A read through this New York Times article on derivatives clearing,
and the exclusivity that big banks seek to maintain, would look very
much like an article on large-scale peering, to someone who is not
expert in both topics. The transit-free club and the "derivatives
dealers club" may have other similarities in the future, and it's
worth watching how further government regulation develops in this
area. It may lead to insight into how government might eventually
regulate ISPs seeking to become settlement-free.
I don't see how this can happen with the number of wide open exchanges
that exist these days. Take the several Equinix IX exchange points as
an example. They aren't controlled by any cartel of participants who
dictate who can and who cannot play. Each network sets their own
peering policy. As most of the traffic is from content heavy networks
to eyeball heavy networks, direct peering between them makes sense.
The financial derivatives market isn't, in my opinion, a good analogy of
the peering market. A data packet is "perishable" and must be moved
quickly. The destination network wants the packet in order to keep
their customer happy and the originating network wants to get it to that
customer as quickly and cheaply as possible. The proliferation of these
peering points means that today there is more traffic going directly
from content network to eyeball network. To use a different analogy, it
is almost like the market is going to a series of farmer's markets
rather than supermarkets in the distribution channel. Sure, there are
still the "supermarkets" out there, but increasingly they are selling
their "store brand" by becoming content hosting networks themselves.
I would expect with the current direction of interconnectivity, third
party transit traffic would become a decreasing percentage of the
aggregate total bandwidth a network moves. Or at least the third party
transit traffic becomes smaller amounts of traffic from a larger number
of sources with the big sources of traffic connecting to the big sinks
of traffic directly and third party transit collecting the crumbs
(albeit probably a large amount of crumbs).
Invisible Hand Networks was really meant to be a spot market. The
same problem exists with bandwidth spot markets that always has
existed, the cost of ports to maintain sufficient capacity to the
exchange, and the lack of critical mass, meaning that the spot
bandwidth is either pretty expensive, or there is not enough capacity
for any serious application. Certainly, no spot bandwidth market
currently in existence can compete with even mid-sized CDNs; and I do
not believe that will ever change.
The IHN folks were also disadvantaged because they seemed to know a
lot about economics, but basically nothing about networks. So their
technology was neat from a reporting perspective, but the actual
functioning their exchange fabric was/is a disaster.
I do not know if they are still in business or if they are still
constrained by the flawed design they had in place several years ago.
From: Jeff Wheeler
Sent: Wednesday, December 15, 2010 7:24 PM
To: nanog@nanog.org
Subject: Re: peering, derivatives, and big brother
Invisible Hand Networks was really meant to be a spot market. The
same problem exists with bandwidth spot markets that always has
existed, the cost of ports to maintain sufficient capacity to the
exchange, and the lack of critical mass, meaning that the spot
bandwidth is either pretty expensive, or there is not enough capacity
for any serious application. Certainly, no spot bandwidth market
currently in existence can compete with even mid-sized CDNs; and I do
not believe that will ever change.
The only way I could imagine it working is something like Equinix does
with their Equinix Direct product
What I really miss is the old Telseon model. If I had a Telseon
connection, I could configure a "logical wire" to any other Telseon
customer (basically provision a vlan through their fabric between us)
with a web interface. I could call the other end, we agree to create
the path, I configure it on the web page, they accept it, the next day
there is a path between us. It was a beautiful system. If I wanted to
adjust my bandwidth cap on any of the "logical wires", I that was done
with a web interface, too. I could raise it for a week and drop it back
down and pay only for what I used. It was billed daily at the
configured bandwidth cap. Problem was that many of the colo providers
hated it as it allowed people basically unencumbered access to any other
Telseon customer within 24 hours. Some absolutely refused to allow
Telseon into their data centers, others insisted on placing their sales
force in the path destroying the value of the product. It was
wonderful, I miss it.
