2309 lines
69 KiB
Plaintext
2309 lines
69 KiB
Plaintext
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Preliminary Draft
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Some Economics of the Internet
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by
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Jeffrey K. MacKie-Mason
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Hal R. Varian
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University of Michigan
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November 1992
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Current version: June 14, 1993
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Abstract. This is a preliminary version of a paper prepared
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for the Tenth Michigan Public Utility Conference at Western
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Michigan University March 25--27, 1993. We describe the
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history, technology and cost structure of the Internet. We
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also describe a possible smart-market mechanism for pricing
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traffic on the Internet.
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Keywords. Networks, Internet, NREN.
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Address. Hal R. Varian, Jeffrey K. MacKie-Mason, Depart-
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ment of Economics, University of Michigan, Ann Arbor, MI
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48109-1220. E-mail: jmm@umich.edu, halv@umich.edu.
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Some Economics of the Internet
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Jeffrey K. MacKie-Mason
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Hal R. Varian
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The High Performance Computing Act of 1991 established
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the National Research and Education Network (NREN). The
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NREN is sometimes thought of as the ``successor'' to the
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NSFNET, the so-called backbone of the Internet, and is
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hoped by some to serve as a model for a future National
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Public Network. It is widely expected that substantial public
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and private resources will be invested in the NREN and other
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high performance networks during the next 5--10 years. In
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this paper we outline the history of the Internet and describe
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some of the technological and economic issues relating to it.
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We conclude with a discussion of some pricing models for
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congestion control on the Internet.
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1. A Brief History of the Internet
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In the late sixties the Advanced Research Projects Adminis-
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tration (ARPA), a branch of the U.S. Defense Department,
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developed the ARPAnet as a network linking universities
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and high-tech defense department contractors. Access to the
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ARPAnet was generally limited to computer scientists and
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other technical users.
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In the mid-eighties the NSF created six supercomputer
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centers which it wanted to make widely available to re-
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searchers. Initially, NSF relied on the ARPAnet, Bitnet and
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_________________________________________
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We wish to thank Guy Almes, Eric Aupperle, Paul Green, Mark
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Knopper, Ken Latta, Dave McQueeny, Jeff Ogden, Chris Parkin and Scott
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Shenker for helpful discussions, advice and data.
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1
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several direct university links for this purpose, but planned
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from the beginning to develop a network connecting the
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centers. The planners of this new network, the NSFNET,
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designed it to provide connectivity for a wide variety of re-
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search and educational uses, not just for the supercomputers.1
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The NSFNET was conceived as a backbone connecting
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together a group of regional networks. A university would
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connect to its regional network, or possibly to a neighbor
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university that had a path to the regional network. The
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regional network hooked into a regional supercomputer. All
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of the supercomputers were connected together by the high-
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speed NSFNET backbone, and thus the whole network was
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linked together.
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This design was quite successful---so successful that
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it soon became overloaded. In 1987 the NSF contracted
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with Merit, the Michigan regional network, to upgrade
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and manage the NSFNET. Merit, aided by MCI and IBM,
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significantly enhanced the capabilities of the network. Since
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1985, the Internet has grown from about 200 networks to well
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over 11,000 and from 1,000 hosts to over a million. About
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370,000 of these hosts are at educational sites, 300,000 are
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commercial sites, and about 130,000 are government/military
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sites. NSFNET traffic has grown from 85 million packets in
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January 1988 to 26 billion packets in February 1993. This is
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a three hundred-fold increase in only five years. The traffic
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on the network is currently increasing at a rate of 11% a
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_________________________________________
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1 See Lynch (1993) for a brief but detailed history of the Internet.
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2
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month.2
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The NSFNET was funded by public funds and targeted for
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scientific and educational uses. NSF's Acceptable Use Policy
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specifically excluded activities not in support of research
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or education, and extensive use for private or personal
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business. This policy raised a number of troublesome issues.
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For example, should access be made available to commercial
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entities that wanted to provide for-profit services to academic
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institutions?
