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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: More Sidgemore on per-bit pricing (fwd)
Folks: While cost of a service and price extended to users dont have to be correlated, it helps to understand what the costs are. The cost of carrying Internet services is very destination and origination specific. Destination/Origination in this context includes the distance traveled which affects the raw cost of transport, but also the specific destination/origination country/region where regulation might affect the cost of doing business. The argument about billing based on destination being very expensive is not entirely true. Whether on not they bill on this data, most any one planning a global IP backbone measures traffic distributions very carefully, not only for network engineering but also to understand the cost of business. The granularity required to bill on this data may have to improve -but it is not a big leap to make. Lot of what pricing you see is a reflection of the fact that large portions of the total IP traffic is within the US. It has also been cheaper for non US ISPs to backhaul to the US and use the US as a hubbing node rather than build in region networks because of the monopoly environments. This has also contributed to the US being the location where the majority of the traffic has been switched. Both of these trends are changing. In this new world, the share of costs so far being borne by non US ISPs and people building global IP backbones will need to be re-examined. Many of the arbitrage based opportunities that build on this "share of cost" or distance insensitive pricing disparity will vanish. The cost models will reflect new global realities. Also, based on the basic wisdom -if the cost of travel is distance sensitive, you try not to travel large distances- people will start paying more attention to elegant content distribution architectures which include caching/mirroring and use of multicast. (Before anyone picks on this, I understand the win on performance is much larger with these techniques than any spectacular bandwidth savings. Because the speed of light is what it is, some of these techniques may be the only way to fill broadband consumer pipes etc.) Finally, as to the other discussion in this thread about flat rate vs metered pricing. If you buy into the basic notion of IP connectivity becoming a commodity service and look for parallels in other industries you find that many of the mature ones are indeed metered usage priced. Many appliances tap into the electricity service in our homes, and we pay for them aggregated roughly on a metered basis. Within physical limits, one can use all one wants .. i.e the electricity service has a "burstable" component. Even the postal service offers a flat rate (hence the term "postalized rates") within a region and a different one for inter-region packages. This is further modulated by the cost of small packages vs big packages that have different service costs. Why does then paying for many "information appliances" that tap into an "IP service pipe" in a similar fashion seem so outlandish ? --pushpendra Pushpendra Mohta [email protected] +1 619 812 3908 Vice President Internet and Advanced Data Services TCG CERFnet http://www.cerf.net +1 619 812 3995 (FAX)
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