Australia's Bandwidth Is The Most Expensive In The World (And It's All Telstra's Fault)

Telstra's dominance in the Australian market means that we all pay more for our bandwidth than we should, according to peering company CloudFlare. Image: Telstra boss David Thodey (Photo: Getty Images)

In a blog post, CloudFlare CEO Matthew Prince runs down the relative costs of peering arrangements that CloudFlare pay around the world. In it, he notes that

Australia is the most expensive region in which we operate, but for an interesting reason. We peer with virtually every ISP in the region except one: Telstra.

Why not Telstra?

Telstra, which controls approximately 50% of the market, and was traditionally the monopoly telecom provider, charges some of the highest transit pricing in the world — 20x the benchmark ($200/Mbps). Given that we are able to peer approximately half of our traffic, the effective bandwidth benchmark price is $100/Mbps.

To give you some sense of how out-of-whack Australia is, at CloudFlare we pay about as much every month for bandwidth to serve all of Europe as we do to for Australia. That’s in spite of the fact that approximately 33x the number of people live in Europe (750 million) versus Australia (22 million).

If Australians wonder why Internet and many other services are more expensive in their country than anywhere else in the world they need only look to Telstra. What's interesting is that Telstra maintains their high pricing even if only delivering traffic inside the country. Given that Australia is one large land mass with relatively concentrated population centers, it's difficult to justify the pricing based on anything other than Telstra's market power.

Telstra's denied the claims, telling ZDNet that the claims made by CloudFlare "are overstating our charges by a factor of ten".

[CloudFlare and ZDNet]


Comments

    as much as this doesn't justify a huge markup you have to take into consideration population density rather than just population. if Australia had the population of Europe then of course we would have better internet because a cable doesn't have to span km s to get to the nearest town

      So naive

      Did you not read what he said?

      We have relatively concentrated population centers.

      Stop making up excuses that don't exist.

    Telstra’s denied the claims, telling ZDNet that the claims made by CloudFlare “are overstating our charges by a factor of ten”When you have a virtual monopoly, you can do whatever the frig you want, I guess...!
    So, nothing is going to change anytime soon now, is it..?

    Last edited 27/08/14 1:37 pm

      Sadly you're right about that. a very large portion of rural Australia can only get Telstra connections, which allows them to charge ridiculous amounts ($100 for 15GB of data on a home broadband plan).

      What beggars belief is that so many sheeple continue to use Telstra when absolutely everyone knows how horrendously expensive it is. I've been on Optus for around 15 years now and I couldn't tell you the last time I couldn't get a viable signal. Any thoughts that Telstra delivers a better service is about 12 years out of date.

        Guess you've never been to the country.... In a town of 30,000 people. If you walk in to the optus shop, you don't get signal. Optus here is a joke, hence everyone's obligated to go to Telstra if they want coverage. If you live in a capital then sure thats great but even then optus wouldn't be my pick, I'd still go an optus reseller for the same experience even cheaper.

        In most city areas the other networks are fine. However, when visit my family way out north-west of Brisbane the only phones that work are on a Telstra network.

    I am so surprised! O wait no Im not. Not at all.

    It is gratifying to be reassured that the elephant in the room really is a greedy counter-productive force that nobody except the customers want gone

    Last edited 27/08/14 1:46 pm

    i live 7ks from a major town I'm classed as rural i have no internet on the wire at all and are unable to get it unill they decide to put the nbn on my street, who knows when that will be. my only connection is 3g telstra only. 33gig costs me $350 plus or minus each month ... so is this fair i think not, no matter how many letters i write the response is we will get to you when we do.

      It's a "Hah! You have no choice but to buy from me! I'll gouge you idiots."

    Isn't the government who privatised Telstra just as much to blame for this as Telstra?

      Maybe, but what're we going to do... buy it back?
      The problem with privatization is once that genie's out of the bottle, it's out for good... with universe-destroying powers.

        For sure. But solely blaming Telstra is silly. Blame the morons who gave them the power to abuse the consumers!

          Maybe. But I'd rather blame someone who still has the power to do something. If that turns out to be the government and that 'something' is increased regulation? I'm all for it.

