TelstraClear pulls internet plug

The auction website TradeMe could lead a backlash against TelstraClear's decision to disconnect from the Wellington internet-peering exchange WIX.

Chief executive Sam Morgan said the depeering has caused major problems for TradeMe users who access the internet through TelstraClear connections, because their traffic is now being routed through the US.

"We are working out our best advice for our customers and our business. That could be a recommendation to change their internet connection," Morgan said.

Peering lies at the heart of the internet. It allows service providers to exchange traffic for no charge.

Peering exchanges are also popular with large or technically sophisticated content providers who want their content to get to users by the shortest possible route.

TelstraClear wants content providers to instead sign interconnect agreements and pay for any traffic, in line with phone industry models. Critics say that is double-dipping, because it already charges its customers for receiving data.

TelstraClear owns Paradise and Clearnet and provides connectivity to other, smaller ISPs.

Telecom Xtra also refuses to connect to the peering exchanges.

Craig Young, of TelstraClear's wholesale division, said peering was costing it money, although he was unable to give a figure.

"Nothing is free on the net. We have invested $1.5 billion building a nationwide network, and we need a return on assets," Young said.

TelstraClear spokesman Mathew Bolland said content providers should pay a service provider to get their content on to the Internet.

"If all the major ISPs pay telcos to use their networks to make sure traffic gets through, but some people go to the peering exchange and get it for free, something is wrong," he said.

"People disputing this move say there should be a free internet. There never had been. Someone ends up paying."

He said the dispute is a storm in a teacup, because most service providers have made alternative arrangements to WIX.

"We are not in the Wild West any more. We want to provide telco-grade service to customers."

Andy Linton, a network engineer from Wellington-based CityLink, which runs WIX and the Auckland Peering Exchange, APE, said TelstraClear is not making sense from an engineering point of view.

"This is marketecture, not architecture," Linton said. "There are some people in the wholesale division who have the idea they are leaving money on the table."

He said it could end up costing TelstraClear money if major content providers such as TradeMe move data to servers overseas. That means TelstraClear will have to pay to bring it back when customers request it, rather than picking it up from a server on the other side of town.

Morgan said because TelstraClear was not peering, its own networks would have to handle more traffic. "That means it has to build these billion-dollar networks because it is inefficiently routing traffic all over the place rather than the fastest way. It costs it money and it costs us money."

TelstraClear was discriminating against New Zealand business. "They aren't going to charge Google or Yahoo or Hotmail for the traffic to New Zealand," Morgan said. Tthe major telcos seemed to be colluding to cripple the internet in New Zealand.

"TelstraClear is making decisions that ignore customer needs. It doesn't talk to us, its pulls the plug on connections, it makes all its customers go slow, and for some reason it thinks that is clever."

Peer revolt

* TradeMe users who are TelstraClear internet subscribers are having to access the auction site via the US.
* TradeMe is considering advising its users to avoid TelstraClear's internet service.
* TelstraClear says its decision to disconnect from the Wellington internet exchange is to recoup its network investment.
* Critics say the move is " marketecture, not architecture".