Re: The Great Exchange

[shields () crosslink net (Michael Shields)]

In article <19980528100840.19859 () scfn thpl lib fl us>,
"Jay R. Ashworth" <jra () scfn thpl lib fl us> wrote:
> On Wed, May 27, 1998 at 10:34:18PM +0000, Michael Shields wrote:
[...]
> > Why are you assuming that the Internet will continue to have
> > non-distance-sensitive pricing, when it clearly has distance-
> > sensitive costs (ultimately)?
>
> Because that has been the primary driver to date of the kind of growth
> the Internet has undergone.

Mature markets and new markets behave differently.  $19.95 unlimited
dialup was a big factor in 1995 and much less so now.

> That it has distance sensitive costs only
> matters if you're trying to be a nationwide ultra-backbone.

Actually I was thinking about international ultrabackbones.

I don't see any theory or evidence that they are going away or being
marginalized.  You will always have to deal with them.  It's in their
interest to be sure that the pricing is fair.  I think pricing based
on the actual destination makeup of your traffic is more fair than pricing
based on the assumption that your traffic is like everyone else's.

I could be wrong, and I'd be happy to be shown why.  But I think
distance-pricing has a sound basis, even if it never materializes in
the market.

The major reason I see that it might not happen is that customers
would tend to remain fairly similar to each other in terms of their
locality; just as when customers have similar bandwidth usage,
circuits tend to be sold unmetered.

If I were an Australian ISP, I'd look very seriously at pricing
transoceanic packets different from intracontinental packets.  From
what I understand the market there would be accepting; and unless
there is a flaw in the reasoning of my message yesterday, you can
collect that data cheaply with today's technology.

> and the "big 5" would be _really_ pissed off.  Good.

You think ultrabackbones are doomed?  Why?
-- 
Shields, CrossLink.