          (Edit: For clarity, parents might be responsible for doing a shitty job raising their kid into a young criminal, but at the end of the day, I'm going to blame the criminal for his behaviour, no matter how shitty his parenting is. Telstra is that criminal.)

          Last edited 27/08/14 2:31 pm

        thats what Labors NBN was doing...sigh

          No it wasn't, NBN is a last mile solution. Cloudflare are just trying this as a negotiating tactic, works well when the media jumps on Telstra's throat.

          Also he says he doesn't peer with Telstra so why would what Telstra charge affect the pricing?

            LABORS NBN, you know the fibre to the Premises solution that offers gigabit speeds and beyond, the NBN that doesnt use copper at all. Labors NBN was buying up the Copper and replacing it with Fibre, and guaranteeing ISPs all payed the same wholesale price for access.

            Unline the Coalition NBN, which doesnt replace the 'last mile' copper, which surprise surprise, is where most of current speed problems come from.

              You are confusing two stories here, peering is how wholesale networks interconnect. It has nothing to do with NBN which is still a last mile program. If you want to discuss NBN then discuss it but this article is all about a global carrier bitching that they have to pay Telstra to interconnect to their network, boohoo.

                you are deliberately muddying the waters, how do you not understand that Labors NBN is not just last mile, its everything. the coalitions NBN is not last mile, they arent event touching the last mile.
                Its not just a global carrier that has to interconnect to Telstra, its every single ISP in Australia, paying telstra exorbitant fees, and its not going to change with the coalitions FTTN solution.

                Last edited 28/08/14 10:19 am

                  Mate fiber to the premises is still ONLY a last mile solution, it terminates you at the exchange and then you go onto whoever's network the retailer chooses. This could be Telstra, Optus, whoever etc etc.

                  The Coalition model is a last mile solution, in the case that it will be fibre to a node they will be replacing some of the copper, so to say they are not touching the last mile is wrong.

                  Nothing would change on interconnects on either solution.

                  My point is and always has been that this has nothing to do with NBN.

                  Last edited 29/08/14 9:44 am

                  @captainmatti
                  wrong again, FTTP teminates at your door, the so called last mile. That is the major difference between Labors NBN and the Coalitions NBN

    CloudFlare says that Telstra some of the "...highest transit pricing in the world — 20x the benchmark ($200/Mbps)." Telstra says that "... claims made by CloudFlare “are overstating our charges by a factor of ten”. which would make the price $20, not $200. I would like to see some facts about this, rather than just what some people, on each side, may have said.

    Thanks John Howard, you dickhead.

      More like, "Thanks Liberal policy". Yes Lil' Johnny Eyebrows was in power at the time of the Telstra sale but it's always been Liberal policy to sell infrastructure assets so that they can claim that they brought the budget back into line. I suspect that's one of the reasons that this budget was so harsh ... they don't have anything left to sell (except Medibank and people are NOT happy about that - so I'm not sure that's on the table anymore either).

        Pretty much down to medibank, auspost, SBS and the ABC. They're pretty keen to privatise functions of the APS too.

        The thing is all the idiots saying "we have to stop the waste" have no appreciation for the fact we're spending money to fix the howard governments fk ups, and that the howard govt gained a surplus by destroying revenue streams, crippling future governments ability to earn the money required to improve the country due to asset sell offs.

          At Last !!
          John Howard gets the recognition he's due !!
          Now as for the incumbent dickhead ............

    Here's a novel idea..! Instead of continually slagging Telstra, why dont all of you "lack of internet connectivity and overpricing" whingers try pouring all of your vitriol instead, upon the heads of all of the other Telco "cream-skimmers" for their absolute dearth of any infrastructure investment outside of the "profit-centres" of our capitals...? We are a nation of just 23 million people living in a land mass covering the same geographic area as the USA and yet we all -demand- our own slice of first world internet access..! It doesn't happen by magic smoke and fairy dust people..! Telstra is the only company who gives a rat's about providing that -unprofitable- infrastructure to all of you living even just a few kilometres outside of our major population centres and that's just a sad fact of life in Australia.

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