Why would it need to be done at the backbone?
Because edges do not have information about the topology and routing, and so cannot asses distance-sensitive charges.
Since most of this distance stuff is being calculated by IP address or ASN, why wouldn't the edge routers have SRC IP, DST IP, and "MY IP." And why couldn't a collector make any other adjustments necessary?
Distance-insensitive per-bit charging is certainly feasible and is being practiced by some ISPs (typically as "burstable" T-1 or T-3 service).
In fact, even those charges aren't likely to stand against close legal scrunity. Example of a scenario of a rationale for action against ISP X - they count received and transmitted packets on a user link. Unfortunalely, they also count packets they didn't deliver due to some packet loss in their backbone. Bingo - they charge customers for service not provided. This is fraud, pure and simple. Sorry if i gave the idea to lawyers...
A lot of people like the word fraud. I am not sure many ISP contracts guarantee delivery of packets to their final destination, but most seem to say that the burstable rate is based on how many packets enter your connection port, or "enter the ISP's backbone." Even service level agreements are generally based on link loss to the customer and not end-to-end backbone loss. Anyone who opens themselves up for loss inside a backbone is hiring the wrong set of attorneys. IMO.
Isn't it possible to have a statistically valid sampling of packets even at the highest speeds?
Good luck doing billing based on statistical sampling.
Hello, Netflow? -Deepak.