Re: Chinese bgp metering story

[tvest () eyeconomics com]

Nobody here remembers ICAIS?
This is actually an old story/ambition, which started elsewhere, and  
not long after the the 1997-1998 "rebalancing" of ITU-mediated  
switched telecom settlements.

Two nuggets from the history books pasted in below.

Of course, just because it's not new doesn't mean that it's not  
newsworthy. As I recall, this issue precipitated a fairly titanic  
behind-the-scenes struggle last time around...

TV
_____


AAP NEWSFEED
July 15, 1999, Thursday
Telstra chief calls for equitable Net traffic cost sharing

SYDNEY, July 15 AAP - Telstra Corp Ltd chief executive Ziggy  
Switkowski today called for an equitable arrangement for sharing the  
cost of carrying Internet traffic to and from the United States.In an  
address to the Asia-Pacific Economic Cooperation (APEC) business  
conference here, Dr Switkowski said US operators were currently  
enjoying an implied subsidy of 30 per cent of the costs of  
international Internet connection...

The charging system operates on a similar principle to that used in  
international phone charging arrangements, he said. "For Australia  
alone, that represents approximately $50 million a year, and the sum  
varies from country to country depending on usage," Dr Switkowski  
said. "Telstra's view is that the future of e-commerce could be  
undermined if investment in capacity growth does not match growth in  
demand. "But infrastructure providers outside the US need to have  
sufficient confidence in cost sharing to invest in new capacity to  
meet the exploding demand for bandwidth"...

_____

Economist
October 19, 1996
Too cheap to meter? The fact that the Internet seems free to many of  
its users has been one reason for its success. Now it may have to  
change. But how?

...If the costs of the telephone companies and the Internet are  
similar, why are their methods of pricing different? The answer is  
that telecoms charges bear little relation to costs. The telephone  
industry is regulated nearly everywhere and in most countries prices  
are set by bureaucrats and commissions; real costs are hidden by a  
layer of crosssubsidies. The Internet, on the other hand, is  
essentially unregulated.

At present, telephone companies typically make less than half their  
revenue from fixed charges rather than from the price of each call.  
Tim Kelly, of the International Telecommunication Union in Geneva,  
reckons that the share of revenue from connection charges and monthly  
rentals has risen in the past decade from about 33% to 40%; he expects  
an increase to around 60% over the next ten years.

The companies are not keen on such "rebalancing", since it usually  
involves reducing lucrative call charges rather than increasing fixed  
charges. But without it, they are vulnerable to competition, including  
competition from the Internet, which can offer rival services far less  
expensively...

...Such settlements are a source of endless argument: America's long- 
distance carriers complain that local telephone companies overcharge  
them. Moreover, they transfer huge sums of money between countries: in  
1994, carriers based in the United States handed over a net $ 4.3  
billion to foreign carriers. Because countries in which telephoning is  
cheap (such as America) tend to ring countries where calls are dearer,  
American carriers grumble that they are subsidising the inefficient  
and uncompetitive. Gradually, therefore, telephone companies are  
moving towards a "sender-keeps-all" system, where they will charge  
each other a flat fee for access to a certain amount of transmission  
capacity, rather than bill each other on the basis of use.


That would bring them increasingly into line with what happens on the  
Internet, where settlement is rudimentary. There are payments between  
each of the Internet's hierarchy of links: access providers pay their  
regional network and regional networks pay the companies that operate  
the high-capacity long-distance parts, the backbone of the system. But  
such payments are mostly based on the availability of capacity, not  
its use: service providers simply agree to carry each other's traffic  
without totting up precise bills.

This encourages a "hot-potato" approach: Internet access providers  
hand traffic on as quickly as possible to the carrier taking it to its  
ultimate destination. That benefits small service providers and  
irritates big ones, who say they get little reward for the effort of  
carrying the traffic for most of its journey. In turn, this lessens  
their incentive to invest in new capacity.

The problem of settlement is worse for access providers outside  
America. Led by Singapore Telecom and Australia's Telstra, they  
complain that they have to pay all the cost of leasing lines between  
their country and the United States. "The rest of the planet  
subsidises the United States," argues Barry Greene, who works for  
Cisco, a maker of routers, but was previously with Singnet, the  
Internet arm of Singapore Telecom. The high cost of leasing  
international lines means that upgrading them to ease congestion can  
cost a non-American company ten times more than in America.