[IP] ALSO MUST READ NYTimes.com: Charging by the Byte to Curb Internet Traffic "People seem to be missing the point."

[David Farber <dave@farber.net>]

________________________________________
From: Roger Bohn [Rbohn@ucsd.edu]
Sent: Sunday, June 15, 2008 11:13 AM
To: David Farber
Cc: Bob.Frankston@indigo.pobox.com; "[bob37-2@bobf.frankston.com]"@indigo.pobox.com; Michael.O'Dell@indigo.pobox.com; "[mo@ccr.org]"@indigo.pobox.com
Subject: Re: [IP] MUST READ  NYTimes.com: Charging by the Byte to Curb Internet Traffic "People seem to be missing the point."

Regarding the reaction to the NY Times article and the whole subject of charging by the byte, let me point out that the correct way to charge for scarcity of bandwidth is ALSO something that many readers of this list will distrust.

>From: Michael O'Dell [mo@ccr.org]
>
>Since bit *rate*, not bit mass, is the instantaneously-exhaustable
>resource in packet network, if they were actually worried about
>network engineering, they'd be going to the burstable charging
>model which is known to worth both technically and economically.
>it relates the charges directly to the exhaustion of the
finite resource - bit *rate*, not bit mass.

Mr. O'Dell is correct about rate, but the scarce resource here is _congestion_ flows, which are highly variable. The correct (economically, and in my modestly informed opinion technically) way to charge for these is with some form of spot pricing, i.e. prices that change in real time and with location. When there's no congestion, no matter how much bandwidth someone currently uses the charge should be zero. Conversely, when your neighbors are running real-time movies via IP, both you and they should be charged congestion fees for whatever each of you is  doing.  Even if you did not "cause" the congestion, your usage is   exacerbating it for everyone.

The easiest analogy is to cellular phones, which have gone as far as a two-level time-of-day price (free/ not free), but otherwise stayed away from a "burstable charging model."  Electricity sellers are starting to play with spot prices. But in general they are viewed as out of the question for consumers because of the  uncertainty and variability they introduce. Your monthly payment becomes even harder to predict than with a pure charge for bytes.*

So like Network Neutrality, this is a case of "be careful what you ask for...." How many of IP's readers would like to give some kind of real-time pricing power to their ISP?  Imagine the problems of auditing your bill to ensure that it was correct, for example. Solvable technically, but when there is a rapacious quasi-monopolist writing the bills it would require a lot of trust.

So a time-of-day based surcharge for bytes seems like a reasonable compromise between tractability and theoretical optimality. This is not what Comcast is proposing, though, which lends credence to the theories that they have a very different agenda than what they claim.

Long-term solution: We need a third source of high-bandwidth to the home  - probably nothing less will get the ISPs to behave. This would also, most likely, solve the net neutrality problem without a lot of dangerous micro-regulation of what behavior is acceptable.

Roger

*(Doing spot pricing  economically correctly for the Internet would be  harder than for cellular, because of  end-to-end issues, which can lead to a lot of nonsense about capacity  reservations, "fair queuing," and the rest.  Hans-Werner Braun, KC Claffy, and I wrote a paper about end-to-end spot pricing in the mid 90s. If they are only worried about local congestion, though, as the Comcasts of the world imply in their PR, then backbone and other-end congestion can be ignored.)




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