[1790] in Commercialization & Privatization of the Internet
From Communications Week, December 23, 1991:
daemon@ATHENA.MIT.EDU (David J. Farber)
Thu Dec 26 16:41:41 1991
Date: Thu, 26 Dec 91 16:35:57 EST
From: farber@central.cis.upenn.edu (David J. Farber)
To: com-priv@psi.com
>From Communications Week, December 23, 1991:
ACCESS PROVIDERS: ANS HAS UNFAIR EDGE
Demonstrating that commercial data network access is becoming big business,
some providers of such services are claiming that one of their number has an
unfair advantage. If it exists, that advantage could raise the price of user
access and keep some users from being able to communicate with other users over
the Internet.
Though the factors behind this issue have been in place for some time, they
weren't well-known and their ramifications weren't clear until October, when
Advanced Network & Services Inc. signed its first commercial data networking
customer, database vendor Dialog.
"We're at the beginning of a new business area, and we're having growing
pains," said Stephen Wolff, director of the networking division of the National
Science Foundation. The Internet is now large enough to be interesting to
commercial providers, he said, adding, "There's money to be made here."
The National Science Foundation Network (NSFnet), which will serve as a base
for the National Research and Education Network created by President Bush
earlier this month (Communications Week, Dec. 16), consists of a high-speed
backbone network and a fast-growing number of regional subnets.
This network is also sometimes referred to as the Internet. Because the
backbone was government-funded, users were proscribed from using it to transmit
commercial traffic, but could only use it for purposes related to research and
education. In 1990, the network was upgraded by Merit Inc., a joint venture of
IBM and MCI, and by ANS, a non-profit organization also funded by IBM and MCI,
to T3 speeds, or 45 megabits per second.
FOR PROFIT UNIT
Since then, ANS has created a for-profit arm called ANS CO+RE, to sell
commercial access to that T3 network. ANS can now sell commercial access
because it invested more money and built a higher-capacity network that was
needed to satisfy NSF's T3 requirements, Wolff said. ANS CO+RE is selling the
excess capacity.
Since this summer, regional networks are being asked by ANS to sign a number of
agreements relating to commercial traffic, said Allan Weis, president and CEO
of ANS, Elmsford, NY. A regional network that agrees to accept commercial
traffic from ANS pays nothing, and is allowed to share in an "infrastruture
pool" made up of profits collected from ANS' commercial users.
A regional network that wants to send commercial traffic to other regional
networks over ANS has to pay ANS a fee, depending on the percentage of
commerical traffic to non-commerical traffic that the regional network
generates, part of which goes to the pool.
While this pool is currently small - less than $25,000, and perhaps $250,00 on
a year - it could amount to millions of dollars in just three to four years,
Weis said. Regional networks could use their share of the pool to improve
their own services.
Regional networks offering commercial services are concerned about either
losing access to the high-speed backbone or having to pay large fees to
transmit their traffic over it. In that case, commercial user organizations
might either be cut off from some other network, or have to pay more money for
network access.
Some of the regional networks also feel that ANS has unfairly uses its role
with the NSFnet to build an advantage for itself in providing commercial
services.
Wolff disagrees. "They [IBM and MCI] made an investment, they competed fairly
[in 1987 and in 1989, for the T3 upgrade], and having won the competition, they
took a business risk," he said.
