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RE: peering charges?

  • From: Danny Stroud
  • Date: Mon Jan 27 11:48:56 1997

Fine. But when pricing models get complicated I do what Pushpendra Mohta said, 
"follow the money."  That usually clears things up and makes it easy to 
discern who is the seller and who is the buyer. Refer back to my original 
message. 

I have seen people buy things that I never really understood the basic 
motivations---  ultra expensive sports cars, for example.  Have you ever heard 
the question, "Why do they charge so much for Italian sports cars?" Answer: 
Because they can. 

des 

----------
From:  Mike Leber
Sent:  Monday, January 27, 1997 1:28 AM
To:  Danny Stroud
Cc:  Vadim Antonov; davec@ziplink.net; madison@queber.acsi.n.et; 
nanog@merit.edu
Subject:  RE: peering charges?


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.

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