Transaction Based Settlements Encourage Waste (was Re: BBN/GTEI)

Michael Dillon michael at
Sat Aug 22 13:45:18 UTC 1998

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?

> 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 at
Check the website for my Internet World articles -        

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