RE: UUNET: Content vs. CIDR

[Steve Hines <shines () gridnet com>]

Without over-simplifying, or taking a side, aren't we missing the point? 
The big kids make the rules; if the little kids wanna play, they go along
with the big kids' rules.    So the short, and
not-as-facetious-as-it-sounds, answer to "Why is UUNet committing this
atrocity" is "Because they have good reason to believe... 1) it will work;
and     2) they'll get away with, and profit from,  it."   

I think Scott Y. nailed it - we vote with our pocketbooks, and with our
networks.  And we allow (or force?) our customers to do the same - we can't,
after all, eat all of these additional expenses, so end-user prices may be
driven up by UUNet's actions.  If that doesn't meet with acceptance by a
balance of the Internet community, including end-users, then a reaction will
take place.

In the meantime, if your ability to provide service is compromised, I think
you'll find that this will prove an opportunity to the "pretty big"
providers, in that they will be able to fill the gap by selling transit. 
And I think undercutting the "big kids" in pricing that service is not only
likely, but a moral imperative. 
:-)
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Steve Hines                             shines () gridnet com
Network Operations                      770 518 5392
Gridnet International                   1 800 GRIDNET
"Some mornings, it's just not worth chewing through the leather straps."
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> ----------
> From:  James Saker[SMTP:jsaker () intellitek com]
> Sent:  Friday, May 02, 1997 5:40 PM
> To:    'Aaron France'; 'nanog () merit edu'
> Cc:    Todd Keener (E-mail)
> Subject:       UUNET: Content vs. CIDR
>
>
> Aaron France writes:
> > Unless we can implement a way to bill eachother for traffic passed 
> through eachothers pipes (reciprical billing, like telco's), they have 
> no right to assume that they can bill us because their network is bigger.
>
>
> Theoretical question: What if ISP-X had only one dedicated connection
> behind it, and subsequently was 1/100,000 the size of NSP-Y. ISP-X's only
> connection was a single content provider: Yahoo.  
>
> How do we resolve the settlement issues in this model? Why should the ISP-X
> pay NSP-Y to deliver valuable content to its consumers (dialup and
> dedicated)? Does the possession of more CIDR blocks dictate value? In
> today's market (of significant price competition, where UUNET is not
> terribly competitive), UUNET would probably experience substantial erosion
> of its client base. Wall Street and shareholders should pay particular
> attention to UUNET's follow-through of this policy as it appears to have
> the potential to impact its market share (and subsequently its revenues).
>
> Traditional broadcasting models work in reverse of the UUNET model, but
> again, we're focusing on the wrong layer for settlement; i.e. the value is
> in the content, not the CIDR.
>
> Having UUNET charge peering ISPs for application content on their network
> is like having Hughes charge Cox, TCI, and other CATV networks for
> receiving CNN's broadcast over the satellite, while also charging CNN to
> carry their signal. It is my understanding that the settlement is between
> the CATV network and CNN, and Hughes is only transit paid for by CNN out of
> this settlement revenue. 
>
> As diagrammed (with Internet / CableTV models referenced), the settlement
> model should look like this:
>
>       consumer pays local access provider  (ISP / CATV)
>       local access provider receives content from transit provider (NSP /
> Satellite)
>       transit provider is paid by content provider ("webcaster" / Cable network
> channel)
>       content provider charges local access provider
>
> Looking at a few other industries, there are significant parallels.  With
> postal service, the producer of the content usually pays the transit
> provider to deliver the content to the recipient. I.e. Compaq pays UPS to
> ship a new computer to me. I pay Compaq for the content. Of course, items
> can come "postage due," but not typically when the sender has also paid
> postage. Does this infer that content producers in the Internet are not
> paying 100% of the delivery expense? Considering there is no charge between
> UUNET subscribers outside of the fee each pays to connect (i.e. the process
> of sending packets to another UUNET subscriber does not create additional
> charges outside of the base fee), this does not seem to be the case. 
>
> What then is the origin of the peer point charge? The expense of delivering
> the traffic to the exchange for consumption by another external network?
> Wasn't this paid for by the content producer (i.e. what is my  $3,000 /
> month going for, if not for transit to exchange points? Local loops only
> cost $340). Again, it appears that freight has been paid for already in the
> UUNET model. It appears that the primary motivation for UUNET's move can
> only be to eliminate competitive pressures from mid-sized ISPs by
> restricting financially viable peering to a handful of providers,
> subsequently increasing network service prices.
>
> Putting our company into the above model, Intellitek (a content provider)
> is not interested in charging local access providers for access to our
> products at the current time. Marketshare is of significant value, and we
> value the unrestrained access to our services consumers of the respective
> local access providers.  ISPs represent a significant consumer base, and
> unrestrained access by these consumers to our content services is key to
> the success of our application.
>
> However, if our transit provider (UUNET) suddenly impacts our ability to 1)
> set our delivery policy (presently at zero charge per consumer) and 2)
> limits the extent of market reach in its attempt to profit from our
> content, I would imagine that we would not continue the use of such a
> transit provider, with one exception.
>
> If we balance the settlements by charging the transit provider, we
> subsequently create a situation where charges are being passed on. I.e.
> UUNET becomes a wholesaler of Intellitek application services. UUNET
> benefits from content consumed from our application service through peer
> points. Content is subsequently transfered to UUNET's domain through a
> distributor arrangement for delivery to ISP "retail outlets."
>
> This may work in an environment where peering is not restricted on a casual
> basis, and multiple transit arrangements are available. I cannot imagine a
> Compaq or Digital limiting distribution of its product through only one
> wholesaler -- and content providers equally would not support such a
> relationship with its transit provider.
>
> I expect that if UUNET continues its course, content providers on its
> network will either migrate to other networks to ensure delivery of their
> content to their market without restriction, or impose settlements on UUNET
> that balance the economic model and open their networks multiple transit
> providers.
>
> JRS
>
> James R. Saker Jr.                     Intellitek Inc.
> President, Network Media Division      voice: 402.333.6233
> jsaker () intellitek com               fax: 402.333.6432
> http://intellitek.com  
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