More on: Ireland to regulate peering

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Alex French <alex () evilal com>
Date: Fri, 20 Jun 2003 15:12:30 +0100
To: Dave Farber <dave () farber net>
Cc: iiu () taint org
Subject: More on: Ireland to regulate peering

Dave et al

[Dave, for IP if you like]

Thanks to all for the comments on my previous post to IP. Based on the
feedback I got from people who know more about this than I do, I'd like to
expand & clarify the issues:

There are two separate issues here: one is the potential designation of
ISPs as having Significant Market Power (SMP); the other is the requirement
for ISPs to peer on request. These are separate but linked.

On the SMP issue, the EU has issued a directive (2003/311/EC) listing which
markets the National Regulatory Authorities (NRAs) should examine for SMP
determination. One internet-related market is listed: wholesale DSL. An NRA
can look at other markets (such as wholesale peering) only after EU
approval (technically, after the EU does not object). A plausible scenario
for this is that the Irish NRA receives a number of complaints that a large
carrier is refusing to peer and requests approval from the EU to
investigate this market. Given the EU's historic concern that large players
will abuse their peering power [1], it's likely that the EU would not
object.

Therefore, due to the way a communications network is defined, the new
regulations move ISPs into the category of networks that can be examined
for SMP without any further legislation or regulations at the local or EU
level, although such regulation is not automatic.

Regarding the right to interconnect, I haven't been given any convincing
explanations of why my original analysis is incorrect:
- ISPs are within the definition of an Electronic Comminucations Network
- ISPs are required to register with the NRA as an Authorized Person
- Therefore, ISPs must negotiate "interconnect" with any other ECN on
request.

This is regardless of any SMP obligations. In addition, this obligation
applies to every ISP operating within the market, even if they had no
intention of offering peering to anyone in this country.

Note that this analysis is also supported by at least one UK commentator:
[2] states that "It has been argued that the Directive requires that ISP
interconnection or peering will be regulated for the first time, and it is
difficult not to agree with that view."

The biggest threat from this issue is that the definition of an ECN is
broad enough to apply to just about every tiny hosting operation with a
single PC and a DSL line. There is real fear that large telcos will be
reluctant to enter a small market such as Ireland to pursue a couple of
large customers when they could potentially be required to peer with every
guy with a PC.

There are also two potential negative impacts on internet exchanges (IXs).
First of all, an IX could no longer refuse to allow an ISP to join, even if
they are not a traditional candidate for IX membership. Second, if network
X wants to protect itself from regulated peering requests by small ISPs, it
can decide not to join any IXs in the country. This will increase the cost
to the small ISPs of peering with X (since the cost of the interconnection
would probably have to be borne by the access seeker). If NRAs were to
uphold the requirement to peer, this could lead to private peering between
large ISPs rather than an IX-centric peering model.

Finally, I should emphasize that no-one believes that ComReg (the Irish
NRA) really wants to regulate the IP peering market. The fear is that once
the rules are in place, any ISP could (ab)use the situation by forcing
ComReg to enforce peering with another party.

Comments continue to be welcome... the deadline for responding to the Irish
NRA is next Friday (27 June 2003) so keep 'em coming.

Thanks,

Alex

Notes:
[1] See for example this treatment of the MCI/Worldcom merger case:
http://216.239.37.100/search?q=cache:hsdXLqy578sJ:www.ciaonet.org/wps/unh01/
&hl=en&lr=lang_en&ie=UTF-8
[2] http://www.legal500.com/devs/uk/it/ukit_126.htm


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