February 04, 2006

Pricing Internet Access

In the raging discussion that is commonly known as Network neutrality, the incumbents suggest that companies like Google are using their pipes for free. But a long time back Tom Evslin (para 4) had pointed out that the way traffic is passed between “subnetworks” that make up the Internet: essentially a subnetwork that is carrying another subnetwork’s traffic gets credit from the latter; between equals the credits cancel each other and no real money is exchanged and between unequals, I suppose there will be some form of settlement. Hence, Tom’s point that the incumbents are not carrying the traffic for free. Indeed, the incumbents should rejoice because most of their customers are receiving traffic from the Internet, thereby allowing the incumbents to accumulate credit.

But it also points out the error in current charging scheme for Internet access. In many countries, the Internet access is tariffed based on the amount of downloads. But it shouldn’t; it is in the interest of the ISPs if their subscribers download a lot. They should be worried only about the upload. So they should change the tariff, charge the customer for uploads and should increase the revenue potential by deploying access systems that have huge upload capacity. It seems that such systems are inherently cheaper to deploy as well.

Posted by aswath at February 4, 2006 09:30 AM
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Comments

Are you kidding? Since when do the ISP's get PAID for the asymetry of traffic? They have to PAY the backbone guys for access, don't they?

Posted by: Bozo at February 5, 2006 01:04 AM



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