back to article Australia's Telstra and Optus outed as two of the world's six most expensive ISPs

Content delivery network Cloudflare has outed Australia's Optus as one of the six most expensive internet service providers in the world, and says the other major local player Telstra is rubbish too. CloudFlare's measuring transit costs for its assessment: as a CDN it is more concerned about shuttling data over carrier …

  1. Ole Juul

    Most expensive?

    So, the Louis Vuitton of ISPs. That's gotta have a bit of cachet.

  2. Anonymous Coward
    Anonymous Coward

    Aussie Aussie Aussie

    Oi Oi Hang-on.....

  3. Rampant Spaniel

    Seriously? The model is basically that you pay for data egress, peering is generally only done where there is a sane ratio (usually up to about 5:1) in the exchange otherwise you aren't bringing enough to the table. A CDN usually has a very asymmetrical usage profile, they take very little data and need to get rid of a lot.

    Now there is a second argument for peering, when it improves service to your end users.

    I don't doubt that Telstra and Optus are doing this for financial reasons. They don't want to lose the revenue from the transit. While the data will still get to their customers it will either be over a different paid transit link or via someone else's peering (in which case there is a ratio in effect, if it gets tripped they end up having to pay for transit).

    Transit is an important source of revenue for isps. What they are doing may be unwise to a degree, they are degrading service to their subs, but I find it hilarious that a company is complaining they effectively won't give them a product for free. CDN's are basically paid to get rid of data, yes they are paid to hold it in regional caches, but basically their job is to throw data at end users. They are now complaining because they have to pay for access to those end users?

    We used to pay for transit in our DC. The rates are relatively small at those levels of commit and you can usually score access at peering exchanges for port fees alone. Oz always did have a weird market, I'm not shocked Europe would have a more liberal approach to peering but that doesn't make it wrong.

    1. P. Lee

      >Transit is an important source of revenue for isps.

      It take it that Telstra and Optus own/rent the intercontinental links and want to force traffic across those (where they get paid) rather than pass data around within a single data centre.

      I get that its more cash for them, but when they are the most expensive and engineered to be deliberately worse, there's probably some anti-competitive issue which keeps them on top.

      This is exactly the kind of thing net neut tries to avoid - extracting money from data providers rather than consumers. It looks like too much vertical integration between retail, backhaul and Inter-continental businesses.

      If your business relies on pushing all traffic over intercontinental links rather than a few feet of fibre in a DC, your business needs to die.

      1. Berny Stapleton

        Re: >Transit is an important source of revenue for isps.

        That doesn't make any sense, whether Telstra is providing access to that data via a cross connect in a DC or whether they provide it over bandwidth they're buying from Asia or the US, they're *still* going to charge their customer for it, as Telstra are still transiting the data themselves. Getting the data over a 10Gb in a DC in Australia somewhere is eminently cheaper than bringing it over subsea cable. If they wanted to charge a nominal fee for a port charge to the CDN provider, I'm sure they'd pay it, but they don't. Larger ISPs usually give the likes of Google whole racks, ports and power for free or used to give space / ports / power for Google Containers when they were around because it meant that they didn't have to pay exorbitant rates to Telstra / Optus / other for transit.

        It's simply a case that Telstra don't peer, period. They only peer with Optus as far as I'm aware. You can't get a connection to them for the purposes of reaching their customers and them reaching yours. They don't peer with TPG / PIPE. You can't even use them for a redundant circuit and use BGP to prefer the traffic go down another path, they route your block down your link, end of. This does mean as an ISP that you end up buying transit off them, and commercially it makes sense, but from someone who is shovelling data in their direction for them to sell, it doesn't make much sense.

  4. aberglas

    How does it actuallly work?

    An explanation of how packets more and who pays would be interesting.

    Is this saying that Telstra charges CDNs to deliver data to Telstra's customers? That would be very dubious, as Telstra is also charging its customers.

    1. Rampant Spaniel

      Re: How does it actuallly work?

      Telstra charges their customers a nominal fee for access to the internet. They don't have an end to end link with the servers they want to access (assuming the other end isn't hosted on Telstra's network, in which case they are paying anyway).

