[11439] in Commercialization & Privatization of the Internet
Re: The whole CIX concept is flawed
daemon@ATHENA.MIT.EDU (Karl Denninger)
Sat Apr 2 22:16:03 1994
From: karl@mcs.com (Karl Denninger)
To: jlw@cs.columbia.edu (James Waldrop)
Date: Sat, 2 Apr 1994 17:10:55 -0600 (CST)
Cc: bilse@eu.net, com-priv@psi.com
In-Reply-To: <199404021843.NAB24187@shekel.cs.columbia.edu> from "James Waldrop" at Apr 2, 94 01:42:41 pm
> [ Please note that I blind carbon copied some people on this... ]
>
> Per Gregers Bilse wrote:
> >You want that guarantee for free. Sorry, can't be done. For one
> >thing, there are real operational costs (manpower, equipment, office
> >space, etc) associated with the CIX itself. The fact that you
> >transit via somebody else doesn't reduce the need for the CIX to be
> >there. Why should you, as an ISP, be allowed to get all the benefits
> >of CIX membership, without chipping in? Foul play.
>
> I think you're missing our anonymous friend's point. All of the
> costs asociated with routing CIX direct connections are presumably
> paid by the CIX connection fee, *not* the CIX membership fee.
Not true.
Have you priced the following lately?
Routers (Especially large-frame CISCOs)
Ports boards for those routers
T1 CSU/DSUs
Maintenance on the above
Salaries (someone has to maintain these things!)
Office space
Electricity (NOT a trivial matter)
And lots more.
I don't mind paying Bill Washburn's salary; I think he happens to earn it.
> Exactly what service is CIX returning for its $10K? If ANS CO+RE
> suddenly decided to "play fair" and force all of its resellers
> to pay the fee, exactly where would that money go? Not into
> routers, new leased lines, or any other such thing, since it seems
> those are already in place. Such a windfall could be used to line
> a few pockets, I'm sure, or it could perhaps be used for other, more
> charitable services such as connecting libraries or what-have-you.
Oh, but you're wrong!
Let's say that ANS CO+RE decided to "play fair" and the resellers ponied up
to the bar. What could happen with, say, $200,000 in additional annual
income for the CIX? I can think of a couple of things right off the bat:
1) New points of service. We could have a CIX-West, CIX-East,
CIX-Midwest and CIX-South. All connected with T1 lines. NOW the
cost to an ISP to connect to one directly drops DRAMATICALLY (long
lines are charged by mileage). This is a GREAT improvement for
nearly everyone (except for those on the west coast who already
enjoy the disparity of this setup)
2) More service. As membership grows, those T1s could become T2s and
even T3s. Imagine a 45mbps AUP-free <cooperative> backbone, with a
$10k/year connection charge. Gods, the mind boggles. Those ISPs
who have made their business selling "resale" connections (primarily
ANS) are in big trouble in this situation -- is it any wonder they
would oppose this? All of a sudden you have available for $10k a
year what ANS would like to charge you $70,000 for!
There are some very, very entrenched interests who would love to see the
day that the CIX dies. Some of them might even be members of the CIX now.
Some of them might have even made snide (or not so snide) comments to
outside parties indicating that they have no intention of seeing that the
above scenario takes place, and in fact their resale policies, explicit or
otherwise, might just happen to undermine the above scenario.
I leave it up to the reader to decide who might be guilty of what in
that area.
Remember that the CIX is a 501(c) organization. It cannot make a profit.
It cannot pay dividends to members, or otherwise engage in "kickbacks". It
can provide services for money, as can any trade association. It can pay
for services rendred at market rates. If it is proven that people have
done things as board members or in other positions of authority that
constitute abuse of their position, they can go to <prison>. Screwing with
non-profit organizations is a VERY bad idea. Also, the membership has the
final vote on the wisdom of fund allocation, and can remove the board if
they so choose.
> At any rate, "protection" seems to be a perfect description of
> what we are talking about here. If two people can agree not to
> fight among each other, then there is no need to pay a third
> party to enforce the peace. We humans have problems with this,
> ornery creatures that we are, but a router doesn't have to deal
> with emotional issues...
....
> In fact, the $10K seems to me to be more of a barrier to entry --
> an anticompetitive agreement among certain large ISPs. Sprint
> can afford to pay the $10K, and is probably happier than not
> that Mr Anonymous's company is less able. So in fact this fee
> becomes another sort of "protection" -- protection from competition.
> And Sprint is one of the founders of CIX. Interesting. What if
> the BofD should someday meet and decide that, due to inflationary
> pressures etc, the $10K/year fee is now $100K? Cough up or quit
> competing. I might speculate that MCS would no longer be able
> to afford this fee, and would have to quit reselling IP connections.
>
> Based on this, I think I can make the assertion that the CIX fee,
> prohibitive as it is, actually INHIBITS the growth of the Internet.
>
> James Waldrop
> jlw@cs.columbia.edu
> sulam@well.sf.ca.us
You'd be wrong.
What are you going to do if the following happens?
1) The CIX dies since everyone thinks they should get the service "for
free" rather than paying for it.
2) Sprint, ANS, Alternet and PSI decide to stop selling to small resale
customers. Note that Alternet already kinda does this, and PSI
absolutely does this in the main. There's only two left...... and
one of these (ANS) has publically declared, a couple of years ago,
that it had every intention of setting up a pay-by-the-byte plan
(COMBITS) which it thought it could ram down everyone else's
throats. The CIX was formed as a RESPONSE to that threat.
3) Now, as a small ISP you CANNOT get a connection which you can resell
easily. Instead, you have to negotiate 30 agreements with 30 other
people, and pay all of them. And their incentive to allow you to
compete with them by agreeing to allow you to exchange traffic?
Zero. Why not just destroy you? There's ZERO reason for the
national boys to cooperate with you in this situation, and you have
ZERO leverage. There is absolutely no reason for these folks to
allow you to compete with them at no cost to you. You think you're
going to get a zero-settlement traffic exchange agreement? You're
nuts!
Bye-bye small ISP marketplace.
Anticompetitive? I think the situation above is worst nightmare of the
small ISP. You're going to end up with no interconnection at all for
the small guy like MCSNet and most others. In fact, I can count the
people who WOULD like that scenario on the fingers of one hand.
This is the very reason that should there be a threat of this happening I
WILL set up a CIX2-Midwest and get the "small" ISPs together to get a loud
enough voice as a group to make damn sure it does NOT happen. And, if
necessary, press that issue in court and the national media.
Be careful what you wish for folks. You might just get it, and find that
the unintended consequences of your actions are 100 times worse than the
intended consequence.
--
--
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.
