UUNET Press Release on Peering

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1

This is a serious misunderstanding of the economics of Internet.

The "equity in traffic" is not important at all.

What is important is equal share in carrying packet flows, which
can be approximately measured in miles*bps. *That* costs money.

Therefore, a small ISP dumping most of its traffic to others at
one exchange point will cause long-haul backbones to carry its
traffic most of the distance (no matter which direction the traffic
goes), thus effectively subsidizing that small ISP.

--vadim

2

>I know of at least one. I'm sure there are more. It seems,
>that equity in traffic exchange may be an overriding
>principle, although running many web-farms and small
>backbone can certainly give you that.

This is a serious misunderstanding of the economics of Internet.

No it's not. It's a statement highlighting that UUNet's
peering policy is not completely objective. It also says
that if you run a web-farm it is easy to make outflow >>
inflow, and therefore any type of model-based just on
traffic exchange differentials is also flawed. I'm not
asserting that content should be an "overriding principal",
but it certainly seems to be with UUNET. Why?

Most networks send traffic over someone else's backbone
and receive it on their own. NSPs who focus on geographically
concentrated content providers can win over those that focus
on a necessarily more dispersed consumer base. If the entire
Internet were polarized into one of these two networks then it
would obviously be a bad business decision on the part of either
not to peer, at least in the short term.

What is important is equal share in carrying packet flows, which
can be approximately measured in miles*bps. *That* costs money.

No, this is what is *fair* based on the economics of building
networks with comparable user-bases. What is *important* is not
to make a decision which will ultimately lose you money.

Mark

3

[Warning, arm-chair telecommunications guy is making assumptions below...]

This is a good point. In the LEC market, it is assumed for the most part
that (1) the costs of building infrastructure are pretty much the same for
the ILEC as they are for the CLEC and (2) whether someone is a customer of
the ILEC or a CLEC doesn't matter, because one of them would have had to
incur the costs required to bring that customer on. Therefore,
interconnect agreements amongst the ILEC and CLECs usually are "free".

However, there is something of a balance. First, the LEC where the call
originates is responsible to provide the facilities to the LEC where the
call terminates. This means that the ILEC will for the most part be
providing a lot of service to the CLECs. Remember, though, that the ILEC
would have had to build up capacity anyways, to terminate the call within
their own network.

In the case of a national backbone, I think there are huge differences.
The NSP incurs huge costs to get to the exchange point, whereas the ISP
(ie Web farm, local provider, etc) really incurs a very small expense (by
comparison). In the case of a Web farm, it can easily increase it's
in/out-ward bandwidth with a comparatively insignificant cost, compared to
the investment required by the NSP to support the farm's increased
traffic.

There may be some other interesting things to consider, especially in the
case of UUNet. One thing I don't really understand is how these
"free-loading" peers are detrimental. If UUNet customers pay on a tiered
pricing scale, that means that when they go to a UUNet peer, they are
paying for the bandwidth being used. What UUNet is saying is that *two*
people should be paying for that bandwidth.

And how is it any different if UUNet loses the second person's revenue
because the traffic ended up on a "small" peer or a "large" peer. In any
case, it is revenue that's lost, period. Wouldn't the benefits of being
able to manage your network (because you can tell peers where to peer with
you, and anticipate that they'll be peered there a long time) outweigh to
a large degree the shortcomings of a small peer (who, for example, could
buy service from another NSP, who might regularly move traffic around
enough that a national backbone would be significantly affected)?

I just don't see that many of the small peers will end up buying UUNet
service (especially at their special "wholesale" prices), but will
ultimately end up buying from another NSP, and UUNet will end up not only
not getting new revenue, but will have compounded problems from the same
traffic they had to support before.

I would also assume that there are some economies of scale by peering at a
central point, rather than putting high-speed customers on POPs away from
the exchange point. If one of these small peers decided to buy UUNet
service, wouldn't it be significantly more expensive to haul DS-3/OC-3
bandwidth close to the customer, whereas they used to haul it to the
exchange point themselves?

Just my $0.02 (well, an email this long is probably worth $2.02).

Pete Kruckenberg
pete@inquo.net

4

There may be some other interesting things to consider, especially in
the case of UUNet. One thing I don't really understand is how these
"free-loading" peers are detrimental. If UUNet customers pay on a tiered
pricing scale, that means that when they go to a UUNet peer, they are
paying for the bandwidth being used. What UUNet is saying is that *two*
people should be paying for that bandwidth.

It is indeed an interesting question. If you look at from a
different angle,
and from UUnet point of view, you will see the why. The cost of
providing a full bandwith T1 to UUNET's customer is actually a
function of 'How Long the Packet Travels * bps', where bps is the
speed 1.54Mbps in the case of T1.

If UUNet is carring the backbone burden, the first parameter is
larger and bps is still 1.54Mbps. Thus, the cost of UUnet providing
T1 will be much bigger than the cost of a Small ISP providing
T1 for its customers.

Now the smaller ISP can price its T1 at lower cost, and compete
with UUNet which cannot lower the price below its cost. By having
the smaller ISP to pay for the peering just RAISE the cost of
providing T1 by the smaller ISP and REDUCE the cost of
providing T1 for UUnet.

5

This is true as long as UUNet is providing the service to the small ISP.
If the small ISP chooses to connect to another NSP, rather than pay for
peering, UUNet's costs and revenues are still the same, but the traffic it
has to support for the small ISP is still the same.

In fact, if the small ISP is "close" to the exchange point, UUNet has just
helped one of it's competitors become (slightly) more profitable, by
giving it a high-bandwidth customer at the cheapest point to connect a
high-bandwidth customer.

I guess I just don't see how forcing small ISPs/farms to pay for peering
benefits UUNet unless the ISP/farm buys service from UUNet. Given UUNet's
pricing, I just can't see that these high-bandwidth users will be
purchasing from UUNet. They'll most likely go where the bandwidth/dollar
is better, and only make things worse/costlier for UUNet (and other NSPs).

Pete Kruckenberg
pete@inquo.net

6

Really?

And just how did that flow get generated to its peer?

Let's see.... someone paid the "big bad network" for the other end of the
connection so they could talk to Mr. Small Network.

Now you can argue that the other customer didn't REALLY pay for the flow,
but then Mr. Big Network isn't selling connectivity to the Internet in its
complete state *to the best of its ability*.

That, however, is what Mr. Big Network's customers think they bought, and
that gives rise to an act of fraud if that's not what Mr. Big Network
delivers.

As long as UUNET *CLEARLY AND HONESTLY* discloses this UP FRONT, and
releases anyone from a contract which they bought THINKING they were getting
to the whole network, there is no problme.

If they don't do both of those things, well, that's another matter.