Generation of traffic in "settled" peering arrangement


Think very carefully about what happens as traffic increases...

Given that the context is the introduction of "settlement-based" peering
for traffic imbalance in a shortest-exit world, then all of the various
schemes for generation of traffic (web crawlers, backup services, etc)
are no problem whatsoever, and may actually been seen as desirable...


  Imagine a nationwide Internet provider with customer A on the west
  coast and customer B on the east coast. Customer B sends queries
  to customer A's server, and receives quite a bit of data in return.
  (all of this traffic stays on the provider's backbone in this case)
  Presume for the moment that the provider charges the customers (A&B)
  on a usage-basis which takes both sending and received traffic levels
  into consideration. Now, one could charge each of A and B the full
  cost of the traffic exchanged (which would effectively be "double
  dipping" and quite profitable :slight_smile: but a competitive market makes it
  far more likely that the rate per traffic measure will be such that
  A & B together pay the costs associated with their traffic exchange

  Now, given that A & B are both on the provider's network, everything
  is fine. When we hypothesize that A is instead connected to a peer
  network, we don't know whether costs will be recovered. In a shortest-
  exit world, traffic is quickly exchanged to the original provider's
  network and hence the costs of transmission to B are almost identical
  to the case where the A was a customer. Given that there's only one
  customer (B) now paying for these costs, this presents a potential
  problem. Customer B expects to pay their fair share of the costs,
  but doesn't expect to pay a larger portion of the total costs simply
  because A is connected to another provider.

  The truth is, there is actually nothing wrong with this situation if
  the traffic to/from the peer is of the same order of magnitude. To
  elaborate: a peer provides traffic which must be carried without
  corresponding sender-side revenue. On the other hand, the peer also
  allows the Internet provider to provide a similar level of sender-paid
  traffic which (by nature of being handed off) has very little actual
  transmission costs. This is why typical peers are overall neutral
  to cost recovery, and why peers which send far more traffic than
  received are problematic.

  There are a few options that have been mentioned to this situation,
  including the "receiver pays full freight / sending is free" model,
  the use of something other than shortest-exit routing, and introduction
  of settlements for such traffic. For purposes of this thread, we're
  trying to determine if the settlement approach is doomed to failure
  due to ability to generate additional traffic flows through innovation.


  Presuming that a peer which is a net exporter of traffic begins to
  address this by encouraging additional traffic from customers to its
  network, this would result in more sender-paid originating traffic
  which quickly moves to the peer. Such traffic is (as noted above)
  quite profitable, as it includes full cost recover but little actual
  costs due to shortest to the peer. This is actually good for
  both networks, and us back to an Internet where more traffic is
  considered a good thing by ISP's at both ends of the connection.


p.s. The fact that the sender of traffic should be paying some portion
      of the resulting costs is not a surprise to anyone; many of the
      content companies that I've spoken to believe they already are
      paying more as traffic increases, and were quite surprised to
      find that it doesn't actually make it to the networks which
      bear the brunt of the traffic carriage.

p.p.s. As noted, departure from shortest-exit is also another approach
        which may provide some answers to this situation, but that's a
        different topic which deserves its own thread. This message
        is simply noting that settling for peering traffic is quite
        viable, despite assertions to the contrary regarding traffic
        generation. As long as you're billing the senders on your
        network for increased usage (and handing it off shortest-exit),
        increased traffic is good thing.