must read really FCC NPRM ban on Paid Peering harms new innovators

[Dave Farber <dave () farber net>]

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 net
> Subject: 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 Hanks
> Subject: RE: [IP] must read really FCC NPRM ban on Paid Peering  
> harms new innovators
>
> Why 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: ip
> Subject: [IP] must read really FCC NPRM ban on Paid Peering harms  
> new innovators
>
>
>
>
> Begin forwarded message:
>
> From: Stan Hanks <stan () colventures com>
> Date: November 12, 2009 4:07:33 PM EST
> To: dave () farber net
> Subject: RE: [IP] Re:    FCC NPRM ban on Paid Peering harms new  
> innovators
>
> Wow... This all brings back a ton of stuff...
>
> So, in the early 90s, I was involved in the creation of the MAE East
> peering point. Initially, it was a "Metropolitan Area Ethernet" to  
> solve
> Steve Wolfe's problem of not getting Marty Schofstall and Rick Adams  
> to
> agree 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  
> packets
> with 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 was
> needed. 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  
> things
> happened -- first, there were a HUGE number of entrants to the
> networking game, and second, traffic flows became inherently  
> unbalanced.
>
>
> At the last point where I had personal knowledge, which was probably  
> '94
> or '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're
> probably 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  
> asking
> for a page to be served, get a potentially unbounded number of bytes
> back in the form of text, image, video, what have you. Instant  
> nightmare
> for 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 very
> difficult 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  
> that
> if 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 are
> only customers of their network provider in order to gain access to  
> the
> information 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  
> with
> content paying the guys with pipes to get it delivered.
>
> But the truth is, it doesn't matter. If you want to do business, you
> have 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, or
> you 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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