RE: Transaction Based Settlements Encourage Waste (was Re: BBN/GT EI)

[Derek Elder <delder () usweb com>]

And this is precisely why the RBOC's are refusing to pay the settlements
to the CLEC's.  I personally agree that settlement based peering won't
work (with current technology).  Whoever figures out a good solution
gets a truckload of beers from me ;)

> In fact, this already happens with telco termination charges. 
>  For example,
> there are CLECs that call up dialup ISPs and offer free PRIs. 
>  They plan
> to make more on termination charges than they could possibly 
> get from the
> ISPs in a competitive environment.  Aside from the fact that 
> they don't
> have copper in the ground, this is the reason CLECs don't 
> want residential
> customers, since they would be the ones paying termination 
> fees on originated
> calls.  When enough CLECs are concentrating on businesses 
> that only have 
> incoming calls (ISPs, tech support centers, 900-style 
> services, etc), Bell 
> will scream to the FCC that termination charges need to be 
> reevaluated.
> With this approach, eventually *no one* will want customers 
> that make lots
> of outbound calls -- let the other providers have them and 
> then collect the
> money when they call your customers.
>
> The point is it is an unstable environment.  Unlike 
> capitalism where our
> innate greedy nature serves to balance the system, in this 
> case the greedy
> nature serves to unbalance the system by promoting inefficient use of 
> resources.
>
> John Tamplin                                  Traveller 
> Information Services
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