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RE: peering charges?

  • From: Mike Leber
  • Date: Mon Jan 27 03:26:58 1997

On Mon, 27 Jan 1997, Danny Stroud wrote:
> I empathize with your angst over the charging issues. But the answer is in 
> microeconomics. Those that have something that others want can charge for it. 

Yes, however things are more complicated than that.

The Internet ecomony is particulary bizzare in that the activity of a
vistor visiting a web site (the majority of Internet traffic) is not a
simple zero sum economic transaction. This is because the visitor wants to
visit the site and the site owner typically wants them to visit (both get
value). Assume you have a network A (which only does dialup) serving
100,000 dialup customers, and network B (which only does hosting) hosting
10,000 virtual hosts.  By directly peering they create new value for their
respective (and different) customer bases. 

Unlike consumable hardgoods, you can create more of your product (external
connectivity) by selectively giving it away.  The selection process,
amoung other things, aims to reduce lost sales by not giving peering to
potential customers. 

Mike.
ps. Some may say networks A and B are enduser networks, but most of the
largest networks now offer one or both of these services directly.

+------------------- H U R R I C A N E - E L E C T R I C -------------------+
| Mike Leber             Direct Internet Connections     Voice 408 282 1540 |
| Hurricane Electric      Web Hosting & Co-location        Fax 408 971 3340 |
| mleber@he.net                                           http://www.he.net |
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