SFI/SBI/Transit - Dumping
Hello all! I'm going a bit deeper into the study of Peering Relationships... And one of the possibilities that I'm trying to understand better on the Peering Relationships on the Internet been considered dumping(economy). The matter here is more on the economic and commercial aspects than on the technical side. On the scope of Internet Peering Interconnections(Transit, Settlement Free, Settlement Based.): - There are any public papers, or even judicial processes, about situations that the possibility of Dumping(economic) was supposed? Independently if de dumping argument was accepted or not. - Does any colleague could remember some memorable case about that? - How does it affect the Big-Traffic-Guys (OTTs, Hosting/Colo/Cloud Datacenters, CDNs) and their routing policy on PNI/MPLA, SFI/SBI? -- Douglas Fernando Fischer Engº de Controle e Automação
Can you explain to us amoeba-like salesmen what is dumping? I assume it involves highly unbalanced traffic flows. -R. ________________________________ From: NANOG <nanog-bounces+rod.beck=unitedcablecompany.com@nanog.org> on behalf of Douglas Fischer <fischerdouglas@gmail.com> Sent: Monday, March 15, 2021 7:33 PM To: NANOG <nanog@nanog.org> Subject: SFI/SBI/Transit - Dumping Hello all! I'm going a bit deeper into the study of Peering Relationships... And one of the possibilities that I'm trying to understand better on the Peering Relationships on the Internet been considered dumping(economy). The matter here is more on the economic and commercial aspects than on the technical side. On the scope of Internet Peering Interconnections(Transit, Settlement Free, Settlement Based.): - There are any public papers, or even judicial processes, about situations that the possibility of Dumping(economic) was supposed? Independently if de dumping argument was accepted or not. - Does any colleague could remember some memorable case about that? - How does it affect the Big-Traffic-Guys (OTTs, Hosting/Colo/Cloud Datacenters, CDNs) and their routing policy on PNI/MPLA, SFI/SBI? -- Douglas Fernando Fischer Engº de Controle e Automação
https://en.wikipedia.org/wiki/Dumping_(pricing_policy) On Mon, 2021-03-15 at 18:40 +0000, Rod Beck wrote:
Can you explain to us amoeba-like salesmen what is dumping? I assume it involves highly unbalanced traffic flows.
-R.
On Mon, Mar 15, 2021 at 11:35 AM Douglas Fischer <fischerdouglas@gmail.com> wrote:
I'm going a bit deeper into the study of Peering Relationships... And one of the possibilities that I'm trying to understand better on the Peering Relationships on the Internet been considered dumping(economy).
The matter here is more on the economic and commercial aspects than on the technical side.
Hi Douglas, I'm not aware of any examples of Dumping (in the economics sense) involving backbone BGP peering. Usually the problem is collusive exclusion. If you want to cast a wider net, Erols Internet of the 1990s offers an interesting case study in driving competition out with extended below-cost pricing. But this was dialup and DSL service, not backbone peering. Regards, Bill Herrin -- William Herrin bill@herrin.us https://bill.herrin.us/
I was an Erols customer during that time. What's the story? ________________________________ From: NANOG <nanog-bounces+rod.beck=unitedcablecompany.com@nanog.org> on behalf of William Herrin <bill@herrin.us> Sent: Tuesday, March 16, 2021 1:01 AM To: Douglas Fischer <fischerdouglas@gmail.com> Cc: NANOG <nanog@nanog.org> Subject: Re: SFI/SBI/Transit - Dumping On Mon, Mar 15, 2021 at 11:35 AM Douglas Fischer <fischerdouglas@gmail.com> wrote:
I'm going a bit deeper into the study of Peering Relationships... And one of the possibilities that I'm trying to understand better on the Peering Relationships on the Internet been considered dumping(economy).
The matter here is more on the economic and commercial aspects than on the technical side.
Hi Douglas, I'm not aware of any examples of Dumping (in the economics sense) involving backbone BGP peering. Usually the problem is collusive exclusion. If you want to cast a wider net, Erols Internet of the 1990s offers an interesting case study in driving competition out with extended below-cost pricing. But this was dialup and DSL service, not backbone peering. Regards, Bill Herrin -- William Herrin bill@herrin.us https://bill.herrin.us/
There is no specific story on the focus. My objective is to go a bit beyond the technical aspects of Peering, or De-peering. At the first moment, I don't mention some cases that I have in mind, exactly to avoid the polemic and focus on the aspects around the cases. I will give a hypothetic example, with no real names: --- 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? If anyone feels more comfortable reaching me privately, no issues with that. Em ter., 16 de mar. de 2021 às 03:33, Rod Beck < rod.beck@unitedcablecompany.com> escreveu:
I was an Erols customer during that time. What's the story?
