I'm confused. Some are already charging fees to carry international traffic. Or rather, they do it indirectly, by offering packages that offer access only to their peering relationships at specific interchanges or full transit.

E.g. at work we have a customer that has 95%+ UK traffic, and one operator offered us bandwidth at about 20% our current price for a peering package that included access to pretty much all UK and most larger European ISP's, but no transit, that we could mix and match with a smaller amount of full transit. If our bandwidth needs had been larger, we'd have looked seriously into it, but as it stands, our customers UK only traffic is low enough that the cost difference isn't worth the hassle of managing our own BGP routing and an extra port.

In other words, it sounds like what these operators really want is to make this mandatory in some form, so that they won't have to deal with those pesky competitors that might undercut them and offer prices actually based on what it costs to provide the service. Many of them will also see it as a way to prevent relative strength in negotiations from deciding on peering costs.

It also means that today, when buying full transit, you _are_ paying a substantial premium for the costs your provider incurs in procuring substantial capacity for international traffic. Almost nobody forgoes paying the premium today because almost everyone _does_ have substantial international traffic, and pretty much nobody can afford not doing so. You can bet your provider does everything they can to peer with everyone who can lower their transit bill, but all but the very largest will still end up paying for transit for a fairly substantial percentage of their traffic, and that cost is of course passed on to their customers.

I ran an ISP in the mid 90's in Norway. At the time, we had "massive" international bandwidth, because we bought 512kbps full transit via Sweden. For that privilege we paid about twice what it would cost us to get a 10Mbps port at the switch at NIX (the then only Norwegian interchange) and suitable line capacity to our office. Our nearest competitor in terms of price and size had 128kbps full transit + 1Mbps to NIX (it was a mixed bag: our customers were ecstatic about the speed of international downloads - personally I remember waiting up to download the newest version of Netscape a few days after we'd upgraded from 256kbps, and had the line almost exclusively to myself and found it absolutely amazing to download at a speed I'd find shockingly slow on my home connection today... But they were annoyed at the performance for Norwegian sites, especially latency - see below).

The only reason we didn't connect immediately is that at that point, to be able to connect you needed at least one peering agreement in place first, which required you to first demonstrate a reasonable amount of traffic.

But it demonstrates the cost differences this industry operates with: If you could fill that 10Mbps with traffic via peering arrangements, your bandwidth cost would still be only twice what someone would pay for 512kbps full transit. Even worse: Those 512kbps of pure transit at the time did _not_ guarantee your provider had peering at NIX (ours didn't for the first year or two), and so you might find massive lag as your traffic went via D-GIX in Stockholm and back to Norway...

I don't know current relative prices, since I've not been directly in that market since '99, but I do know the gaps are still massive and there's probably still also money to be made in arbitrage in some locations in offering custom "bandwidth mixes" for someone who can do a good job of negotiating the right contracts given the 5-times difference I mentioned I was offered. Even more so because of a proliferation of peering points.

Effectively this is what companies that are large enough to do their own peering gets - but it is far harder to make it pay for itself if you're "only" buying in the <200-300Mbps range or so (guesstimate). We "only" do an aggregate of 45Mbps at the moment), and bandwidth makes up less of our operating costs than the personnel cost to my employer of the time I'd have to spend configuring and managing a BGP setup and peering arrangements alone, much less equipment and interconnect fees.