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In September of 1990, Merit, IBM and MCI spun off a
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new not-for-profit corporation, Advanced Network & Ser-
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vices, Inc. (ANS). ANS received $10 million in initial
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funding from IBM and MCI. One of the main reasons for
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establishing ANS was to ``: : :provide an alternative network
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that would allow commercial information suppliers to reach
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the research and educational community without worrying
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about the usage restrictions of the NSFNET.'' (Mandelbaum
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and Mandelbaum (1992), p. 76). In November 1992, the re-
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sponsibility for managing NSFNET Network Operations was
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taken over by ANS. Merit, however, retains responsibility
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for providing NSFNET backbone services.
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In 1991 ANS created a for-profit subsidiary, ANS
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CO+RE Systems, Inc., designed to handle commercial traffic
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on ANSnet. It seems apparent that the institutional structure
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is developing in a way that will provide wider access to
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private and commercial interests. According to the Pro-
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gram Plan for the NREN, ``The networks of Stages 2 and 3
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will be implemented and operated so that they can become
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_________________________________________
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2 Current traffic statistics are available from Merit Network, Inc. They
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can be accessed by computer by using ftp or Gopher to nic.merit.edu.
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3
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commercialized; industry will then be able to supplant the
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government in supplying these network services.''
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2. Internet Technology and Costs
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The Internet is a network of networks that all use connec-
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tionless packet-switching communications technology. Even
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though much of the traffic moves across lines leased from
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telephone common carriers, the technology is quite different
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from the switched circuits used for voice telephony. A tele-
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phone user dials a number and various switches then open a
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line between the caller and the called number. This circuit
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stays open and no other caller can share the line until the call
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is terminated. A connectionless packet-switching network,
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by contrast, uses statistical multiplexing to maximize use of
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the communications lines.3 Each circuit is simultaneously
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shared by numerous users, and no single open connection is
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maintained for a particular communications session: part of
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the data may go by one route while the rest may take a differ-
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ent route. Because of the differences in technology pricing
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models appropriate for voice telephony will be inappropriate
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for data networks.
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Packet-switching technology has two major components:
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packetization and dynamic routing. A data stream from a
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computer is broken up into small chunks called ``packets.''
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The IP (Internet protocol) specifies how to break up a
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datastream into packets and reassemble it, and also provides
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the necessary information for various computers on the
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_________________________________________
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3 ``Connection-oriented'' packet-switching networks also exist: X.25
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and frame relay are examples of such.
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4
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Internet (the routers) to move the packet to the next link on
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the way to its final destination.
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Packetization allows for the efficient use of expensive
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communications lines. Consider a typical interactive terminal
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session to a remote computer. Most of the time the user is
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thinking. The network is needed only after a key is struck or
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when a reply is returned. Holding an open connection would
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waste most of the capacity of the network link. Instead, the
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input line is collected until the return key is struck, and then
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the line is put in a packet and sent across the network. The
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rest of the time the network links are free to be used for
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transporting packets from other users.
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With dynamic routing a packet's path across the network
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is determined anew for each packet transmitted. Because
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multiple paths exist between most pairs of network nodes,
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it is quite possible that different packets will take different
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paths through the network.4
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The postal service is a good metaphor for the technology
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of the Internet (Krol (1992), pp. 20--23). A sender puts
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a message into an envelope (packet), and that envelope is
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routed through a series of postal stations, each determining
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where to send the envelope on its next hop. No dedicated
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pipeline is opened end-to-end, and thus there is no guarantee
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that envelopes will arrive in the sequence they were sent, or
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follow exactly the same route to get there.
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_________________________________________
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4 Dynamic routing contributes to the efficient use of the communications
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lines, because routing can be adjusted to balance load across the network.
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The other main justification for dynamic routing is network reliability, since
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it gives each packet alternative routes to their destination should some links
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fail. This was especially important to the military, which funded most of
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the early TCP/IP research to improve the ARPANET.
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5
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So that packets can be identified and reassembled in the
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correct order, TCP packets consist of a header followed by
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data. The header contains the source and destination ports,
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the sequence number of the packet, an acknowledgment flag,
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and so on. The header comprises 20 (or more) bytes of the
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packet.