------------------------------ *From:* NANOG <nanog-bounces+rod.beck=unitedcablecompany.com@nanog.org> on behalf of William Herrin <bill@herrin.us> *Sent:* Tuesday, March 16, 2021 1:01 AM *To:* Douglas Fischer <fischerdouglas@gmail.com> *Cc:* NANOG <nanog@nanog.org> *Subject:* Re: SFI/SBI/Transit - Dumping
I'm going a bit deeper into the study of Peering Relationships... And one of the possibilities that I'm trying to understand better on the Peering Relationships on the Internet been considered dumping(economy).
The matter here is more on the economic and commercial aspects than on
On Mon, Mar 15, 2021 at 11:35 AM Douglas Fischer <fischerdouglas@gmail.com> wrote: the technical side.
Hi Douglas,
I'm not aware of any examples of Dumping (in the economics sense) involving backbone BGP peering. Usually the problem is collusive exclusion.
If you want to cast a wider net, Erols Internet of the 1990s offers an interesting case study in driving competition out with extended below-cost pricing. But this was dialup and DSL service, not backbone peering.
Regards, Bill Herrin
-- William Herrin bill@herrin.us https://bill.herrin.us/
-- Douglas Fernando Fischer Engº de Controle e Automação
* fischerdouglas@gmail.com (Douglas Fischer) [Tue 16 Mar 2021, 11:32 CET]:
And then?? Can this be considered an anti-competitive act?
I think you're asking this on the wrong list. We're network operators, not lawyers with a specialisation in competitive markets regulation. -- Niels.
On 3/16/21 13:18, Niels Bakker wrote:
I think you're asking this on the wrong list. We're network operators, not lawyers with a specialisation in competitive markets regulation.
Well, yes and no... No, we aren't lawyers, but yes in that there is some merit to the question from a network operator standpoint. Sure, the CDN operator wants to deploy their node with as little cost to them as possible, particularly if the target country does not move the traffic and $$ needles for the CDN operator, i.e., they want to de-risk their investment as much as possible, hopefully until traffic and revenue picks up from that specific market. Getting a local ISP to shoulder that responsibility, likely disguised as "content is king, so you benefit" would not be unusual. It all comes down to how desperate the local market is for the content, and how far they are willing to negotiate in or against their favour. Mark.
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/
On Tue, Mar 16, 2021 at 3:33 AM Douglas Fischer <fischerdouglas@gmail.com> wrote:
There is no specific story on the focus. My objective is to go a bit beyond the technical aspects of Peering, or De-peering.
At the first moment, I don't mention some cases that I have in mind, exactly to avoid the polemic and focus on the aspects around the cases.
I will give a hypothetic example, with no real names:
--- 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?
If anyone feels more comfortable reaching me privately, no issues with that.
From the content-provider side, such demands (ie, drain all traffic away from IXPs and other SFI PNIs) might last a short time, if RSN (RumpleStiltskinNet) undercuts the pricing so low on their connectivity
Hi Douglas, I've been involved in negotiations with country-level providers that engaged in negotiation tactics like that. that it makes sense to move all the traffic over, or bundles in other products (power, space, remote management, etc.) so that the overall package price is lower than it would be if the IXP and SFI PNIs were maintained. However, such relationships tend to fall apart the first time RSN has a large-scale outage that negatively impacts the CDN and all its content customers, at which point the negotiation table is usually re-opened, and the CDN says "in order to protect our customers from your ineptitude, we require alternate pathways for the content to be served in your region" -- and the exclusive arrangement goes away. The simple fact of the matter is that in general, agreeing to single-home your content behind a single provider results in reduced availability for the content, as a single provider has less redundancy and less diversity than a blend of multiple providers, whether paid or settlement free. And once a major outage happens that threatens the top-line revenue numbers for the CDN, saving money on the bottom line suddenly becomes much less important than preserving the top-line revenue number. There's a finite and limited benefit RSN can offer by reducing cost numbers; but there's a potentially *unlimited* upside risk. That is, RSN can't reduce your cost numbers from what they are today to less than zero; so there's a maximum benefit they can offer. But if they have a bad week, and you go dark, and lose all your customers, you could lose all your revenue--and there's no limit on how much you could lose on that end, as your customer base and revenue numbers go up. Thus, on balance, such agreements don't last, as either the CDN goes out of business, and the agreement thus ends, or the CDN becomes more successful, and the top-line revenue dollar value risk outweighs the offered cost-reduction saving benefit RSN is bringing to the table, and the agreement is thus terminated. I hope this helps clear up the situation for you. :) Thanks! Matt
participants (7)
-
Douglas Fischer -
Mark Tinka -
Matthew Petach -
Niels Bakker -
Nuno Vieira -
Rod Beck -
William Herrin