The basic model of data and money flows from the small ISP's perspective in Australia is this (keep in mind this represents volume charges, not rentals or other static fees).

The Internet user pays money to an ISP to get data. The ISP has to pay money to a owner of a backbone network to get that data from wherever else on the Internet it is stored.

What you should notice is that where the backbone owner gets the data from another small ISP, they don't have to pay for it. Where ISPs are providing much more data than they download, the major backbone operator in Australia, Telstra, even charges the ISP for the privilege (this is the so-called "backchannel policy").

To cut costs, the ISPs have tried to cut out the middleman.

AUSIX members can download content from each other for free, without having to resort to the costly use of a third parties backbone.

That's the theory. In practice, AUSIX does charge flat fees for its service, and you have to figure out whether you can save enough money on data charges to cover your AUSIX fees. Now, there are many extra benefits you get from AUSIX membership, as will be detailed further on, but of course you want to know whether peering is going to be worthwhile for you.

First, it must be said that there are certain types of ISPs which will not be able to justify joining AUSIX. Very small providers may not be able to afford the fees. ISPs who take all their data on a flat rate will also find it hard to find cost savings. Companies who do mainly hosting, and have very few dial-up users, will not be able to figure out a profitable arrangement if they look at it purely in terms of transit savings (there are other reasons you should join).

With that said, let's get down to the basics.

There are three types of traffic you would take from your AUSIX connection: content hosted by AUSIX members, NNTP news feeds, and shared proxy cache traffic.

The amount of content hosted by AUSIX members is very substantial - a survey of members showed that outgoing traffic from their hosted sites totals more than 35 terabytes per month. In addition, AUSIX is talking to several hosting companies and content providers, some of which host sites which are in the top ten most popular in Australia, to add their content to the AUSIX network. For the purposes of working out how much you could save, the consensus estimate on the average ratio of local to international downloaded traffic by Australian Internet users is about 30:70. Of that 30% local downloads, AUSIX would represent a small fraction, but a significant one.

News traffic is currently provided by our members, but AUSIX is also talking with several providers of multicast satellite feeds, not only for news feeds but also broadband content like streaming video. Being in close proximity on AUSIX racks to many other ISPs, our members have worked out many deals between themselves to peer the contents of their cache servers. Instead of relying on your own box, you could be connecting through AUSIX create a virtual proxy with four times the capacity of your present server. There may also be a centrally hosted AUSIX cache server in the future provided by Hitwise, which will generate revenue for connecting members.