On Tue, Mar 16, 2021 at 3:30 AM Douglas Fischer <fischerdouglas@gmail.com> wrote:
--- The "SteveAndEdNet", a CDN Company, decides to extend its branchs until "Kingdom of Far Far Away", and creates a POP there. Installs itself on "DorisInnDatacenter", connects with some IXPs over there, connects some PNIs with some nobles. But, after some time, "SteveAndEdNet" make a deal with "RumpelstiltkinNet" a Transit provider that operates there.
On that deal "RumpelstiltkinNet" ensure to supply the traffic demanded to "SteveAndEdNet" POP to be considered technical justifiable... But it also demands, that "SteveAndEdNet" drain all the traffic to IXPs and PNIs... With that, "RumpelstiltkinNet" can be the only one reseller of the content delivered by "SteveAndEdNet". --- This is a foggy example that I'm trying to understand better by the point of view of Economics Dumping.
And then?? Can this be considered an anti-competitive act?
Hi Douglas, The words you're using here are very strange but I think you may be trying to ask if "settlement free peering" can be anticompetitive. Yes, it can, but from the way you talk about it I think your understanding of when and how is probably upside down. It has little or nothing to do with dumping or other forms of cross-subsidy. Let's start with some terminology. "Settlement free peering" is business practice in which two organizations place routers physically next to each other* and trade network packets which are sourced from one of the organization's users and destined to the other organization's users. This differs from a normal business relationship between Internet companies in several important respects. 1. Both organizations pay their own direct costs to place their routers next to each other. 2. Neither organization pays the other any money. They do not "settle up" with each other depending on the packets transmitted, hence the packet trade is free of any settlement settlement process. 3. Only packets which are from one organization and to the other are transmitted via the connection. Unlike a normal "transit" relationship, the settlement free peering connection links neither organization to the Internet at large. Rather it connects them only to each other. The idea is that directly connecting both reduces cost for both parties and improves the customer's experience by providing faster data transmission between the parties. Organizations which engage in settlement free peering generally have a "peering policy." This policy describes the circumstances in which they seek to or are willing to establish settlement free peering with other organizations. Their peering policy is said to be "open" or "closed" depending on the manner in which they select their peers. An "open peering policy" is one in which, within reason, an organization agrees to engage in settlement free peering with every other organization which asks to do so. The two organizations either place routers in a mutually agreeable location or the asking party places a router somewhere that the asked party is already present. A "closed peering policy" is one in which the organization is very selective about who they will establish settlement free peering with. Even if the other organization is willing to place a router next to theirs, they will only trade packets for free if the other organization has specific business characteristics which meet with their approval. Finally, "paid peering" is exactly like settlement free peering except that one organization pays the other for the connection. As you can probably guess from the terminology, it's practically impossible for an organization with an open peering policy to drive anticompetitive behavior with settlement free peering. The same business relationship is open to all seekers; they have but to ask. The question gets more interesting where one or both have a closed peering policy and offer paid peering to organizations who do not qualify for settlement free peering. Now, moving on from fact to opinion, closed peering policies can be and often are anticompetitive. The peering policies typically have two components: high data rates (exclude anyone who isn't already an industry titan) and comparable bytes in and out (make content providers who send more than they receive, like Netflix, pay us). While industry leaders don't negotiate the list of folks they will and won't peer with, they nevertheless all pretty much arrive at the same list. Anyway, hopefully this information is helpful to you. * The routers don't necessarily have to be physically right next to each other but that case is easiest to understand and the variants where they aren't are functionally identical. On a related note, it's been my experience that while cross-subsidy exists in the Internet transit industry, it's not one of the critical sources of anticompetitive behavior. The two primary sources are things like the subtle collusion involved in closed peering policies and product tying where many valuable services like a wavelength on a last-mile PONS line cannot be purchased independently of the Internet service lighting that line. Regards, Bill Herrin -- William Herrin bill@herrin.us https://bill.herrin.us/