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Re: peering charges?
From: "Jeff Young" <young () mci net>
Date: Mon, 27 Jan 1997 14:08:44 -0500

all of this pseudo-marketing is enough to make my head spin.
the practice of limiting peering agreements has nothing to do
with collusion and we all damn well know it.  enough of us
have been around long enough to know that to draw simple 
comparisons between the phone business and the internet business
is foolish, if not dangerous.  settlements, as they exist in the 
phone industry do not make sense for the internet industry.  
there may be a way for internet networks to settle on traffic 
imbalances but i haven't heard a decent one proposed.  do we assume
that all traffic is web traffic (pull model)?  and if that changes?  
what about multicast traffic (push model sometimes, pull model others)?
who derives benefit, and who should pay?

sure, mci has a good reason to connect to bell atlantic and all of the 
LOCAL carriers in the telephone business.  their customers are 
potentially our customers for long distance traffic.  we can BILL them.
if MCI the phone company decided not to offer its long distance to a
certain company's local customers, i would expect that the feds would 
be all over us/them.

if internetMCI decides that we should or should not peer with
another network the decision is made purely on traffic flows.
if coast to coast traffic moves over our network twice between
ourselves and the peer, that's not a peer.  if the peer has a
number of nap connections and a ds3 ld packet network, that's a peer. 

the practice that you refer to as 'unwise' keeps us from losing 
our shirts in an already-too-competitive marketplace.  how, you 
ask?  by forcing mci to continually buy bandwidth from ixc's.  
and the bandwidth is only half the battle, unless the ixc's start
offering higher speed pipes, the engineering to keep so many connections
going to a single ixc will become very costly.  working 
without such a policy would be the equivalent of allowing a small
start-up local phone company to demand and get free long distance
for all of it's subscribers from mci.  i have no way of billing
anyone elses customers, there is no dileniation of service between
local and long distance internet so we're left with the 'you move
half the packets and i'll move half the packets' model.

the end of your post is interesting, however.  it may come to the 
point where larger carriers are forced to tag local as's local and
to peer on the 'local' basis.  but what benefit for that added 
complexity?  local networks would still need to buy transit from
someone.  

Jeff Young
young () mci net


To: nanog () merit edu
Subject: Re: peering charges? 
Date: Mon, 27 Jan 1997 09:52:15 -0800
From: Paul A Vixie <paul () vix com>
Sender: owner-nanog () merit edu

[...] say your MCI and you have a smaller provider that wants to peer with
you, you had rather have them buy a pipe than let the peer and ride your
network for free.  It's all about market share, plain and simple.

That's the conventional thinking.  (I won't say "conventional wisdom" since
this is not a wise practice.)  The trouble with this is called the Sherman
Act, which has a provision for something like "collusion in restraint of
trade."  I'm not pointing at MCI -- I have no idea whether they have ever
thought as you ascribed above.  But in your example, MCI does not know who
the nonpeer will ultimately buy transit from -- all it knows is that if MCI
refuses to peer, the nonpeer will have to buy transit from someone who *does*
peer with MCI.  If reasonable suspicion can be raised that this is occurring,
then everybody in the "first tier" peering club can be investigated by the
feds.

This isn't a "big" deal, Microsoft has been investigated by the feds and
they're still in business.  In fact, it didn't even hurt their reputation,
let alone their bottom line.  When the big nets started demanding private
peering and refusing to peer with little guys, I had to just shrug and think,
"well, they are now big enough that they do not fear gov't intervention."

On the other hand the industry will end up regulated due in part to practices
like these.  And I received some mail (due to my NIC registrations for past
customers) a few weeks ago inviting my ex-customer to join a class action
lawsuit against a couple of "first tier peering club" members, that was all
about this kind of squeezing.

We really do just need to send eachother local-region routes, which keeps
local traffic local, does not give away wide area telecom to noncustomers,
takes away some causes for lawsuits and new legislation, and moves us back
to a level playing field where folks without wide area networks have to buy
transit and do so without complaining.


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