRIBUTION TO THE WORK OF THE CONFERENCE DRAFT NEW RESOLUTION FOR INTERNET ACCESS AND AVAILABILITY FOR DEVELOPING COUNTRIES AND INTERNATIONAL INTERNET CONNECTION CHARGING PRINCIPLES
The Asia-Pacific Telecommunity (APT) submits this document to WTDC-02 for its consideration. The proposal contained in this document is commonly endorsed by the following APT members, who are members of ITU: Proposal from Australia, Bangladesh, Bhutan, Brunei Darussalam, China, Fiji, India, Japan, Malaysia, Philippines, Singapore, Sri Lanka, Thailand, Vietnam, TRAI (India).
noting
a) that ITU Recommendation D.50 on International Internet Connection recommends that administrations* involved in the provision of international Internet connections negotiate and agree to bilateral commercial arrangements enabling direct international Internet connections that take into account the possible need for compensation between them for the value of elements such as traffic flow, number of routes, geographical coverage and cost of international transmission amongst others;
b) the rapid growth of the Internet and IP-based international services;
c) that international Internet connections remain subject to commercial agreements between the parties concerned; and
d) that continuing technical and economic development require ongoing studies in this area, recognizing initiatives by service providers have the potential to deliver cost savings for Internet access, for example by the development of more local content and the optimization of Internet traffic routing patterns in a manner that provides for a greater proportion of traffic to be routed locally,
resolves to
invite Member States
1 to support the work of ITU-T in monitoring the implementation of ITU Recommendation D.50, bearing in mind the importance of this issue for developing and least developed countries' international Internet connectivity;
2 to create policy conditions for effective competition in the international Internet backbone network access market as well as in the domestic Internet access service market as an important aspect of lowering the cost of Internet access for users and service providers,
urge regulators
1 to promote, within the context of national policy, competition among all service providers, including small and medium-sized Internet service providers and incumbent network access service providers,
urge service providers
1 to negotiate and agree to bilateral commercial arrangements enabling direct international Internet connections that take into account the possible need for compensation between them for the value of elements such as traffic flow, number of routes, geographical coverage and the cost of international transmission, amongst others,
instruct the Director of the BDT
1 to organize, coordinate and facilitate activities that promote information-sharing among regulators on the relationship between International Internet Connection Charging Arrangements and affordability of international Internet infrastructure development in developing and least developed countries.
Source: ITU – D |
ENDNOTES
[1] Daniel Roseman: The digital divide and the competitive behaviour of Internet backbone providers part 1. Info 5.5.2003.
[2] Antelope Consulting: DFID Cost Study Appendix G: Regulating Internet Interconnection, 2001.
[3] Daniel Roseman: The digital divide and the competitive behaviour of Internet backbone providers part 1. Info 5.5.2003.
[4] ACCC: Internet Interconnect: Factors affecting commercial arrangements between network operators in Australia. Discussion paper. 2000.
[5] Antelope op. cit. p. 30.