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Comcast-Time Warner merger: CloudFlare's fare flare fair warning

Web host lifts lid on price hikes caused by 'increasing consolidation of networks'

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Distributed web host CloudFlare says its costs rise dramatically in places where telcos have little to no competition.

The company, which is hired by website owners to rapidly sling pages and other stuff at visitors, today published a report detailing its peering operations – and the deals it signs with internet connection providers around the world.

Interestingly, CloudFlare singled out Australia, where the company says it spends by far the most money to offer services to customers. While Europe carries a bandwidth cost of $5/Mbps per month on average – and the US a loosely estimated cost of $10/Mbps – CloudFlare says it has to pony up in the neighborhood of $100/Mbps just to offer services to Aussies.

The main culprit, claims CloudFlare, is the high prices charged by Australian ISP giant Telstra, which the report alleges charges far higher rates for transit services than other carriers. Telstra could not be reached for immediate comment as The Reg hit publish.

"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," said CloudFlare.

"What's interesting is that Telstra maintains their high pricing even if only delivering traffic inside the country."

The high prices, say CloudFlare, are the result of decreased competition in Australia. Without much competition in the market, Telstra does not have to worry about pricing wars with other firms and can set higher prices.

This, the company says, is an indication of how a consolidated market with a few large players will adversely impact the market as a whole.

"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," CloudFlare said.

"In regions like North America where there is increasing consolidation of networks, Australia's experience with Telstra provides a cautionary tale."

When CloudFlare mentions "increasing consolidation" in the US, we assume it's coyly referring to the proposed merger of Time Warner and Comcast.

The web biz noted there are other factors that can impact the costs carriers and service providers pay. In Europe, CloudFlare reported having lower operating costs in part to the prevalence of free peering deals in which the firm can directly connect to ISP networks rather than pay for transit services.

Similar deals have helped lower operating costs in South America, while North America makes up for low peering levels by offering cheaper prices on transit service. ®

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