Sprint v. Cogent, some clarity & facts

michael.dillon at bt.com michael.dillon at bt.com
Wed Nov 5 09:52:26 CST 2008


> what you're calling a political failure could be what others 
> call a rate war. 

I only used the term "political failure" because it was
the best match of the two options given. But you are
right that it is necessary to let go of those terms
and maybe, define your own, if you want to get to a
deep understanding of what is going on.

> but i am saying that if this long chain of guesses is 
> accurate it likely also represents the ONLY way to drive 
> efficiency in a competitive capital-intensive market.

In other words, the market demands more efficiency and gives
their resources (money) to those willing to provide it.
This is generally how any given industry makes step changes
in efficiency, due to competitive pressures.

> It is now part of every nation's and 
> everbody's 
> > critical infrastructure. It needs to be engineered and 
> operated better 
> > so that it does not end up partitioning for dumb reasons.
> 
> that sounds like justification for government regulation, if true.

Not at all. It is justification for ISP management to stop
peddling the same old, same old, and to restructure their businesses
to be more like a utility. Granted, there is more margin to be
made in vale-added services, but the core network operation needs
to be run as an efficient utility, not have its inefficiency propped
up by some lucrative voice products.

Cogent seems to be operating according to the pure utility model.
If the other ISPs don't want to get dragged into that space, they
need to partition their businesses so that the high-priced services
provide actual added value to customers over and above the generic
Internet transit service.

Regulation is just a way to prop up inefficient businesses as we should
have all learned with the global telco disaster from the 1960's onward.
As the sophistication of technology rose exponentially along with
drastic drops in prices, telcos just ate up the extra margin by
becoming more inefficient, until finally the regulators said enough is
enough, and opened the doors to competition.

--Michael Dillon




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