      When you have a server connected to the Internet you pay to have data taken off that server and delivered. The network you are connected to then either hands it off to another company (for payment or payment in kind) or if it can delivers it directly to the edge of the destination network.

      If there were no paid transit the shortfall in revenue it generates would fall on either the server owner (and get passed on to you) or directly on you. There are quite a few companies that make their living serving as that connection from the server you want information off and the edge of your isp's network. Take them away and your isp then has to pay for a much larger network which you end up paying for.

      Peering fees on a per mbps basis are minor, they aren't extortionate and on the few occasions they are you can usually get around it by buying routes from another network that connects with your desired destination.

      What really hurts these situations is the disparity between ingres and egress. Cosnider netflix. You want to watch an episode of house of cards on your tablet. You whack play and your tablet sends a quick request and you get a stream of video coming at you. All your tablet really sends back are acknowledgements it received video. You are probably transmitting at 50-100kbps but receiving at 3000-4000kbps. If netflix had any sense they would use spare inbound capacity to run a backup service! That disparity between send and receive is what generally makes peering unatttactive. Especially since it's usually indirect anyway. Some company has already been paid to deliver the information, they just don't want to share their cut of the fee.

      Put basically the cost of getting the information from server to you is shared by you and the server owner. Peering and transit exist to serve different situations, if you have access to trade then you get peering, if you want to dump data and can do jack in return you pay for transit. When you carpool and some guy never takes his turn to drive you aren't carpooling, you are a free taxi :)

    2. Rampant Spaniel

      Re: How does it actuallly work?

      I just remembered Oz used to have a very unique bandwidth pricing method. If you rented a server anywhere else you typically paid for bandwidth either as a flat fee for the pipe, 9th percentile, per mbps or per Gb. There may have been a few others but they were the most common. I recall Oz had a weird system where you paid only for outgoing bandwidth, incoming was free, from a server standpoint. Not sure if they still do that. That would account for a reluctance to peer as well.

    3. Berny Stapleton

      Re: How does it actuallly work?

      Bingo. Got it in one. Get this man (woman? Person?) a beer. You need to pay for the access to the network and a per Mb/s charge for the bandwidth you use to send them data for them to deliver to a customer.

  5. GrumpyKiwi

    No surprises from here

    Anyone on this side of the Tasman who's had to deal with Australian Telco's know just how overpriced and underperforming they are.

    Repeating myself, but I've had Optus sales-spods tell me that paying the same price for business grade 100/100 fibre in NZ for 2/2 copper in Australia is a bargain. Telstra sales-spods tell me that paying three times as much for mobile data as in NZ represents great value for money. And Vodafone guys tell me that just because it's cheaper to run mobile services in anywhere else in SE Asia/Oceania than Australia (with better service no less), that I should still sign up because they were cheaper than Telstra.

    The same bunch who've failed to get a fibre connect to a premise on the edge of the Melbourne CBD for over eight months.

    I'm fully in favour of shooting a random 30% of management in the kneecap of each of them to encourage the rest to do better.

  6. rtfmoz

    Its high time the ACCC got involved to sort out the peering arrangements in Australia. The price of data would drop significantly as a result.

  7. david 12

    And here is what they said sime time, two years ago:

    Fundamentally it's still unexplained. From the complete abscence of explanation, it's not clear that there is any meaningful simularity between their transit/peering activities in Europe / USA, and what they do in Aus.

    (Also, if Telstra and Optus still have spare international capacity, changing the connection point from Sydney to Singapore isn't costing them anything at all).

  8. Turbo Beholder

    Clodflare, seriously?

    In other words, the fattest server-side censorship provider on the whole internet points an accusing finger at two fattest client-side censorship providers in Australia.

    While they are probably right about the prices, the author here have a curious way of picking the independent experts to heed.

  9. Colin Tree


    The ACCC has to have more power to stop monopolies and duopolies or quadopolies (banks), which Australia's marketplace is full of.

    Name a business sector which isn't dominated and screwed down.

    We, the consumers, are always the screwees.

    Capitalism is meant to be about competition.

    It isn't, it's about stopping fair competition and making unrealistic profits.

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