[11429] in Commercialization & Privatization of the Internet
Re: Use market forces to deal with routing questions & charging
daemon@ATHENA.MIT.EDU (Karl Denninger)
Sat Apr 2 02:11:14 1994
From: karl@mcs.com (Karl Denninger)
To: nowhere@bsu-cs.bsu.edu (Anonymous)
Date: Fri, 1 Apr 1994 22:04:03 -0600 (CST)
Cc: com-priv@psi.com
In-Reply-To: <9403311650.AA09754@bsu-cs.bsu.edu> from "Anonymous" at Mar 31, 94 11:50:19 am
>
> The real way to ensure routing among commercial ISPs is as I mentioned to
> make it a marketing issue. The real way for ISPs to protect themselves from
> competitors cutting off routing is to band together to say its not an
> acceptable policy.
Boy, that sounds like restraint of trade, doesn't it? "Banding together" eh?
> If some ISP cuts off routing, then competitors should
> immediately alert the customers of their ISP that it is playing games at
> their expense, and use that as a marketing issue perhaps to compete in that
> market. People are buying connectivity to as much of the net as they can
> get.
>
> In terms of the traffic that gets routed through a pipe, CIX shouldn't
> care if Sprint (or whoever), resells it to another provider. Traffic routed
> through CIX is at one endpoint at least connecting to a CIX customer. CIX
> customers should be paying for the pipe. Essentially ISPs all provide
> pipes, its up to them to make sure its priced so that all of its *direct*
> connects pay for that pipe, rather than policing all the indirect
> connections and getting into murky water of who pays who.
Let me ask you a question: Have you priced long-lines?
Let me make a statement -- a T1 connection is roughly 2x a 56kbps connection
from most national providers.
Guess what a T1 COSTS in relationship to a 56kbps connection?
About 10 56kbps connections.
A pretty good deal, actually, since you can get 24 56kbps connections in
one T1, and the termination gear doesn't cost 24 times as much either.
Now, you said that providers shouldn't care what you do with the link. Ok,
let's take that as a given.
Get ready to pay 5x what you're paying now for that T1 line. I believe the
common wording is "bend over and grab your ankles".
I've done this pricing, I've built national backbones, I've done the
engineering and installation for nationwide service. My last such endeavor
before MCSNet was for a company called VideOcart -- TCP/IP to <grocery
shopping carts> in the store. Yes, you heard it right. <32,000> of them
across more than 200 stores, nationwide. DS0s and T1s all over the damn
country, and enough CISCO AGS+ routers to crush you dead. About a
half-million bucks worth of them in fact. We had 13 T1 segments coming into
Chicago alone -- just enough to make it worthwhile to start getting T3
access at headquarters (!). We built and operated it for a <fraction> of
what Alternet, Sprint, or any of the other guys wanted to do the same thing.
Why? Because we knew what we were doing. I engineered and built 95% of this
monster, and it worked like a well-oiled watch. This was a network that cost
well over a million bucks a year to operate in line charges <alone>.
Unfortunately, the company failed. Very unfortunately in fact, as I would
not need to work any longer had they succeeded with the incentives they put
on the table. Oh well, I was just an engineer for these folks. But I can
tell you this -- I know EXACTLY what this kind of infrastructure costs,
because I was one of the guys doing the negotiation and PO generation --
<and> I saw the invoices when we were done.
> Given the
> ambiguity of what is a backbone, differing connectivity speeds to various
> parts of the net, etc., the only way to make sense of a tangled network is
> basically that each provider owns their node. They pay other nodes what
> they think it is worth to get connectivity to that node, and customers pay
> them in return to connect to their node. All pricing is done through direct
> negotiation with the nodes connecting to you. Its basically just like the
> free market, you pay directly for what physical items you buy, and the
> manufacturer pays all its suppliers, the suppliers don't start charging you
> directly. The web may be more tangled than usual production activities,
> but the same methods and market forces can work.
No, its not that simple. You can't drive up to a Shell gas station in
your car and siphon off Amoco's gas! But as an ISP you <CAN> do this, by
manipulating your route tables and administrative distances in interesting
ways. That is the root of the problem -- this is NOT as simple as
purchasing other commodities, as the chain of "buying" isn't nearly as
clear as it is with other things you might purchase.
> I think the CIX is mixing up the issues of providing a backbone with
> guarenteeing cooperative routing, because it should be extremely cheap for
> agreements to be signed, and would encourage much more of the industry to
> come on board without blinking an eye rather than charging what they are.
You're nuts. Again, you have never priced or operated a large, national
grade service of this type. Some of us here HAVE AND DO. Those who
haven't find it easy to "snipe" because they see "too much cost". Those
who have think the CIX is the best thing since sliced bread, because we
KNOW what the alternative costs to negotiate and operate, and we KNOW that
we couldn't afford it.
> The only possible use I could see for charging large $ per year would be
> for a different sort of cooperative associate, which agreed to pool the
> money to form sort of an insurance policy, which would be used to advertise
> against any ISP that cut off routing to bully their competitors. This money
> would be only availible to ISPs joining the pool, but then joining would be
> voluntary with no threat at all of cutting off routing (in fact the
> agreement should be that routing is not cut off to any other ISP, member or
> not). I'm not sure if this is worthwhile, however if ISPs are concerned
> about other ISPs bullying them then voluntary insurance makes sense. And
> fighting back with only the truth makes sense (ie telling current and
> potential customers that the ISP who cuts off routing is hurting THEM).
Restraint of trade again. Join the real world, Mr. Anonymous. We're out
here, with our names on our messages. People may disagree with my
position, but at least they know that I have the courage of my convictions.
--
--
Karl Denninger (karl@MCS.COM) | MCSNet - Full Internet Connectivity (shell,
Modem: [+1 312 248-0900] | PPP, SLIP and more) in Chicago and 'burbs.
Voice/FAX: [+1 312 248-8649] | Email "info@mcs.com". MCSNet is a CIX member.
