I empathize with your angst over the charging issues. But the answer is in microeconomics. Those that have something that others want can charge for it. Those that want it pay. If you want to get to a network bad enough you will pay for it-one way or another. The concept of transit is not very different from what people are now referring to as settlement charges. The magic is in making your network a more desirable destination than the other guys. In many industries there are often "surrogates" for value that are used to set pricing. Per minute charges in wireless (cellular, PCS, etc.) is and example. Not all minutes are of equal economic value but for the most part you pay the same rate whether you are talking to your mother or closing a billion dollar business deal. I suspect that the ease of anointing bandwidth as a surrogate for value will make it so until someone is able to measure the economic value of an individual packet or web page hit. Until then I predict that the networks with the biggest infrastructure will be in the best position to extract peering charges. Batten the hatches, the onslaught of change is upon us. I suspect that this is the first of many economic model changes in the Internet. des Danny E. Stroud President GES Internet ---------- From: owner-nanog@merit.edu on behalf of Vadim Antonov Sent: Sunday, January 26, 1997 12:54 AM To: davec@ziplink.net; madison@queber.acsi.net Cc: nanog@merit.edu Subject: Re: peering charges? Eric D. Madison wrote:
Since some of the larger vendors (Cisco mostly) has introduced accounting features into their software settlements could start any time.
a) the accounting was there for years, so what b) a 100-byte packet travelled from provider A to provider B. Should A pay to B or vice versa? So far nobody gave any useful answer to that question. There are no settlements because traffic has little relevance to relative worth of connectivity from one provider to another. The large ISPs are generally interested in market share or peers, not in volume of mutual traffic. --vadim
On Mon, 27 Jan 1997, Danny Stroud wrote:
I empathize with your angst over the charging issues. But the answer is in microeconomics. Those that have something that others want can charge for it.
Yes, however things are more complicated than that. The Internet ecomony is particulary bizzare in that the activity of a vistor visiting a web site (the majority of Internet traffic) is not a simple zero sum economic transaction. This is because the visitor wants to visit the site and the site owner typically wants them to visit (both get value). Assume you have a network A (which only does dialup) serving 100,000 dialup customers, and network B (which only does hosting) hosting 10,000 virtual hosts. By directly peering they create new value for their respective (and different) customer bases. Unlike consumable hardgoods, you can create more of your product (external connectivity) by selectively giving it away. The selection process, amoung other things, aims to reduce lost sales by not giving peering to potential customers. Mike. ps. Some may say networks A and B are enduser networks, but most of the largest networks now offer one or both of these services directly. +------------------- 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 | +---------------------------------------------------------------------------+
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