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

Owen DeLong owen at DeLong.SJ.CA.US
Sat Aug 22 19:15:57 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.
No, I think your just missing his point, whether deliberately or not...

The point was that althoug the traffic flows would appear balanced, they would
be artificially balanced by wasteful automatons asking for or delivering
traffic with no benefit just for the sake of consuming bandwidth in the opposite
direction in order to balance assymetry.

> > 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.
There's a difference.  Power is inherently a one-way flow, and whichever way
it is flowing obviously has a TO is purchasing from FROM value system built
in.  This is not inherently true in IP traffic, and so the model doesn't work
as well.

> > 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.
It's not fraud if you create real traffic.  It's only fraud if you claim
traffic that didn't exist.  Reread the legal definition of fraud.

> --
> Michael Dillon                 -               Internet & ISP Consulting
> Memra Communications Inc.      -               E-mail: michael at
> Check the website for my Internet World articles -        

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