April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The...
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![Page 1: April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The views in this slide do not necessarily represent the.](https://reader036.fdocuments.in/reader036/viewer/2022082817/56649dca5503460f94ac12a5/html5/thumbnails/1.jpg)
April, 2001 Korea Telecom 1
IP Pricing and Interconnection in Korea
by Inho ChungKorea Telecom
(The views in this slide do not necessarily represent the views or policies of Korea Telecom)
![Page 2: April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The views in this slide do not necessarily represent the.](https://reader036.fdocuments.in/reader036/viewer/2022082817/56649dca5503460f94ac12a5/html5/thumbnails/2.jpg)
April, 2001 Korea Telecom 2
The Trend of Internet in Korea
1995 1996 1997 1998 1999 2000
(~Oct)
No of ISPs
11 16 21 26 54 80
No of Users
( thousands)
366 731 1,634 3,103 10,860 16,400
No of Host
38,644 73,194 131,005 177,299 460,974 -
No of Domain
569 2,644 8,045 26,166 207,023 511,003
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April, 2001 Korea Telecom 3
The structure of Internet Service Markets in Korea
• Access Service Providers• Dial-up, ADSL, CATV, ISDN, Private line, B-WL
L, Satellite, Wireless Phone,Wireless Internet
• Internet Service Providers• IP/CPs
![Page 4: April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The views in this slide do not necessarily represent the.](https://reader036.fdocuments.in/reader036/viewer/2022082817/56649dca5503460f94ac12a5/html5/thumbnails/4.jpg)
April, 2001 Korea Telecom 4
Structure of Internet Networks
ISPISP
IXIX
ASPASP ISPISPASPASP
ISPISP ASPASP ISPISPASPASP
EndUserEndUser
EndUserEndUser
EndUserEndUser
EndUserEndUser
CPCP
CPCP
CPCP
CPCP
![Page 5: April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The views in this slide do not necessarily represent the.](https://reader036.fdocuments.in/reader036/viewer/2022082817/56649dca5503460f94ac12a5/html5/thumbnails/5.jpg)
April, 2001 Korea Telecom 5
Pricing in Korean Internet Markets
• ASP• Different flat rate per month by speed
» Premium, Lite
• ISP• Flat(All you can eat)
• IP/CP• Free, flat rate, usage rate, mixed• Internet advertisement• Use infoshop service for billing and collecting fees
![Page 6: April, 2001Korea Telecom1 IP Pricing and Interconnection in Korea by Inho Chung Korea Telecom (The views in this slide do not necessarily represent the.](https://reader036.fdocuments.in/reader036/viewer/2022082817/56649dca5503460f94ac12a5/html5/thumbnails/6.jpg)
April, 2001 Korea Telecom 6
The Comparison of Internet Access Services in Korea (at the end of
2000)ISDN ADSL CATV
MODEMSatellite
Market share
7.8% 64.9% 27.0% 0.3%
Installation and
subscription cost (won)
90,000~
100,000
30,000~
80,000
40,000~
570,000
Monthly usage cost
(won)
41.6 per 277 seconds
40,000~
50,000
40,000~
50,000
20,000
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April, 2001 Korea Telecom 7
The Interconnection Arrangements in IP
• Peer-to-peer bilateral• Hierarchical bilateral• Third-party administrator• Cooperative Arrangements
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April, 2001 Korea Telecom 8
Two Conditions for Peering to Function Efficiently
• Equal level of connectivity between networks
• Volumes of traffic or numbers of subscribers
• The costs of processing traffic less than the costs of developing a payment scheme
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April, 2001 Korea Telecom 9
Developments in Peering
• In Oct. 1999 Digex Inc. and AGIS cut off their peering connections due to a dispute
• In 1997 UUNet, MCI, and BBN left the CIX router– 4 largest networks including above 3 contro
lled 85~95% of backbone traffic by 1997
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April, 2001 Korea Telecom 10
Peering to TransitUUNet
Allows peering only to large ISPs– To qualify for
peering ISPs have to have more than four backbone networks of DS-3
– Supplier-Supplier Relationship
Forces small ISPs to make transit contracts– Pay $ 2,000 per
month for interconnection service
– Customer-Supplier Relationship
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April, 2001 Korea Telecom 11
The Bright and Dark Sides of This Trend
Bright side– Induces large ISPs
to invest their own network
– Improves the service quality and realize economy of scale
Dark side– Discourages new
ISPs to enter into markets
– Possibility of large ISPs’ abuse of market power and balkanization of internet
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April, 2001 Korea Telecom 12
Characteristics of Interconnection in Korean IP
Markets• Indirect Interconnection through IX >
direct interconnection between ISP• Mainly two types of interconnection
arrangements• Peering• Supplier-customer relationship
• No dominant system of settlement between ISPs
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April, 2001 Korea Telecom 13
Legal Principles in IP Interconnection in Korea
• Major common carriers are required to provide interconnection to every other service providers by law
• Settlements for traffic• Voice network – data network
» No settlements
• Data network – data network» Pay accounting rates for traffic
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April, 2001 Korea Telecom 14
Payment of Interconnection Line Costs between Networks
Cases Who pay for interconnection line
costs
KIX-CIX CIX
CIX-CIX Half and half
IX-ISP ISP
ISP-ISP Depends on negotiation
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April, 2001 Korea Telecom 15
Settlement between ISPs
• ISPs mainly rent lines from common carriers and pay for line rental
• No settlement between ISPs for traffic in principle
• The large ISPs who are themselves common carriers charge for their service
• KT charge 1.2 times of line rental costs to ISPs for delivering their traffics
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April, 2001 Korea Telecom 16
Who should Pay for Delivering Traffic?
• Difficult to distinguish which party gets more benefit from the traffic over internet
• E-mail or web-searching?
• The party who initiates the traffic should pay for the delivery cost
• This is the case in delivering a telephone call even with existence of externality
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April, 2001 Korea Telecom 17
Which way to go?
• Do governments need to regulate interconnection in IP markets?– No public position on this issue– Cyber Korea 21
• sharing of carriers’ revenue with ISPs for their contribution to traffic increase
• Do we need to move from peering to transit?– Need more sophisticated settlement system