Dave Rand wrote:
Assuming it does matter, in which direction does the value flow?
and Michael Dillon responds:
Here's the complex part. The value is not expressed in bits and it depends on the destination within the peer's network. I am assuming that we can map the IPv4 address space by city and that we can set some value to each intercity link. This means that a stream of bits entering a peers network in San Jose with a final destination in San Jose would be free. But if the stream of bits was destined for Santa Cruz there would be a small cost.
I don't see that you've answered his question about value flow. You're describing how to set a value on a stream of packets without answering the question of who should pay. Should we charge the sender or the receiver? Back at the 1995 APRICOT conference there was a mention of an IETF WG (likely now dissolved) which was specifically working on the settlements issue, and their answer to this question was "it depends". For every packet you have to determine a packet owner who is responsible for paying. The owner could vary per application, per site, and/or per end user. I could even imagine that responsibility for payment could be split between sender and receiver: 50/50, 90/10, choose your favorite. If I'm downloading a copy of sendmail, I'm probably the "owner" of those ftp packets because Berkeley makes sendmail available as a public service and doesn't want to pay settlement costs to reach me. If I'm downloading a product white paper, maybe I expect the company that wrote the white paper to pay transit costs to reach me because it's a marketing expense that they should absorb. If somebody is sending me spam, I want the spammer to be the owner of those SMTP packets because I'm certainly not going to pay a settlement fee so that people can spam me. Back to Dave Rand again:
Down this path lies madness.
Perhaps. On the other hand, there are already multiple Silicon Valley startups whose business models revolve entirely around metering every packet. And several well-known SF Bay area companies are already paying on a strictly metered (per Gb) basis to deliver web and ftp content to customers and potential customers. Metering in a multi-provider environment generally requires settlements.
On-net facilities have made distance-sensitive pricing in most metro areas a thing of the past. Sub $0.04 per DS0-mile long-haul rates have made long haul circuits very affordable. High speed WDM dark fiber routes will make long haul very, very cheap in the next 2 years.
This is the old "bandwidth is so cheap that it's free" argument. True, bandwidth is now inexpensive enough for a single DS0 that it's becoming counterproductive, from a marketing standpoint, for the telco to attempt to differentiate based on distance for a voice call. But if we're ever to arrive at the day when I can turn on my 100Mbps video-over-IP feed to my home PC over my FTTH connection, and expect to actually get reasonable performance, we're probably going to need both metering and inter-provider settlements. Bruce Hahne hahne@netcom.com
On Fri, 21 Aug 1998, Bruce Hahne wrote:
For every packet you have to determine a packet owner who is responsible for paying. The owner could vary per application, per site, and/or per end user. I could even imagine that responsibility for payment could be split between sender and receiver: 50/50, 90/10, choose your favorite.
If your split isn't 50/50 (in other words settlement free) I guarantee anybody with half a brain will balance out their traffic by hosting the correct type of applications so that you owe them money. Repeated from my earlier post: Transaction based settlements will have the effect of subsidizing one form or another of transactions, in this case either requesting web pages or serving web pages, and clueful providers will act accordingly to maximize revenue by hosting the appropriate applications (for example a web crawler). In fact, TRANSACTION BASED SETTLEMENTS ENCOURAGE WASTE to the point where it should be obvious to the casual observer that anybody reasonably informed would never suggest them. The factors that are the cause of the inherent problem with transactions based settlements are: 1) Either party can end up paying. 2) Transactions are generated by machines. 3) Machines can generate transactions which are either positive flow or negative flow. (web servers vs web crawlers as two simplistic examples). Oh, and before anybody comes up with a simplistic (and flawed) rebuttal such as banning the large web crawlers from settlements, there are plenty of other legitimate automated methods of getting flows in either direction. Mike. +------------------- H U R R I C A N E - E L E C T R I C -------------------+ | Mike Leber Direct Internet Connections Voice 408 282 1540 | | Hurricane Electric Web Hosting & Co-location Fax 408 971 3340 | | mleber@he.net http://www.he.net | +---------------------------------------------------------------------------+
On Sat, 22 Aug 1998, Mike Leber wrote:
If your split isn't 50/50 (in other words settlement free) I guarantee anybody with half a brain will balance out their traffic by hosting the correct type of applications so that you owe them money.
