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- From: Karl Denninger
- Date: Wed Aug 26 16:40:50 1998
On Tue, Aug 25, 1998 at 08:17:48PM -0700, Paul Vixie wrote:
> > [...], even if someone is NOT doing "best exit" (or there is only one
> > exit) that doesn't change the fact that the transit customers on the other
> > network paid in part so they could get there!
> In the current non-market economy used to fund the Internet, it's extremely
> rare for someone to actually pay by the bit-mile for the costs their service
> provider undergoes on their behalf. Billing strategies I'm familiar with are
> all in terms of maximum or average or peak or whatever, per unit time (like
> for example, T1 by the month.)
That's nobody's problem EXCEPT for the person who sold the transit at a
I dispute your assertion - pricing is in fact market-based. Whether you're
on a measured ("burstable") circuit or an unmetered one, the person you buy
it from has computed some statistical model which says that they can sell that
transit at the price quoted and not lose their shirt. If they're wrong, they
go out of business. If they're right, they make a profit.
That model is between the transit customer and the provider they buy from,
and is frankly nobody else's business. To assert that this model is not
"market based" is to assert that in a marketplace with 5,000 US providers
that there is effective collusion and pocket-stuffing going on - which I
simply don't buy. The only way you can make such an attempt stick is if you
have market power - which very, very few firms actually have to ANY level in
None of this has ANYTHING to do with what the customer has purchased - which
is TRANSIT TO THE ENTIRE INTERNET. Not just the parts that someone else
will pay that same provider to communicate with.
Now, you might argue that some providers want to sell transit to only part
of the Internet. I'd agree with you there - some providers will in fact do
this; its called private negotiated peering (access only to a given backbone's
customers, or to some subset of the peer relationships that a given provider
has), and is ALSO a valid thing to sell someone.
But general transit connections, which are what 99% of the end-user
attachments are buying, are the general case and what is actually under
The fact is that when I, as a TRANSIT customer, buy a connection into Network
<X>, what I have purchased is transit to the ENTIRE Internet. I don't CARE
(as a customer) whether the backbone provider loses or gains on the packets
I source and sink - that's the provider's problem, and their business risk
to manage and express in their pricing formula (which we both agreed to when
we signed our contracts). What I care about, and paid for, is the
Now if that connectivity is *deliberately* refused or interrupted, I argue
that the provider is in violation of the implied covenants and warranties
that attach when you sell a TRANSIT connection.
This is NOT the same as an *accidental* discontinuity - we all agree, I
think, that the model today is "best effort" beyond your own network
infrastructure - because we can't control backhoe fade.
But to turn down a peering session on purpose, or to refuse to establish one
where both firms are at a public exchange, is a different matter entirely.
> People who run big networks can't recover
> their bit-mile-related costs from their own customers
Yes they can. Its called negotiating appropriate pricing with your customers.
> Closest-exit routing doesn't do this. The biggest packets of the session
> are being carried by the person who isn't getting paid any money by the
> sender and is not being paid by the bit-mile by the receiver.
So what? That's a business failure on the transit-selling firm's part, and
nobody else's responsibility.
> I quoted to give this message context: NO. "No, the transit customers on
> the other network did NOT pay the costs of this traffic."
Yes they did. If someone mis-priced a facility or service that is THEIR
problem. Mispricing of a service (more accurately - lowballing a price to
either capture a client from competitors or attempting to generally grab
market share) is a time-honored way of building a market. What crosses the
line into inappropriate behavior is when you do that and THEN try to recover
the costs which you didn't properly factor into your pricing model from
> but we lack the technology for a market economy.
We have a market economy.
We also have firms which have historically tried to win market share not by
service levels, but by lowballing quotes - and then grabbing back that which
they failed to price properly from third parties when their customers
actually USE what they purchased.
All you have to do is look at the 2, 3, 4, or even 5-year "discount levels"
that some transit firms are offering and have historically offered, and then
tell me that a given transit firm has the right to offload THEIR business
risk (which they now may be unhappy with, but were clearly happy with at the
time they signed the original deal!) on someone else's back!
> Paul Vixie
Karl Denninger (karl@MCS.Net)| MCSNet - Serving Chicagoland and Wisconsin
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