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Once a packet is built TCP sends it to a router, a
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computer that is in charge of sending packets on to their next
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destination. At this point IP tacks on another header (20 or
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more bytes) containing source and destination addresses and
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other information needed for routing the packet. The router
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then calculates the best next link for the packet to traverse
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towards its destination, and sends it on. The best link
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may change minute-by-minute, as the network configuration
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changes.5 Routes can be recalculated immediately from the
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routing table if a route fails. The routing table in a switch is
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updated approximately continuously.
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The data in a packet may be 1500 bytes or so. However,
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recently the average packet on NSFNET carries about 200
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bytes of data (packet size has been steadily increasing). On
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top of these 200 bytes the TCP/IP headers add about 40; thus
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about 17% of the traffic carried on the Internet is simply
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header information.
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Over the past 5 years, the speed of the NSFNET backbone
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has grown from 56 Kbps to 45 Mbps (``T-3'' service).6 These
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_________________________________________
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5 Routing is based on a dynamic knowledge of which links are up and
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a static ``cost'' assigned to each link. Currently routing does not take
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congestion into account. Routes can change when hosts are added or deleted
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from the network (including failures), which happens often with about 1
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million hosts and over 11,000 subnetworks.
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6 In fact, although the communications lines can transport 45 Mbps, the
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current network routers can support only 22.5 Mbps service. ``Kbps'' is
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6
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lines can move data at a speed of 1,400 pages of text per
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second; a 20-volume encyclopedia can be sent across the net
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in half a minute. Many of the regional networks still provide
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T1 (1.5Mbps) service, but these too, are being upgraded.
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The transmission speed of the Internet is remarkably
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high. We recently tested the transmission delay at various
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times of day and night for sending a packet to Norway. Each
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packet traversed 16 links, and thus the IP header had to be
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read and modified 16 times, and 16 different routers had to
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calculate the best next link for the transmission. Despite
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the many hops and substantial packetization and routing
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overhead, the longest delay on one representative weekday
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was only 0.333 seconds (at 1:10 pm); the shortest delay was
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0.174 seconds (at 5:13 pm).
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Current Backbone Network Costs
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The postal service is a good metaphor for packet-switching
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technology, but a bad metaphor for the cost structure of
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Internet services. Most of the costs of providing the Internet
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are more-or-less independent of the level of usage of the
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network; i.e., most of the costs are fixed costs. If the network
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is not saturated the incremental cost of sending additional
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packets is essentially zero.
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The NSF currently spends about $11.5 million per year
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to operate the NSFNET and provides $7 million per year of
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grants to help operate the regional networks.7 There is also
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_________________________________________
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thousand (kilo) bits per second; ``Mbps'' is million (mega) bits per second.
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7 The regional network providers generally set their charges to recover
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the remainder of their costs, but there is also some subsidization from state
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governments at the regional level.
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7
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an NSF grant program to help colleges and universities to
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connect to the NSFNET. Using the conservative estimate of
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1 million hosts and 10 million users, this implies that the
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NSF subsidy of the Internet is less than $20 per year per host,
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and less than $2 per year per user.
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Total salaries and wages for NSFNET have increased by
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a little more than one-half (about 68% nominal) over 1988-
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-1991, during a time when the number of packets delivered
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has increased 128 times.8 It is hard to calculate total costs
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because of large in-kind contributions by IBM and MCI
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during the initial years of the NSFNET project, but it appears
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that total costs for the 128-fold increase in packets have
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increased by a factor of about 3.2.
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Two components dominate the costs of providing a
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backbone network: communications lines and routers. Lease
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payments for lines and routers accounted for nearly 80% of
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the 1992 NSFNET costs. The only other significant cost is
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for the Network Operations Center (NOC), which accounts
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for roughly 7% of total cost.9 In our discussion we focus
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only on the costs of lines and routers.
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We have estimated costs for the network backbone as of
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1992--93.10 A T-3 (45 Mbps) trunk line running 300 miles
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between two metropolitan central stations can be leased for
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_________________________________________
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8 Since packet size has been slowly increasing, the amount of data
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transported has increased even more.
