Asian Telcos to Bypass U.S. Internet Routing Fees

A consortium of Asian telecommunications carriers will set up its own Internet exchange in the U.S. to avoid millions of dollars of "inequitable" routing fees that U.S. carriers currently charge, the carriers said late last week.

The Asia-Pacific Internet Community (APIC) -- comprising South Korea's Dacom Corp., Kokusai Denshin Denwa Co. Ltd. (KDD) of Japan, Cable & Wireless HKT of Hong Kong, Singapore Telecommunications Ltd. and Australia's Telstra Corp. -- will establish a joint Internet router at the Palo Alto Internet Exchange (PAIX) in the U.S., according to John Hibbard, Telstra managing director for global wholesale operations.

"The current situation where non-U.S. carriers are paying the cost of carrying significant amounts of trans-Pacific Internet traffic into and out of the U.S., while the U.S. carriers pay nothing, is inequitable," Hibbard said in a statement issued Friday. "It does not, in our view, represent commercial reality in a truly competitive global environment."

The router will be ready early next month and will be able to transmit more than 1.3G bits per second (bps) of Internet traffic, the companies said. APIC members account for around 30 percent of the Asia-Pacific Internet market. The router will serve as an interconnection point with the top-level Internet backbones in the U.S. and will provide equal access for APIC members and U.S. carriers alike, Telstra said.

The fees paid by Asian carriers to their U.S. counterparts -- up to US$250,000 per month -- to route their Internet traffic in the U.S. has been a point of disagreement for some time. In addition to the monthly fee, Asian carriers pay for the leased lines to the U.S. under a deal whereby Asian ISPs (Internet service providers) pay for circuit costs to the U.S.

Attempts by Asian carriers to get their U.S. counterparts to pay some of this cost have consistently been unsuccessful.

"We have experienced explosive growth of Internet traffic over the past three years in all our markets, and foresee continuing exponential growth in the years ahead," Hibbard said in the statement. "APIC members play a significant role in the regional and global Internet communities, and this joint initiative is likely to be just the beginning of asserting our presence in the U.S. market."

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