peering charges?

Danny Stroud dannystroud at
Mon Jan 27 06:51:11 UTC 1997

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
GES Internet

From:  owner-nanog at on behalf of Vadim Antonov
Sent:  Sunday, January 26, 1997 12:54 AM
To:  davec at; madison at
Cc:  nanog at
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 


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