Re: The Great Exchange

["Roeland M.J. Meyer" <rmeyer () mhsc com>]

At 12:42 PM 6/2/98 +0200, Julian Rose wrote:
> Some crystal ball gazing... 

Those who peer too much, into crystal balls, often eat glass <grin>.

> I expect to see an amount of distance billing in the future, but only
> alongside QoS billing, for example.
>
> Email - Non urgent, low traffic - I would expect this to remain flat rate
> (i.e. Free with connection).  As with browsing traffic etc.  Caches will
> add an intersting factor to this model, e.g Retrieving files from the ISP's
> local cache - (Free with connection), Retrieving from distant locations,
> perhaps dependant on time of day etc.

Why would there be a difference? On one hand, ISP disk capacity is used and
OTOH ISP band-width is used. These days, about the same cost. Besides, it's
second-order effect anyway and the market won't stand-still for it.

> Voice over IP - This is starting to get bandwidth and delay sensitive
> dependant on the efficiency of the Internet in the future, I expect this
> might start to be billed dependant on distance/providers travelled over
> etc.  As otherwise if two ISP's do not directly connect or peer, an
> intermediate ISP would have to carry this traffic.  If this traffic
> requires a high QoS, I would imagine the intermediate ISP would want to
> charge for it.

Does that "Intermediate ISP" include such as MAE-WEST? They're already
charging for it, have you seen NAP bandwidth prices lately?

> Video over IP - When it comes around and end users via their xDSL
> connections want to receive 1.5Mbs of video traffic - I can see definate
> costs being incurred.  Of course multicast techniques, caching etc will
> make this not a geographical distance based pricing model, but a pricing
> model will surely evolve.

Until we get decent bandwidth at the end-user site, this simply won't
happen. Modem connections barely support Voice-over-IP. I mean a
preponderance of end-users must have sufficient direct band-width to make
them a decent market. Even when this does happen, they won't want to use it
for video. A classic is the MCI commercial where that gal was telecommuting
(bath-robing at noon), the last thing such would want is a video-based
conference. Been there, doing that.

> Of course this argument of carrying others traffic applies to peering also,
> if two ISP's peer a similar amount of data, no problem, but if it is one
> sided then billing would have to occur.  In other words, we will all buy
> and sell our connectivity to each other.
>
> One thing this state of affairs would lead to if it occurs is some scope
> for very interesting pricing models, value adds etc.

I don't think so. We have had remarkable lack of success in moving away
from the flat-rate pricing model, in the face of competition. Customers
want predictable bills. Volume based billing will not give them this.
However, they are more than willing to pay higher flat-rate costs, if there
is value-add.

> A topic measured earlier was the ratio between payroll/equipment costs vs
> line costs.  The ratio of this will depend on the model of the ISP.  A
> dialup provider will incurr much higher support costs for a much smaller
> bandwidth than a transit/backbone provider, which the line costs would be
> expected to be the majority of their costs.
>
> ... Perhaps a bit more than 2 cents...
>
> Julian Rose
> ----------------------------------------------------------
>              Internet Planning & Design
> AT&T Unisource Communications Services, Hoofddorp, Holland
> Tel: +31 (0)23 569 7878          Fax: +31 (0)23 569 7455
> ----------------------------------------------------------

___________________________________________________ 
Roeland M.J. Meyer, ISOC (InterNIC RM993) 
e-mail: <mailto:rmeyer () mhsc com>rmeyer () mhsc com
Internet phone: hawk.mhsc.com
Personal web pages: <http://www.mhsc.com/~rmeyer>www.mhsc.com/~rmeyer
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