This post by Dave Siegel on tiered peering addresses some the most high-anguish issues in a truly application-neutral Internet:
The issue of peering is this. If ATT demands that content providers pay them in order to put them into the premium class (similar to how our IP-VPN customers pay us to put traffic in the premium queue, but on a whole different level, then that content provider has to connect directly to the ATT core (i.e. become a directly customer of theirs). Unless QoS/CoS is enabled across the existing peering connection that exists between ATT and Global Crossing, and then a content provider could connect to Global Crossing and we could transport the packets between the content provider and ATT at a premium level and give them to ATT at a premium level.
The kicker is that today peering amongst the top providers (known as the Tier 1, not to be confused with the other use of tier in this post) is settlement free. So here is where the business issue enters the equation. If the Best Effort Internet traffic remains settlement free, what is the charge for the premium traffic, and how will it be billed? By the bit? In both directions? Do we bill ATT for the premium traffic that we receive from them and vice-versa? But what about VoIP where the traffic is roughly equal bi-directionally? How does that help ATT if the billing is a wash? Believe it or not, these are the same discussions that have raged in the Internet peering debate since the Internet went fully commercial in 1995. Ultimately, we all decided that peering should remain settlement free, although some providers do requirement settlements if the ratio of in to out traffic is too high because of the unfavorable economics.
What if ATT billed the content provider directly and Global Crossing was just a pass-through, with a contract with ATT to ensure that we didn’t give them any premium traffic that wasn’t being billed. Then there are the billing mechanics to content with…ATT has to know which content provider to bill for what amount of traffic, since they will probably get multiple content providers sending them premium traffic over the same link.
There is also the technical issue of insuring that the content provider that pays for the priority ride on ATT’s network gets it in both directions. In order for that to happen, ATT has to identify the content originating at each broadband connection and identify it as premium traffic. This is not so easy in current edge equipment…it is not only processor intensive but it requires a lot of administrative overhead. The lists of IP addresses that identify content providers and their applications will need to be updated across all customer connections every time a provider connects or disconnects from this premium service.
Okay, for now let’s assume that we can get that all sorted out so that ATT can collect additional revenue, either by billing us and Global Crossing passing that cost on to the content provider, or by collecting it directly from the content provider.
How does the content provider who is either still trying to turn a profit or turning a profit (but not an unreasonable one) going to pay this added business expense. They probably can’t absorb it in their current business model, and even if they can to maintain margins they will have to raise prices. Since most content revenues are derived from advertising (see Andrew Odlyzko’s paper Content is Not King, they will have to raise their ad rates. I’m not sure if advertising will pay more, my understanding is that it’s a pretty competitive business as it is.
While other technologies like ye old Infranet iniative or IMS may have something to say about improving the billing mechanics around this, the business implications are still something to be concerned about.
If you don’t understand it, you probably aren’t entitled to an opinion on the various attempts at regulating Internet service levels we’re contending with these days.
H/T Lippard Blog