[ppml] 2005-1 or its logical successor

Tom Vest tvest at pch.net
Thu Nov 10 00:34:05 EST 2005

On Nov 9, 2005, at 11:22 PM, Christopher Morrow wrote:

> On 11/9/05, Stephen Sprunk <stephen at sprunk.org> wrote:
>> Thus spake "Howard, W. Lee" <Lee.Howard at stanleyassociates.com>
>>>> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
>>>> Behalf Of Stephen Sprunk
>>> I hear a lot of support for settlements from telcos,
>>> some from governments, and little from network people.
>>> It effectively drives hosting companies out of business,
> I'd be concerned, am concerned, about 'settlement' situations. Perhaps
> its a misunderstanding of them on my part though :) I'd be concerned
> that there are more than 2 parties involved in the conversation, and
> potentially someone in the middle could bend traffic paths to
> influence their business needs (putting competition out of business or
> just censoring people?) Anyway, probably not a topic for this
> conversation, just worrisome :) (knowing how evil bean counters can
> be...)

Be afraid, be very afraid. The bean counters that are nostalgic for  
this must have very short memories -- or very questionable  
intentions. Most developing country telcos vacated the old geographic  
settlement system for international voice services back in 1997  
because it had ceased to be viable. Why? Because prices and the value  
of currencies vary across markets, and these variations (plus new  
technology) tempted some operators to suppress demand in their own  
markets (to maximize their external settlement receipts), and tempted  
some others to offshore their service platform in order to voice spam  
their own markets, which also pumped up their home market settlement  
receipts. The cost of these diversions reached the tens of billions  
of $US by 1996, which prompted the US to lead the charge to the door  
shortly thereafter.

So long as costs, prices, and currencies vary between markets, and  
its technically/institutionally possible to play such tricks,  
arbitrage will confound any effort to map economic sanity onto  
whatever benefits this arrangement might provide in terms of routing  
sanity/bloat deceleration. To date, the only proven way to avoid such  
arbitrage is to operate a hermetically sealed network, where  
everything coming in/out is closely monitored...

Which, sadly, is not to say that that little complication would  
unacceptable to everyone. If you hear a developing country telco  
advocating settlements, they're probably remembering the good old  
days when international settlement receipts helped to cross-subsidize  
domestic government services. You hear a rich country telco  
advocating something like this, you can bet they're doing it with  
full understanding of what would be required to make it work  
economically. Be very afraid...

>>> if they have to pay for transit (settlement for inbound
>>> traffic) but carriers get to charge at both ends of the
>>> stream.
>> OTOH, people with big upstream pipes, like hosters, could end up  
>> receiving
>> huge settlement checks for inbound traffic on pipes that are today  
>> only
>> filled in one direction.  I've seen no data to indicate that the net
> If they charge lots of settlement, perhaps people won't send packets
> their way? or will degrade performance intentionally? Or force that
> traffic through a competitor to impale them on a higher cost link :(

>> movement of money would be substantially different under this plan  
>> (or that
>> it wouldn't, for that matter).
>>> Is there evidence that this model provides a network
>>> that is better, faster, or cheaper?
>> It's arguably "better" and "faster" because local traffic stays  
>> local and
>> inbound traffic takes the most direct route; at a macro level,  
>> both are good
>> for the Internet.  Less long-haul traffic means transit prices  
>> should drop,
>> leading to "cheaper".
> it takes the most direct route assuming no funny monkey business with
> routing... assuming people don't have capacity problems in region (or
> at the IX) and don't force traffic on non-optimal paths.
>> Also, by replacing PI-based multihoming with IX-based multihoming,  
>> there is
>> less pressure on the DFZ, leading to cheaper routers, or at least
> I am not sure that local/regional IXP proliferation is going to help
> the DFZ folks all that much in the end. It may remove direct
> connections and direct allocations from their tables. It would
> essentially aggregate all customers in region behind one prefix.
> Eventually the 'regional' IXP would have to become a County IXP then a
> City IXP then Town IXP, proliferating the number of IXP's to a very
> large number (how many towns exist in the USA alone? Does this really
> drop the DFZ table that much?
> Additionally, the DFZ folks now become the 'LD carrier' of the
> Internet and since they don't have direct customers they arrange
> 'settlement' with the IXPs I suppose? I'm not sure this gets us to the
> end goal either.
>> less-frequent upgrades.  And multihoming, at least within one "area",
>> becomes significantly cheaper and easier, which a lot of end sites  
>> would
>> call "better".
> How is a local IXP 'multihoming' me? it's getting me a connection to a
> single 'carrier' with lots of bgp options... or I'm again confused. It
> may get me more than one pipe to the IXP and more bgp options on each,
> and now the IXP-truck-bomb is my failure scenario (and much easier I'd
> think).
>>> but I think having a single point of failure (nuke the IX) in
>>> each geographical area sounds contrary to good
>>> internetwork design.
> <aol>me too</aol>
> -Chris
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