Of course if everybody does this, then the traffic will balance out. Seems to be a good thing to create the incentive, no?
In fact, TRANSACTION BASED SETTLEMENTS ENCOURAGE WASTE to the point where it should be obvious to the casual observer that anybody reasonably informed would never suggest them.
Then I must be unreasonably informed because I think that some form of exchanging money to even out imbalances would give providers more choice.
The factors that are the cause of the inherent problem with transactions based settlements are:
1) Either party can end up paying. 2) Transactions are generated by machines. 3) Machines can generate transactions which are either positive flow or negative flow. (web servers vs web crawlers as two simplistic examples).
OK. So now you've convinced us that network traffic shres a number of characteristics with electric power distribution. Yet the power companies seem to manage quite well with settlements. I wouldn't want to slavishly imitate their system any more than I want to slavishly imitate the long distance telcos. But these things can be made to work.
Oh, and before anybody comes up with a simplistic (and flawed) rebuttal such as banning the large web crawlers from settlements, there are plenty of other legitimate automated methods of getting flows in either direction.
They aren't legitimate if the sole purpose of the method is to create traffic; that would be fraud. A webcrawler would be fine if it was for a search engine but not if you just ran it and discarded the data. -- Michael Dillon - Internet & ISP Consulting Memra Communications Inc. - E-mail: michael@memra.com Check the website for my Internet World articles - http://www.memra.com
On Sat, 22 Aug 1998, Michael Dillon wrote:
On Sat, 22 Aug 1998, Mike Leber wrote:
If your split isn't 50/50 (in other words settlement free) I guarantee anybody with half a brain will balance out their traffic by hosting the correct type of applications so that you owe them money.
Of course if everybody does this, then the traffic will balance out. Seems to be a good thing to create the incentive, no?
The point is that anybody interested in making money would make sure that traffic didn't just balance out, they would develop a business plan where they maximized revenue from settlements where possible.
In fact, TRANSACTION BASED SETTLEMENTS ENCOURAGE WASTE to the point where it should be obvious to the casual observer that anybody reasonably informed would never suggest them.
Then I must be unreasonably informed because I think that some form of exchanging money to even out imbalances would give providers more choice.
Ok, so that was gratuitous. Let me put it this way, transaction based settlements encourage creative minded people to go out and create businesses based on this new revenue source you have created. Ultimately, traffic would be generated for traffic's sake, and this would be waste. Evening out imbalances isn't what would happen. Businesses don't exist to even out their profit and loss statement. Understand, for the sake of argument I'm not saying that anybody would necessarily generate traffic destined for the bit bucket, I am saying you incentivize bad behavior with transaction based settlements. See examples below.
They aren't legitimate if the sole purpose of the method is to create traffic; that would be fraud. A webcrawler would be fine if it was for a search engine but not if you just ran it and discarded the data.
Ok, so how about if you have a big dialup pool, or a R&D department is developing a new type of web index, or somebody is studying word frequency occurance of written english in web pages, or any one of half a dozen other perfectly legitimate uses that suck traffic instead of pulling traffic (and these two are just what I thought of in the second when I got to the period in your sentence, I could come up with hundreds much better uses based on what people are already doing as legitimate businesses online). Ok, now think about what happens if a provider earns revenue from any of these applicatons. Instead of charging for the bandwidth a provider could actually pay the users that generate this type of traffic. Ok, now see how easy it would be to attract legitimate users. People would run ads to the effect of "Are you a dialup provider? We'll pay you to get an OC3 from us!" Or "Are you a web crawler? We'll pay you to host with us?" Or any one of several other examples... Michael, I've met and talked with you several times and have the general impression you're a relatively creative guy. I find it hard to believe that you are myopic to the extent of not being able to imagine these and other uses... unless the actual goal of your proposal is to have dialup providers and web crawlers get paid for existing. At first glance that might be your impression as to what happens. However, can't you see how this type of settlement encourages web crawlers to generate more traffic. Again, as just one of hundreds of ideas, imagine that a web crawler house has the choice of updating their database once every 30 days or once every 15 days. Now imagine they make the decision about this in light of the fact they get paid for additional traffic. So now they have an incentive to update their database more frequently. Wow, what a great service for the customer! And as a kicker, they make more money from settlements! And web crawlers are just one application, and not the only one that sucks traffic from web servers. And I can think of many more perfectly valid uses for other protocols. Again, if you use your imagination, you can create a legitimate business based on currently existing online businesses and get the desired traffic flows. Ultimately, in all of these cases less efficient algorithms and uses will be chosen in the direction that results in positive revenue, and waste will occur. Mike. +------------------- H U R R I C A N E - E L E C T R I C -------------------+ | Mike Leber Direct Internet Connections Voice 408 282 1540 | | Hurricane Electric Web Hosting & Co-location Fax 408 971 3340 | | mleber@he.net http://www.he.net | +---------------------------------------------------------------------------+
On Sat, 22 Aug 1998, Mike Leber wrote:
Ok, now see how easy it would be to attract legitimate users. People would run ads to the effect of "Are you a dialup provider? We'll pay you to get an OC3 from us!" Or "Are you a web crawler? We'll pay you to host with us?" Or any one of several other examples...
