THE National Telecommunications Commission (NTC) has started formulating rules on Internet protocol (IP) peering, which is similar to interconnection among phone companies, except that this applies to the Internet space.

“We have to encourage firms to set up IP peering in the Philippines so consumers can realize lower access costs,” NTC Director Edgardo Cabarios said.

IP peering is similar to interconnection among local telcos for calls and texts, as it involves connecting subscribers and applications of one Internet service provider (ISP) to another.

Without this policy, IP traffic takes longer to route as data are sometimes sent overseas before reaching their target destination. For customers, this may result in sluggish response time and lower service quality. And for ISPs, it is a waste of international capacity and resources when the transmission should be direct and not routed outward, especially when both the origin and destination are located in the Philippines.

The circuitous data routing also means added costs as the peering partner can charge a fee for transmitting the data.

“Only 3 percent of IP traffic is processed within the country and 97 percent are still being accessed from outside,” added Cabarios.

Globe Telecom Inc. is pushing for the establishment of an IP peering policy, saying domestic IP peering can be free of charge, as data need not be pushed out of the country. In the same way, landline calls made within the same calling area are free calls that are covered by the monthly service fee. Globe said peering costs for domestic data transmission could be offered free to help reduce Internet access rates.

“As Internet penetration grows, we must continue to improve the way we serve customers by providing them with faster and better Internet experience. The absence of a domestic IP peering policy today stifles healthy competition as subscribers of an ISP will experience unsatisfactory interlinking with another ISP if the latter refuses to leverage efficient domestic IP peering,” the company said in a statement issued earlier.

To date, Globe said it has been able to establish IP peering with other telcos and ISPs with sufficient bandwidth, but rival Philippine Long Distance Telephone Co. (PLDT) has refused to allow connection upgrades.

“The market power that PLDT wields now, and more so post consolidation with Digitel, potentially stands to further embolden the incumbent to perpetuate data-traffic routing contrary to efficient domestic IP peering practice,” Globe said.