Nobody here remembers ICAIS?
This is actually an old story/ambition, which started elsewhere, and
not long after the the 1997-1998 "rebalancing" of ITU-mediated
switched telecom settlements.
Two nuggets from the history books pasted in below.
Of course, just because it's not new doesn't mean that it's not
newsworthy. As I recall, this issue precipitated a fairly titanic
behind-the-scenes struggle last time around...
TV
_____
AAP NEWSFEED
July 15, 1999, Thursday
Telstra chief calls for equitable Net traffic cost sharing
SYDNEY, July 15 AAP - Telstra Corp Ltd chief executive Ziggy
Switkowski today called for an equitable arrangement for sharing the
cost of carrying Internet traffic to and from the United States.In an
address to the Asia-Pacific Economic Cooperation (APEC) business
conference here, Dr Switkowski said US operators were currently
enjoying an implied subsidy of 30 per cent of the costs of
international Internet connection...
The charging system operates on a similar principle to that used in
international phone charging arrangements, he said. "For Australia
alone, that represents approximately $50 million a year, and the sum
varies from country to country depending on usage," Dr Switkowski
said. "Telstra's view is that the future of e-commerce could be
undermined if investment in capacity growth does not match growth in
demand. "But infrastructure providers outside the US need to have
sufficient confidence in cost sharing to invest in new capacity to
meet the exploding demand for bandwidth"...
_____
Economist
October 19, 1996
Too cheap to meter? The fact that the Internet seems free to many of
its users has been one reason for its success. Now it may have to
change. But how?
...If the costs of the telephone companies and the Internet are
similar, why are their methods of pricing different? The answer is
that telecoms charges bear little relation to costs. The telephone
industry is regulated nearly everywhere and in most countries prices
are set by bureaucrats and commissions; real costs are hidden by a
layer of crosssubsidies. The Internet, on the other hand, is
essentially unregulated.
At present, telephone companies typically make less than half their
revenue from fixed charges rather than from the price of each call.
Tim Kelly, of the International Telecommunication Union in Geneva,
reckons that the share of revenue from connection charges and monthly
rentals has risen in the past decade from about 33% to 40%; he expects
an increase to around 60% over the next ten years.
The companies are not keen on such "rebalancing", since it usually
involves reducing lucrative call charges rather than increasing fixed
charges. But without it, they are vulnerable to competition, including
competition from the Internet, which can offer rival services far less
expensively...
...Such settlements are a source of endless argument: America's long-
distance carriers complain that local telephone companies overcharge
them. Moreover, they transfer huge sums of money between countries: in
1994, carriers based in the United States handed over a net $ 4.3
billion to foreign carriers. Because countries in which telephoning is
cheap (such as America) tend to ring countries where calls are dearer,
American carriers grumble that they are subsidising the inefficient
and uncompetitive. Gradually, therefore, telephone companies are
moving towards a "sender-keeps-all" system, where they will charge
each other a flat fee for access to a certain amount of transmission
capacity, rather than bill each other on the basis of use.
That would bring them increasingly into line with what happens on the
Internet, where settlement is rudimentary. There are payments between
each of the Internet's hierarchy of links: access providers pay their
regional network and regional networks pay the companies that operate
the high-capacity long-distance parts, the backbone of the system. But
such payments are mostly based on the availability of capacity, not
its use: service providers simply agree to carry each other's traffic
without totting up precise bills.
This encourages a "hot-potato" approach: Internet access providers
hand traffic on as quickly as possible to the carrier taking it to its
ultimate destination. That benefits small service providers and
irritates big ones, who say they get little reward for the effort of
carrying the traffic for most of its journey. In turn, this lessens
their incentive to invest in new capacity.
The problem of settlement is worse for access providers outside
America. Led by Singapore Telecom and Australia's Telstra, they
complain that they have to pay all the cost of leasing lines between
their country and the United States. "The rest of the planet
subsidises the United States," argues Barry Greene, who works for
Cisco, a maker of routers, but was previously with Singnet, the
Internet arm of Singapore Telecom. The high cost of leasing
international lines means that upgrading them to ease congestion can
cost a non-American company ten times more than in America.
