RE: peering charges?

I empathize with your angst over the charging issues. But the answer is in
microeconomics. Those that have something that others want can charge for it.
Those that want it pay. If you want to get to a network bad enough you will
pay for it-one way or another. The concept of transit is not very different
from what people are now referring to as settlement charges. The magic is in
making your network a more desirable destination than the other guys. In many
industries there are often "surrogates" for value that are used to set
pricing. Per minute charges in wireless (cellular, PCS, etc.) is and example.
Not all minutes are of equal economic value but for the most part you pay the
same rate whether you are talking to your mother or closing a billion dollar
business deal. I suspect that the ease of anointing bandwidth as a surrogate
for value will make it so until someone is able to measure the economic value
of an individual packet or web page hit. Until then I predict that the
networks with the biggest infrastructure will be in the best position to
extract peering charges.

Batten the hatches, the onslaught of change is upon us. I suspect that this
is the first of many economic model changes in the Internet. des

Danny E. Stroud
President
GES Internet

I empathize with your angst over the charging issues. But the answer is in
microeconomics. Those that have something that others want can charge for it.

Yes, however things are more complicated than that.

The Internet ecomony is particulary bizzare in that the activity of a
vistor visiting a web site (the majority of Internet traffic) is not a
simple zero sum economic transaction. This is because the visitor wants to
visit the site and the site owner typically wants them to visit (both get
value). Assume you have a network A (which only does dialup) serving
100,000 dialup customers, and network B (which only does hosting) hosting
10,000 virtual hosts. By directly peering they create new value for their
respective (and different) customer bases.

Unlike consumable hardgoods, you can create more of your product (external
connectivity) by selectively giving it away. The selection process,
amoung other things, aims to reduce lost sales by not giving peering to
potential customers.

Mike.
ps. Some may say networks A and B are enduser networks, but most of the
largest networks now offer one or both of these services directly.

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