Fine. But when pricing models get complicated I do what Pushpendra Mohta said, "follow the money." That usually clears things up and makes it easy to discern who is the seller and who is the buyer. Refer back to my original message. I have seen people buy things that I never really understood the basic motivations--- ultra expensive sports cars, for example. Have you ever heard the question, "Why do they charge so much for Italian sports cars?" Answer: Because they can. des ---------- From: Mike Leber Sent: Monday, January 27, 1997 1:28 AM To: Danny Stroud Cc: Vadim Antonov; davec@ziplink.net; madison@queber.acsi.n.et; nanog@merit.edu Subject: RE: peering charges? 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 | +---------------------------------------------------------------------------+