In fact, this already happens with telco termination charges. For example, there are CLECs that call up dialup ISPs and offer free PRIs. They plan to make more on termination charges than they could possibly get from the ISPs in a competitive environment. Aside from the fact that they don't have copper in the ground, this is the reason CLECs don't want residential customers, since they would be the ones paying termination fees on originated calls. When enough CLECs are concentrating on businesses that only have incoming calls (ISPs, tech support centers, 900-style services, etc), Bell will scream to the FCC that termination charges need to be reevaluated. With this approach, eventually *no one* will want customers that make lots of outbound calls -- let the other providers have them and then collect the money when they call your customers. The point is it is an unstable environment. Unlike capitalism where our innate greedy nature serves to balance the system, in this case the greedy nature serves to unbalance the system by promoting inefficient use of resources. John Tamplin Traveller Information Services jat@Traveller.COM 2104 West Ferry Way 256/705-7007 - FAX 256/705-7100 Huntsville, AL 35801
Mike Leber writes:
The point is that anybody interested in making money would make sure that traffic didn't just balance out, they would develop a business plan where they maximized revenue from settlements where possible.
Already being looked into and implemented.
Ok, so how about if you have a big dialup pool, or a R&D department is developing a new type of web index, or somebody is studying word frequency occurance of written english in web pages, or any one of half a dozen other perfectly legitimate uses that suck traffic instead of pulling traffic (and these two are just what I thought of in the second when I got to the period in your sentence, I could come up with hundreds much better uses based on what people are already doing as legitimate businesses online).
Bothered to see how backwards Australia does it?
Ok, now think about what happens if a provider earns revenue from any of these applicatons. Instead of charging for the bandwidth a provider could actually pay the users that generate this type of traffic.
Bothered to see how backwards Australia does it?
At first glance that might be your impression as to what happens. However, can't you see how this type of settlement encourages web crawlers to generate more traffic.
Bothered to see how backwards Australia does it?
Again, as just one of hundreds of ideas, imagine that a web crawler house has the choice of updating their database once every 30 days or once every 15 days. Now imagine they make the decision about this in light of the fact they get paid for additional traffic. So now they have an incentive to update their database more frequently. Wow, what a great service for the customer! And as a kicker, they make more money from settlements!
Huh?
And web crawlers are just one application, and not the only one that sucks traffic from web servers. And I can think of many more perfectly valid uses for other protocols. Again, if you use your imagination, you can create a legitimate business based on currently existing online businesses and get the desired traffic flows.
Ultimately, in all of these cases less efficient algorithms and uses will be chosen in the direction that results in positive revenue, and waste will occur.
