Andrew Odlyzko on pricing and architecture of the Internet

[Declan McCullagh <declan () well com>]

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Date: Mon, 29 Dec 2003 20:17:59 -0600 (CST)
From: Andrew Odlyzko <odlyzko () dtc umn edu>
To: Andrew Odlyzko <odlyzko () dtc umn edu>
Subject: FYI: paper on pricing and architectures for the Internet


Dear Colleagues,

You might be interested in the following paper that I have just
completed.  Comments would be greatly appreciated.

Andrew Odlyzko




Title: Pricing and architecture of the Internet: Historical perspectives
from telecommunications and transportation

URL: <http://www.dtc.umn.edu/~odlyzko/doc/pricing.architecture.pdf>


  Abstract:  With telecommunications in a slump, the search is on for
  ways to re-invigorate this key industry.  The main problems are clearly
  economic much more than technological, and many of the proposed remedies
  would lead to new architectures for the Internet that would provide for
  greater control by carriers.  They would drastically reduce the role of
  the end-to-end principle, the main foundation for the success of the
  Internet, in which functionality resides at the edges of the network.
  The proposals to restrict voice over Internet (VoIP) are just one part
  of this trend.

  Historical precedents from telecommunications for introduction of
  differentiated services and sophisticated charging methods on the Internet
  are discouraging.  The almost universal trend has been towards decreasing
  price discrimination and simpler pricing.

  The history of transportation presents a different picture, with frequent
  movements towards increasing price discrimination and more complicated
  pricing (although with many noteworthy reversals).  Charging according to
  the nature of the goods being transported has been and continues to be
  the norm.  Since the incentives to price discriminate are increasing,
  and the ability to do so is also growing, it is conceivable that
  telecommunications might break with its historical record and follow
  the example of transportation.  It is therefore of interest to examine
  the evolution of pricing and quality differentiation in transportation.

  Some historical sketches on the evolution of pricing in transportation
  are presented.  Their implications for telecommunications, and especially
  for Internet pricing and architecture, are discussed.
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