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must read really FCC NPRM ban on Paid Peering harms new innovators
From: Dave Farber <dave () farber net>
Date: Thu, 12 Nov 2009 20:05:10 -0500
Begin forwarded message:
From: Stan Hanks <stan () colventures com> Date: November 12, 2009 7:33:02 PM EST To: Bob Frankston <bob2-39 () bobf frankston com>, dave () farber netSubject: RE: [IP] must read really FCC NPRM ban on Paid Peering harms new innovators
Unless you nationalize the telecom and internet infrastructure, I doubt you’ll be able to move the needle too far in that direction.Those who have spent money building their networks need to have some way to justify having done so. Their political agendas are driven strictly by Wall Street economics. If the stock price slides, the shareholder put pressure on the board, which puts pressure on the executive team, etc. Most of the executive team, having stock based incentives, would rather die than do the right thing, other than as measured by stock performance.The ugly truth in this – and one of the reasons that you’ll be unlikely to see me as an executive another public company – is that those companies are run on a quarter-to-quarter basis by the Wall St reet analysts assigned to cover them. If those guys aren’t happy, th en nothing happens. The very, very best senior executives succeed be cause they are able to persuade the analysts that what they want to do is a good idea. Most of the rest are just along for the ride in a n un-ending “me too” fest…You said something a few years back that really stuck with me, that trying to find a business model for ubiquitous wifi was like trying to find a business model for sidewalks. Really made a big impression on me, I use it all the time. I haven’t sponsored an investment in t hat sector or anything similar since as a result. Those who didn’t g et the memo are still trying to figure out how to construct business models and political constructs which make it possible for them to justify to their keepers that no, really, there *IS* a pony in here somewhere…From: Bob Frankston [mailto:bob2-39 () bobf frankston com] Sent: Thursday, November 12, 2009 4:05 PM To: dave () farber net; 'ip' Cc: Stan HanksSubject: RE: [IP] must read really FCC NPRM ban on Paid Peering harms new innovatorsWhy do we have to choose between paid-transit and private infrastructure other than legacy politics? The point I tried to make in http://rmf.vc/?n=IPPeers and other writings is that economics of infrastructure scales very well to community or common infrastructure.This is even more important when we consider that there is a single connectivity infrastructure rather than separate policies for bits and for telecom. This is why I’m using the term peering in a loose s ense to include the various settlement systems rather than in the te chnical sense it is may be used within the IP community.From: Dave Farber [mailto:dave () farber net] Sent: Thursday, November 12, 2009 17:08 To: ipSubject: [IP] must read really FCC NPRM ban on Paid Peering harms new innovatorsBegin forwarded message: From: Stan Hanks <stan () colventures com> Date: November 12, 2009 4:07:33 PM EST To: dave () farber netSubject: RE: [IP] Re: FCC NPRM ban on Paid Peering harms new innovatorsWow... This all brings back a ton of stuff... So, in the early 90s, I was involved in the creation of the MAE Eastpeering point. Initially, it was a "Metropolitan Area Ethernet" to solve Steve Wolfe's problem of not getting Marty Schofstall and Rick Adams toagree to play nice and meet the NSFnet and CSnet in a convenient location, but as we all know, it exploded into something much larger.The MFS MAE model was simple "we don't charge you for moving packets, we charge you for ports, and you work out the details on exchanging packetswith whomever you want to exchange packets with on your own". In practice, the model that DJF noted was the rule of the day -- to avoid having to address the "settlement" issue, everyone agreed to pretend like traffic exchange would be in parity and thus no settlement wasneeded. That worked *great* when there were only a handful of networks, and when MOST of the traffic was "classic ARPAnet style traffic" -- FTP,email, TELNET, etc.The advent of the "world wide web" changed all that. Suddenly two thingshappened -- first, there were a HUGE number of entrants to thenetworking game, and second, traffic flows became inherently unbalanced.At the last point where I had personal knowledge, which was probably '94or '95, there were close to 300 parties connected to MAE East. I understand that it went up from there. That's an INSANE number of network peering relationships to manage!The very nature of "web pages" also was a big deal. Whereas with email,it's reasonable to assume I send you one, you send me one, we'reprobably writing about the same amount, on average it all balances, web pages just don't work that way. Send a very small number of bytes askingfor a page to be served, get a potentially unbounded number of bytesback in the form of text, image, video, what have you. Instant nightmarefor people trying to manage traffic on networks. When I was putting together what became Enron Broadband, one of the early directions we looked at was becoming a major "Tier One" ISP backbone. At the time, "Free Peering" was the rule of the day, but was already dying. If you didn't have peering established, it was verydifficult to get. My engineering team put in a lot of time and I pulled a lot of personal relationship strings, but it finally became clear thatif we wanted to do this, and have free peering, the only way to get there was to acquire players who had the peering that we wanted. That was in '97. By 1999, it was pretty much all over. Level 3 was talking in terms of "suck" and "blow" -- are you pulling traffic out, or are you sending traffic? And if you were sending them more traffic than they sent you, you had to pay. Period. You see that replayed countless times since, the most recent being in the dispute with Cogent. The economic argument is interesting. If you're a content provider, a "net source" of traffic, you argue that the end user subscribers areonly customers of their network provider in order to gain access to theinformation provided by the content providers, and thus the network providers should be glad that the info is there because otherwise they wouldn't have any customers. Of course, the network providers take the obverse position...My take is that from a amount of work and investment of capital, it's a LOT harder and more expensive to provide an operating network than it is to provide a web server farm, and thus my bias is towards the guys withcontent paying the guys with pipes to get it delivered. But the truth is, it doesn't matter. If you want to do business, youhave to accept that it's just a matter of economics, and you either have to figure out how to make the economics of paid transit work for you, oryou have to figure out how to scale large enough that you can build enough of your own infrastructure to pose a credible threat to the network provider establishment that they're willing to modify their terms for your benefit. Stan Archives
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