Okay.. lets just run through this again. If you supply content, you lose. If you accept content, then you WIN from a settlement-based peering arrangement? Wow. I must be really backwards. Because, I would have thought that you'd pay for services that you receive. If I'm a dialup NSP *ONLY* then I can pretty much guarantee my traffic will be asymetrical, and that I will be sucking lots and lots of traffic compared to what I push. If I'm a web hosting company, then I can pretty much guarantee my traffic will be asymetrical, and that I will be pushing out more traffic than I pull. Now, who should pay for what in today's internet? An internet which is based on content provisioning? In Australia, if you're a client of Telstra Internet, you pay 19c/meg in pretty much all cases. You get a small discount on your traffic bill which is dependant on what traffic you SUPPLY to their network, but thats the whole point about "purchasing transit". If you're a settled peer with a network, then you pay the network you pull traffic off x c/meg, and they pay you x c/meg for traffic they pull off you. If your traffic flows are symetrical, then you both win. If they're not, well the network which pulls the most traffic pays up. It works in Australia. Hell, even with our heavily inflated pipes compared to you guys. And you are all bickering over this when if you DID this your interconnect fee per megabyte in a settlement based peering arrangement WITH the source network transiting the traffic to the 'local' point of the receiving network would be way below < 0.01c/meg . I might be naive, but if there are any other technical issues with what I've suggested then please, point them out in a nice, clear fashion :-) So if you're a web crawler generating lots of incoming traffic (because thats what a webcrawler does, doesn't it? downloads pages for analysis?) then it would PAY for the traffic IT uses. Not BE paid for the traffic it uses. Only when this webcrawler database is put on line and it starts to supply lots and lots of content will people want to peer with it, and it would win in settled peering. Adrian, finding it mildly entertaining that AU is screaming for a more US-like internet setup, and how the US seem to be after what AU have already been and done.
On Sun, 23 Aug 1998, Adrian Chadd wrote:
Again, as just one of hundreds of ideas, imagine that a web crawler house has the choice of updating their database once every 30 days or once every 15 days. Now imagine they make the decision about this in light of the fact they get paid for additional traffic. So now they have an incentive to update their database more frequently. Wow, what a great service for the customer! And as a kicker, they make more money from settlements!
Huh?
Updating more often == legitimate use and more suck traffic. Extended to the extreme: imagine how much sucking traffic they can generate if they wanted to update the database index entries for all 100 million (for example) web sites they index every day. Users would be happy because they would be using a very fresh index. Again, this is just one of many ways to conveniently generate this much sucking traffic.
If they're not, well the network which pulls the most traffic pays up.
The examples provided were counter points to Michael Dillion's transaction based settlement proposal where sucking networks earn money. In the opposite direction, if I am interpreting your proposal correctly, where pushing networks earn money, there are plenty of methods of legitimately GENERATING additional traffic. For example, you could PAY your web hosting clients based on the amount of traffic they generated. This one reversal alone would generate a huge increase. They would have an incentive to use large graphics, more graphics per page, video, sound, continously updating pages, ad nauseum... (Plenty more legitimate ideas where these came from.) Transaction based settlements presume an inbalance in the value of a transaction. There are plenty of ways to generate legitimate traffic in either direction (suck or push) in any amount desired (facilitated in some cases by paying the clients that generate it legitimately). So traffic can be adjusted in the direction of positive revenue depending on the polarity of a particular transaction based settlement scheme. Incentivizing the generation of traffic for traffic's sake results in waste. Mike. +------------------- H U R R I C A N E - E L E C T R I C -------------------+ | Mike Leber Direct Internet Connections Voice 408 282 1540 | | Hurricane Electric Web Hosting & Co-location Fax 408 971 3340 | | mleber@he.net http://www.he.net | +---------------------------------------------------------------------------+
Mike Leber writes:
Updating more often == legitimate use and more suck traffic. Extended to the extreme: imagine how much sucking traffic they can generate if they wanted to update the database index entries for all 100 million (for example) web sites they index every day. Users would be happy because they would be using a very fresh index. Again, this is just one of many ways to conveniently generate this much sucking traffic.
Which is okay - they're paying for it.
In the opposite direction, if I am interpreting your proposal correctly, where pushing networks earn money, there are plenty of methods of legitimately GENERATING additional traffic. For example, you could PAY your web hosting clients based on the amount of traffic they generated. This one reversal alone would generate a huge increase. They would have an incentive to use large graphics, more graphics per page, video, sound, continously updating pages, ad nauseum... (Plenty more legitimate ideas where these came from.)
