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Local IP peering according to PLDT

Last month, the local telecom sector was abuzz about the signing of an agreement between PLDT and the Department of Science and Technology for the Philippine Open Internet Exchange (PHOpenIX) to be hosted in ePLDT’s VITRO Data Center.

PLDT is said to have donated 21 million pesos ($460,000) worth of fiber, rack space, and utility cost to locate a third PHOpenIX switch inside its facility for two years, free of charge.

The signing, however, should not be mistaken for PLDT’s resolve to now start peering through the neutral, government-run IX. If anything, it is a reminder that incumbents do succumb to pressure sometimes, but not in the way that people might think.

While the PLDT-PHOpenIX fiber connection is already in place, the actual peering has yet to happen. Also, PLDT only intends to peer with DOST. Many things remain unclear.

Will PLDT peer just with DOST or with all government offices who are at the PHOpenIX?

Will PLDT exchange traffic with the ISPs of government offices who are peered at PHOpenIX?

Which subscriber (based on data plan) of which PLDT company (PLDT, Smart, Sun) will peer?

Will government offices connected to the PHOpenIX be able to access PLDT customers freely? Or access content that is hosted by PLDT group?

A few weeks after, PLDT announced that it was in talks with Globe Telecoms on bilateral IP peering. The proposal, however, was immediately slammed by Globe who said that noting less than unconditional peering  was acceptable. Globe elaborated further that PLDT’s proposal “doesn’t allow Globe customers to directly access content and applications hosted by the PLDT group without exception.”

What does this tell us? Nothing has changed in PLDT’s strategy and business model. PLDT wants commercial and bilaterally negotiated agreements with other players where it can use its leverage to dictate the terms and rules of the game. This is consistent with anything that it has done over the past decades in all aspects of its business. And, as with any incumbent, this has worked well to sustain their dominant position.

Globally, local IP peering is done on a voluntary basis. However, contrary to what big telcos often claim, an OECD study has revealed that 99.5% of peering arrangements worldwide are done on a handshake, with no written contract and no money changing hands. The same study also found that in many locations, multilateral agreements are in place, using the so-called route server, where hundreds of networks allow the exchange of traffic for free with any network that joins the agreement.

The most successful Internet exchanges operate on openness, neutrality, and mutual trust, according to Jane Coffin of the Internet Society. A neutral IX is where the terms are agreed upon by all members who make decisions about terms and policies, regardless of their size. An open IX is not managed by one company alone and not one player dictates the environment. These build the foundation for mutual trust.

Neutral and open IXPs, similar to the PHOpenIX, have helped put pressure bottom-up and, as a result, telcos have been found to bring cost down. Coffin recounts that in Ecuador, where traffic going to Miami, USA used to cost $100/Mbps, exchanging traffic through an IXP now costs $1/Mbps. One incumbent in Europe was also reported to have decreased its rate by 70% after an open IXP was set up.

PLDT’s approach in exchanging traffic through an IXP is bilateral, periodic negotiation and commercial arrangements, with charges depending on the type of cross-connect and bandwidth.

Without PLDT, the PHOpenIX has grown from exchanging peak traffic of 2Gbps between 2007 and mid-2014. After the Senate hearings and publicity about IP peering, PHOpenIX’s peak aggregate traffic (inbound) has reached 12Gbps between 2014 and 2015. Membership has also grown significantly—with Akamai, ABS-CBN and DotPh being the latest to join.

With PLDT now physically connected to the PHOpenIX, there is much potential to improve the internet experience of Filipinos, to lower the cost of connectivity, nurture local content, and entice popular content providers to locate in the country. But this would all depend on what PLDT decides to do with this IX connection. Meanwhile, life for the rest of the internet community who are already enjoying the benefits of open IP peering goes on.