[10752] in Commercialization & Privatization of the Internet
Re: Settlements
daemon@ATHENA.MIT.EDU (John Curran)
Tue Mar 8 00:31:44 1994
To: Craig Partridge <craig@aland.bbn.com>
Cc: com-priv@psi.com, dlynch@interop.com
In-Reply-To: Your message of Mon, 07 Mar 1994 07:29:15 -0800.
Date: Mon, 07 Mar 1994 18:08:35 -0500
From: John Curran <jcurran@nic.near.net>
--------
] From: Craig Partridge <craig@aland.bbn.com>
] Subject: re: Settlements
] Date: Mon, 07 Mar 94 07:29:15 -0800
]
] Suppose the IXC simply billed each connected provider a flat amount
] per month based on the size of the provider's pipe (or pipes) into the
] long-haul network. So, for instance, if PSI had T1 connections to the IXC
] in LA and DC, PSI would pay for two T1 connections.
]
] The IXC could make guarantees about loss rates and service outages, so
] you'd know what you were buying.
]
] The result:
]
] * a nice simple, predictable revenue stream for the IXC
]
] * a simple bill for the local carriers
]
] * possibly lower costs (less accounting work at both ends)
]
] What's wrong with this picture that we have to inject settlements into it?
Does your model presumes that:
o There is a single IXC to which each "local carrier" connects?
o The "local carrier" (PSI, in your example) doesn't have a national
backbone of their own which they might rather use?
Given the prior existence of multiple providers serving multiple roles
(transit versus end-site connections), it appears non-trivial to map
the current state of the Internet into your model. Pricing based upon
"size of the provider's pipe" fails to consider actual operational costs
for the IXC carrier.
Settlements are not inevitable: they are mentioned whenever the relationship
between providers becomes unbalanced with respect to the transit traffic,
routing coordination, or operational support provided between the parties.
At the extreme end, one provider may rely entirely upon another for these
services and the result is a relationship which closely resembles standard
Internet service provision for a number of sites.
/John