Err. How is this *ANY* different to whats already happening? There's an already established and well-tried way around this if you're worried - the use of web caches. We've been using them for quite some time over here in Australia, because of the cost of traffic from the US (where a large part of the end userbase wants traffic from..) Its not a perfect solution but its working quite nicely here..
Transaction based settlements presume an inbalance in the value of a transaction.
Transactions on the internet don't provide their value. The flow of information does.
There are plenty of ways to generate legitimate traffic in either direction (suck or push) in any amount desired (facilitated in some cases by paying the clients that generate it legitimately).
Which is what is already happening in some places.
So traffic can be adjusted in the direction of positive revenue depending on the polarity of a particular transaction based settlement scheme.
Incentivizing the generation of traffic for traffic's sake results in waste.
If you want to put a value on 'transactions', then how would you treat a website that has 30 gifs on it? You'd have to monitor the gif's size as well as the number of 'transactions'... Oh wait. You have http 1.1 . Its all inside the same stream.. so now you have to not only monitor the TCP connections, but you have to snoop inside each stream. Mike, what you have said with regards to websites has been happening over the past couple of years. People want the latest and greatest looks, and the traffic flows will increase. Sure, that means more revenue in for the content 'provision', but if end-users pay for what they use in traffic.. Adrian
On Sun, 23 Aug 1998, Adrian Chadd wrote:
Updating more often == legitimate use and more suck traffic. Extended to the extreme: imagine how much sucking traffic they can generate if they wanted to update the database index entries for all 100 million (for example) web sites they index every day. Users would be happy because they would be using a very fresh index. Again, this is just one of many ways to conveniently generate this much sucking traffic.
Which is okay - they're paying for it.
Under Dillion's original proposal: No, they are earning money. This was original mentiond in response to Dillion's proposal and just clarified in response to your "Huh?". Under the current system of settlement free peering: Yes, networks shoulder their internal costs to carry this traffic. Under your system: Yes, they pay settlement fees AND their internal costs.
In the opposite direction, if I am interpreting your proposal correctly, where pushing networks earn money, there are plenty of methods of legitimately GENERATING additional traffic. For example, you could PAY your web hosting clients based on the amount of traffic they generated. This one reversal alone would generate a huge increase. They would have an incentive to use large graphics, more graphics per page, video, sound, continously updating pages, ad nauseum... (Plenty more legitimate ideas where these came from.)
Err. How is this *ANY* different to whats already happening?
Under the current system: Networks shoulder their interal cost to carry this traffic. No revenue is generated from settlements. Web traffic costs money to carry. Web hosting companies charge customers for traffic. Customers are incentivized to be efficient. Under your proposed system: Networks shoulder their internal costs to carry and EARN money from settlements. This makes web traffic cheaper to push. In the conservative analysis; this simply encourages more data per page by lowering the cost. In the final analysis; if the cost to carry can be made lower than the settlement earnings it allows hosting companies to pay customers for traffic. Customers are incentivized to generate as much data as possible. Night and day.
There's an already established and well-tried way around this if you're worried - the use of web caches.
Under your system hosting companies would have an incentive to try to avoid the caching of their pages. One simple method to do this is the current vogue trend towards site customization per user. Each user would get a custom web page at their favorite news site based upon their preferences... Presto! More revenue. Networks would EARN money by pushing traffic. This is just another example of why transaction based settlements encourage waste.
Its not a perfect solution but its working quite nicely here..
That is because you are not pushing more traffic than you are sucking and the dominant networks are perfectly happy with a system under which you pay them (uh, *duh*). Or perhaps you do push more traffic, but due to whatever magic billing calculation you are referring to, even though you puport their system pays you for traffic, somehow you still come out owing them more money. In that case, you aren't really talking about settlements for peer networks.
Mike, what you have said with regards to websites has been happening over the past couple of years. People want the latest and greatest looks, and the traffic flows will increase. Sure, that means more revenue in for the content 'provision', but if end-users pay for what they use in traffic..
