[e2e] end of interest

James Kempf kempf at docomolabs-usa.com
Mon Apr 21 12:47:08 PDT 2008


When I say "for free", what I meant was that when I get my bill, what does 
it say I'm paying for?

What it says is that I am paying  $25 a month for 1 Mpbs downlink and 768 
kbps uplink for the month of, say, March (AT&T just raised my rates).

It does not say that I am paying $x for 250 connections, above which I would 
have to pay incrementally for additional connections (and pay through the 
nose if I get a Storm worm infection).

To see what a difference this makes, consider the California "energy crisis" 
of the early 2000's. Utilities were required to buy power at market rate, 
but only allowed to charge customers a fixed and regulated price. Enron took 
advantage of this situation (kind of like the Storm work authors and 
CanadianPharmacy.com do with the Internet) to make enormous amounts of money 
by manipulating the market. Getting pricing signals right is very important 
because they influence customer and market participant behavior. Getting 
them wrong can lead to all kinds of distortions.

If, as the theoretical studies suggest, the value of networks is in their 
connectivity, then why shouldn't businesses charge for that value? Or are 
you suggesting that the theoretical studies on network value have it wrong? 
Your point about capex of equipment and labor to maintain the network has 
nothing to do with the value provided by the network, it has to do with the 
cost of providing the service. These are two different things.


----- Original Message ----- 
From: "David P. Reed" <dpreed at reed.com>
To: "James Kempf" <kempf at docomolabs-usa.com>
Cc: "Jon Crowcroft" <Jon.Crowcroft at cl.cam.ac.uk>; 
<end2end-interest at postel.org>
Sent: Monday, April 21, 2008 12:02 PM
Subject: Re: [e2e] end of interest

James -

Connectivity in the Internet is NOT free (at least "as in beer").   The
Storm worm used already paid-up capacity, paid for by the users in bulk
form.  One can get confused because the phone companies charge "by the
minute" for some things, but give away *for free* so-to-speak the
always-on connection between home instrument and line card.   How dare
you not pay for receiving all the bits of information that come from
knowing that "no one is calling you right now" - you should pay at
texting rates for those bits, unless you are a pirate.  :-)

I'd suggest using accurate terminology, lest one just add to the confusion.

The primary cost base of a communications company is composed of capex
for the wires and switches, power for them, and salaries for humans who
interface with customers.   None of those are correlated even slightly
with minutes of voice or bits of data.

Economics is hard work, but its probably worth learning the meaning of
the term "free".

James Kempf wrote:
> Jon,
> According to Patrick Peterson at Ironport (presentation week before
> last the RSA Conference), the Storm worm made over 70,000 connections
> during the first 36 hours after infection. And the Storm network earns
> the spammers over $150 million in revenue through fufillment of Viagra
> orders through CandianPharmacy.com from Indian and Chinese sources.
> If the architecture were such that connectivity was not free, you can
> be sure that the ISPs, equipment vendors, and others in the ecosystem
> would do something to ensure that this didn't happen. Otherwise,
> infected users would be screaming about their bills.
>                  jak
> ----- Original Message ----- From: "Jon Crowcroft"
> <Jon.Crowcroft at cl.cam.ac.uk>
> To: "James Kempf" <kempf at docomolabs-usa.com>
> Cc: "Saikat Guha" <saikat at cs.cornell.edu>; <end2end-interest at postel.org>
> Sent: Monday, April 21, 2008 9:10 AM
> Subject: Re: [e2e] end of interest
> so that leads to an interesting conclusion which might align
> business models with anti-spam and anti-ddos economic
> incentives.
> 1. charge a sender for the number of reachable recipients
> per unit time...doesn't  hurt the average joe q public much,
> collects much money of supernodes, big server sites, and
> spammers/ddossers...
> 2. retire
> In missive <026d01c8a3c8$a64278e0$1a6115ac at dcml.docomolabsusa.com>, "J
> ames Kempf" typed:
> >>>the value of the net to users is that it connects them to content. the
> >>>network providers
> >>>are in the business of taking a fraction of the business that the
> content
> >>>providers are in
> >>>...
> >>
> >>If you look at any of the research on networks, most researchers
> agree that
> >>the value of the network is in connectivity. There's arguments about
> whether
> >>the value scales as O( n**2  ) via Metcalfe's Law or something more
> like
> >>O( n log(n)  ) which Briscoe, Odlyzko, and Tilly claim.  But nobody
> claims
> >>that the value of networks is in the bandwidth.
> >>
> >>Last time I looked, network providers weren't charging for
> connectivity,
> >>they were charging for bandwidth. Google makes tons of money off of
> small
> >>text ads that use almost no bandwidth but cash in from free
> connectivity.
> >>Network providers are forced to give away connectivity because the
> Internet
> >>architecture provides no way for them to charge for it. Not a
> particularly
> >>good business when you are forced to give away what is of value and
> charge
> >>for what isn't.
> >>
> >>My blog post this week discusses this more and the connection with
> >>end-to-end (http://cleanslate-internet.blogspot.com).
> >>
> >>                     jak
> >>
> >>
> cheers
>   jon

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