Paying for delivery of packets (was about Sprint Peering, and Importance of Content)

Fri Jul 12 03:00:45 UTC 2002

On 11:31 AM 7/11/02, E.B. Dreger wrote:
 >
 >JD> Date: Thu, 11 Jul 2002 08:37:01 -0700
 >JD> From: JC Dill
 >
 >
 >JD> It is my opinion that eventually the Internet will be mostly
 >JD> funded by those who send packets, and will be mostly free for
 >JD> those receiving said packets, much in the way that 800
 >JD> numbers are funded in the telephone system.  In order for
 >JD> that to work, we will need a settlement system.  I predict
 >JD> that something like this will start happening before
 >JD> 12/2005.
 >
 >Agreed, except is any fancy settlement really needed?  I predict
 >asymmetric pricing.

The problem with asymmetric pricing is that the cost of passing the packets 
is equally born by both ends.  Take 2 networks that peer, one with mostly 
content, one with mostly eyeballs.  The content providers pay a higher 
price *per MB* for bandwidth to their provider than the end user does, but 
both networks have equal costs in transiting the packets from the server to 
the end user.

 >>From a political standpoint, it's easier to get a business to pay
 >an extra <x> per month to deliver their content than it is to get
 >Joe Public to pay an extra $10/mo for premium access.

Joe's ISP needs to pay for fat pipes to get the data (from wherever Joe's 
ISP peers with the content provider's network) to Joe's eyeballs.  That 
cost has to be borne by someone.  Either Joe pays an equally high rate (per 
MB) for incoming packets as the content provider pays for sending them, or 
the content provider pays and there are settlements between the content 
provider's network and the Joe's network.

My premise is that in the end, content providers want to send lots of 
packets more than end users want to pay to receive them.  Joe is not 
willing to pay an equally high rate to get the packets that content 
providers are willing to pay to send them.  Thus, settlements.

 >I think 12/2005 is conservative.  Industry fallout begins
 >settling, and we see interesting tactics from "new breed"
 >upstarts run by laid-off engineers with a bit of money and a
 >bunch of clue.  Beginning of 2005, significant presence by the
 >end of the year.

I was hedging my bet.  :-)  I wouldn't be at all surprised to see it much 
sooner, even by the end of 2002.

jc 