Advisor： Kuang Chiu HuangGroup： Ting Wei Lin,Ting Huei Lee, Kuei Chin Fan

Transit & peering Taiwan Internet Interconnection problem

Background

Transit and peering

Respect of ISPs

Analysis

Conclusion

Outline

Background

Development of Taiwan’s telecom industry

Telecommunications industry has a typical characteristic of public utilities industries they have exclusive

Background

The first time to open to competition in telecom industry

The introduction

of infrastructure competition

Open competition completely

1987~1996 1996~2000 2000~

Background The first time to open to competition in telecom industry

1987

• Began the liberalization of terminal equipment

1989

• liberalization of the circuit using• common data circuit rental released• open value-added network services

1994

• Open Digital Low Power Wireless telephone (CT-2) business

Background

The introduction of infrastructure competition

1996

• Pass the three laws of telecom

1997

• open business of mobile phone, Radio Paging, mobile data and wireless telephone

mobile phone penetration rate of 108% in 2002,it was the highest rate in the world!!

Background

Open competition completely2000

• open international submarine cable• International Simple Release (ISR) Business

2003

• mobile virtual network operator business

2006

• the National Communications Commission was established

2007

• Open wireless broadband access services

Background

Memorabilia

NCC asked fixed-line

operators to discuss

coordination

Chunghwa Telecom reduce

the price

NCC held the hearing about relevant draft

amendments to the network

April,2009 August,2009 April, 2013

Background

Current state

Chunghwa Telecom

first provide

bandwidth services

80% UP domestic

broadband users

Background

Current state

what is reasonable on network interconnection prices?

Chunghwa Telecom

Other ISPs

Charge the high rate fees

Transit and peeringPeering

Internet is composed of many ISP's network. Depending on the connection type and pay conditions can be divided.

• Public peering

• Private peering

Transit and peeringTransit

Passing packets to itself and other downstream domains, in addition, is also responsible for the traffic to other domains

Transit and peeringConclusion

The Internet and fixed-line market is still only oligopolistic. the authorities should be actively controlled. While others were also thrown free interconnects voice, but this in turn involves fairness and justice.

Transit and peeringConclusion

The Internet and fixed-line market is still only oligopolistic. the authorities should be actively controlled. While others were also thrown free interconnects voice, but this in turn involves fairness and justice.

Respect of CHT

Market mechanismsStates supervisory authority for network interconnection policy, are "low control; highly consultative; scale quite free interconnection" principle.

First mover advantageWith unequal business model to control prices, just let small ISPs use resources of CHT in vain.

State-owned enterprisesResources put into the construction is tax, if free interconnection, is tantamount to allow the private industry use national resources.

Respect of other ISPs If other carriers doesn’t interconnect with CHT, the line must go through

oversea, this would appear delay; therefore no other viable alternatives.

CHT sets high prices of Internet interconnection.

AnalysisMonopoly

• Other operators can not negotiate peerOther ISP industry can not be commercial negotiations on an equal footing to get a reasonable access fee.

• Price squeezeVertically integrated industry has a monopoly position, to increase the price to the downstream industry competition.

• The market can not generate a positive cycleWhen interconnecting, the net inflow are required to pay to the net outflow.So ISPs will seek great ICP to enhance the customer experience and reduce the.Moreover,ICP get more resources to optimize content

But the current situation in Taiwan, small ISPs buy bandwidth of CHT to enhance the customer experience, ICPs do that for the same reason.

Government control controversyCHT has gradually cut costs and improve interconnection issues above unfair, but CHT and other operators on interconnection charges are still unable to reach a consensus.

Industry self-regulation failure (TWIX inefficient)CHT past only use low bandwidth links to TWIX (only 1G in 2009), resulting in other ISPs need to buy its bandwidth. Now,CHT has increased bandwidth to TWIX about 187G (Oct 2013).

Conclusion

Chunghwa Telecom

ISPs In Taiwan

Free peeringBigger ISPs in

the worldtransit fee

It will harm the industry and block the development.

Government should forma the vertical price squeeze according to the Fair Trade Act

Establish relations linked between wholesale price and retail price in the future

1. Enhance the competitiveness of existing business.

2. Subscriber loop circuit fees will thus reduce

3. Attract new entrants into the broadband market