[kictanet] Day 3 of 10:-IGF Discussions, Internet Interconnection Charges

[Michuki Mwangi]

Hi coming in late :)

mwende njiraini wrote:
> In traditional telephony call termination revenues are shared between
> operators and are based on negotiated interconnection rates, in a regulated
> environment, rather than the size and number of subscribers on the network.

Well i tend to think that the regulated environment leads to this 
scenario. For instance, in an non-regulated environment there would be 
more players resulting in increased competition. Consequently, a large 
player would not necessarily have more subscribers but more ARPU. In 
such a case, they would settle to interconnect on more favorable rates 
on both ends not on affect their ARPU. However in a heavily regulated 
environment we find that one player tends to dominate the market.

> (I stand to be corrected) Developing countries for a long time have
> benefited from revenues generated from this international settlement scheme.
> However, these revenues are rapidly being eroded by VoIP, which is
> encouraged by 'loosely regulated' flat rate pricing of internet bandwidth.  The
> issue internet interconnection is based on the fact that international ISPs
> have no incentive to enter shared-cost peering with ISPs developing
> countries thus forcing them to incur the full cost of transmitting
> international traffic.  What incentives need to be put in place to encourage
> shared-cost peering?  Content development?
> 

Good arguement - there are a number of things are that happening that we 
can take advantage of going forward.

We have cheap land which can be converted into Internet real estate aka 
data centers. For the past 3 years Europe has been running short on 
collocation space and turning commercial buildings into datacenters was 
not scalable to the pockets of most investors. With quality data-centers 
we can reverse the follow of traffic from its current % over 80% 
internationally and less than 20% local to more competitive levels. This 
would mean that foreign ISPs would come to peer or buy transit from 
within the region to access content. This can be comparable to what has 
happened to the BPO sector and the shift of traffic into the reverse 
direction.

I still hold the position that we lack sufficient relevant local content 
to draw the interest of critical mass into using the net to notable 
levels. For instance, if KRA made it mandatory for every individual to 
make their annual returns online, to eliminate the costs related with 
service provision on their end by having physical agents at drop off 
points, what would be the effect of that?. It would be similar to the 
effect we had on the release of the KCSE and KCPE results online. If 
such initiatives were sustained in addition to the introduction of 
making payments for most services i.e telephony, power, water and even 
online shopping services there would be a greater shift in penetration 
of Internet services out of choice as a convenience.

> 
> There is raging debate on "network neutrality"; with network operators
> seeking to price network access on the basis of utilization in a bid to
> manage network congestion.  In the US, for example the recent Comcast case
> has resulted in the regulator, FCC, ruling that Comcast 'discriminatory'
> network management practices were illegal.  To overcome the challenge of
> network congestion several proposals have been made including the
> introduction of bandwidth metered services.  Vint Cerf, Google's chief
> internet evangelist, has proposed that ISPs should "introduce transmission
> caps allowing users to purchase access to the Internet at a given minimum
> data rate, which would be guaranteed even during times of congestion."  Net
> neutrality is definitely an issue we may need to consider with reference to
> the current developments in national and international fibre optic projects.
> 

Well this is a clear demonstration of the frustrations that service 
providers are going through as a result of the competition. There's a 
theory given some of the large operators that about 5 - 10 % of the 
subscribers consume over 50% - 80% of the bandwidth available. So the 
raving question would be why would 10% of the subscribers punish the 
rest? and what should the ISP do in this case?.

Regards,

Michuki.