Good on him. I had a New Zealander friend explain to me that residential bandwidth gets metered into two categories: local to New Zealand (cheap or even free) and any data that comes from overseas, which I find a complete ripoff.
Here in Portugal we used to have three tiers (international, national and intra-ISP, the latter of which was unlimited) and what happen in that some developers forked Emule to give it per-ISP and national filters, which you could configure independently.
It was very useful even for legal but bigger content, like game demos or patches - a single person would download it from abroad and then share it locally. A single cap would be much worse for everyone.
Apparently Telecom could do this but it would require a court order or major political pressure. If this were happening now you'd see a lot more innovation in the digital space, and the experience of using the internet in NZ, in terms of streaming media etc. Netflix for example declined to startup business in NZ because of these problems. http://www.stuff.co.nz/technology/digital-living/6045189/NZ-...
I don't know where you got the idea that all traffic goes out of the country and back in again. That is just false.
I hope so! It's what I was told, and of course it would make no sense. I'll have to ask them to show me some hop reports. Good to hear that there is national traffic for data centres however.