Currently, web sites are not PAID for traffic. Under your proposed system they could be. Diametrically opposite effect. Encourages waste. ;) Mike. +------------------- H U R R I C A N E - E L E C T R I C -------------------+ | Mike Leber Direct Internet Connections Voice 408 282 1540 | | Hurricane Electric Web Hosting & Co-location Fax 408 971 3340 | | mleber@he.net http://www.he.net | +---------------------------------------------------------------------------+
On Sat, 22 Aug 1998, Mike Leber wrote:
Michael, I've met and talked with you several times and have the general impression you're a relatively creative guy.
*blushes*
I find it hard to believe that you are myopic to the extent of not being able to imagine these and other uses... unless the actual goal of your proposal is to have dialup providers and web crawlers get paid for existing.
Well, I can imagine them but I can also imagine solutions to them. For instance, rate-limiting can be applied on either side of the peering interface. And if both peers try to attract legitimate sucking users then chances are that both peers will get some of them and the traffic flows will even out somewhat. Also, if it does not make economic sense for peer A to have an interconnect with peer B in a specific city, then they won't do it. This greatly reduces the incentive for peer B to sign up customers to suck from A because all of a sudden, those customers will either lose connectivity or that traffic load will suddenly shift to peer C who sells transit to peer A. I think that most companies will think through these issues before acting rather than just taking the simplistic view that it is good to suck huge amounts of traffic from a peer. Also, this is an entirely hypothetical scenario so the actual implementation could differ considerably. Consider the fact that in order to make this work, both peers need to supply a settlement arbiter with a full city-to-city link map with route-miles and with a price list to determine the value of transit consumed. We could just as easily say that if the traffic is out of balance by a ratio of more than 2:1 then we will examine the transit consumed on both peer's networks based on the maps and the source/destination addresses. Then those numbers will be balanced against one another and the peer who uses more transit than they contribute will pay a settlement fee. Now it becomes a lot harder to sign up legitimate sucking customers that you know will create a settlement imbalance.
Ultimately, in all of these cases less efficient algorithms and uses will be chosen in the direction that results in positive revenue, and waste will occur.
I don't think that the future is as deterministic as you believe it would be. For instance, what if you sign up a webcrawler, and then once they have a good database, they host a search engine for multimedia content with thumbnail pictures, video and audio clips. All of a sudden they become a net sender of traffic. You can't control what your customers do with their net connections. -- Michael Dillon - Internet & ISP Consulting Memra Communications Inc. - E-mail: michael@memra.com Check the website for my Internet World articles - http://www.memra.com
On Fri, 21 Aug 1998, Bruce Hahne wrote:
I don't see that you've answered his question about value flow. You're describing how to set a value on a stream of packets without answering the question of who should pay. Should we charge the sender or the receiver?
Neither. We charge the peer whose traffic is incoming and who uses our transit resources, a.k.a. intercity links. The peer always has control over the traffic because they can route it differently if they choose or build network infrastructure to avoid excessive use of the other company's intercity links. We don't care about the peer's customers at all and have no idea what is in the data packets. They are just bitstreams flowing in both directions.
Back at the 1995 APRICOT conference there was a mention of an IETF WG (likely now dissolved) which was specifically working on the settlements issue, and their answer to this question was "it depends". For every packet you have to determine a packet owner who is responsible for paying. The owner could vary per application, per site, and/or per end user.
Much, much too complex. If the packet comes into my network, I note which peer it came from, what is it's destination address and how many bytes in the packet. At my leisure, I count the bytes and compare with outgoing bytes. If it exceeds a predetermined ratio of free balanced peering, I apply a selection algorithm to look at destination addresses and byte counts and calculate a transit value. This is what I bill. Of course, in the real world the collection of data and the billing would be audited or even performed by a 3rd party settlements council.
If I'm downloading a copy of sendmail, I'm probably the "owner" of those ftp packets
I don't care about you; you're just a customer. The peering relationship is strictly between the two backbone providers. -- Michael Dillon - Internet & ISP Consulting Memra Communications Inc. - E-mail: michael@memra.com Check the website for my Internet World articles - http://www.memra.com
participants (5)
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Adrian Chadd -
Bruce Hahne -
John A. Tamplin -
Michael Dillon -
Mike Leber