North American Network Operators Group
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Re: [Latest draft of Internet regulation bill]

  • From: Tom Vest
  • Date: Sat Nov 12 20:04:54 2005 
On Nov 12, 2005, at 6:48 PM, Christopher L. Morrow wrote:
Are you suggesting a return to cost-based regulation? At one time airline
prices were regulated based on air mile distance.
No, I'm not, actually I think that the answer to my question was: "All
bits cost the same to push inside 'my' network" (where 'my' is really any
single entities network, and the cost is for that entity).
Is cost-based regulation so bad for critical, non-substitutable infrastructure? That's how the US market got flat-rate Internet access.

Is flat-rate the same thing as "making some people pay for more than they want"?

MCI Friends & Family charged different rates for phone calls depending
whether the person you called was also a MCI customer. Was MCI illegally
interfering with people calling AT&T customers by charging a different
rate? Level 3 charges different rates for "on-net" versus "off-net"
traffic. Is Level 3 illegally interfering with people accessing content on
other ISPs buy charging more? Many cell phone companies offer "free"
minutes when you call other people in your plan. Is Verizon illegally
interfering with other cell phone companies by charging more? Or in each
of this cases, are they actually charging some people less? How do you
decide what is a "discount" or a "surcharge"?
good question, I think all of the examples though have on thing in common:
all the 'discount' is on 'local' traffic (local to the network), the cost
differential is applied to 'non-local' traffic. This sort of goes to my
point that inside a network bits all cost the same, its the external
places that cost more... Are the folks advocating making content providers
pay for 'access' to their customers willing to stand up competing services
locally? (something to keep their customers who lose access to things they
really care about)
There no such thing as a market price for critical, non-substitutable infrastructure. Most markets/regulatory jurisdictions around the world don't have / never had any cost-based pricing requirements for network infrastructure, and in most of those markets the "market price" of infrastructure inputs is somewhere between 90-200% of the projected revenue potential that the infrastructure creates. That's why there are so few operators/ASNs in most countries -- there's very little upside for non-telcos -- and one of the reasons that markets like the US spawned so many infrastructure users.

That may be where the Internet is headed in the absence of some major trend shift, but is that where it should go, where we want it to go?

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