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9 A NOC monitors traffic flow at all nodes in the network and trou-
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bleshoots problems.
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10 We estimated costs for the network backbone only, defined to be links
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between common carrier Points of Presence (POPs) and the routers that
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manage those links. We did not estimate the costs for the feeder lines to
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the mid-level or regional networks where the data packets usually enter and
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leave the backbone, nor for the terminal costs of setting up the packets or
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tearing them apart at the destination.
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8
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about $32,000 per month. The cost to purchase a router
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capable of managing a T-3 line is approximately $100,000,
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including operating and service costs. Assuming 50 month
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amortization at a nominal 10% rate yields a rental cost of
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about $4900 per month for the router.
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Table 1.
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Communications and Router Costs
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_(Nominal_$_per_million_bits)1_________________________________________________*
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*_______
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__Year________Communications_____________Routers______Design_Throughput________*
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*_______
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1960 1.00 2.4 kbps
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1962 10.00*
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1963 0.42 40.8 kbps
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1964 0.34 50.0 kbps
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1967 0.33 50.0 kbps
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1970 0.168
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1971 0.102
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1974 0.11 0.026 56.0 kbps
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__1992____________________0.00094_______0.00007_______________45_mbps__________*
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*_______
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Notes: 1. Costs are based on sending one million bits of data approximately
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1200 miles on a path that traverses five routers.
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Sources: 1960--74 from Roberts (1974). 1992 calculated by the authors
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using data provided by Merit Network, Inc.
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The costs of both communications and switching have
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been dropping rapidly for over three decades. In the 1960s,
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digital computer switching was more expensive (on a per
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packet basis) than communications (Roberts (1974)), but
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switching has become substantially cheaper since then. We
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have estimated the 1992 costs for transporting 1 million bits
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of data through the NSFNET backbone and compare these
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to estimates for earlier years in Table 1. As can be seen in
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1992 the line cost is about eight times as large as the cost of
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routers.
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9
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The topology of the NSFNET backbone directly reflects
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the cost structure: lots of cheap routers are used to manage
|
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a limited number of expensive lines. We illustrate a portion
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of the network in Figure 1. Each of the numbered squares
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is an RS6000 router; the numbers listed beside a router are
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links to regional networks. Notice that in general any packet
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coming on to the backbone has to move through two separate
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routers at the entry and exit node. For example, a message
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we send from the University of Michigan to a scientist at
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Bell Laboratories will traverse link 131 to Cleveland, where
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it passes through two routers (41 and 40). The packet goes to
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New York, where it again moves through two routers (32 and
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33) before leaving the backbone on link 137 to the JVNCnet
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regional network that Bell Labs is attached to. Two T-3
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communications links are navigated using four routers.
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Figure 1. Network Topology Fragment
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10
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Technological and Cost Trends
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The decline in both communications link and switching costs
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has been exponential at about 30% per year (see the semi-log
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plot in Figure 2). But more interesting than the rapid decline
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in costs is the change from expensive routers to expensive
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transmission links. Indeed, it was the crossover around 1970
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(Figure 2) that created a role for packet-switching networks.
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When lines were cheap relative to switches it made sense
|
||
|
||
to have many lines feed into relatively few switches, and
|
||
|
||
to open an end-to-end circuit for each connection. In that
|
||
|
||
way, each connection wastes transmission capacity (lines are
|
||
|
||
held open whether data is flowing or not) but economizes on
|
||
|
||
switching (one set-up per connection).
|
||
|
||
Figure 2. Trends in costs for communications links and
|
||
|
||
routers.
|
||
|
||
|
||
|
||
When switches became cheaper than lines the network is
|
||
|
||
more efficient if data streams are broken into small packets
|
||
|
||
and sent out piecemeal, allowing the packets of many users
|
||
|
||
to share a single line. Each packet must be examined at each
|
||
|
||
|
||
11
|
||
|
||
switch along the way to determine its type and destination,
|
||
|
||
but this uses the relatively cheap switch capacity. The gain
|
||
|
||
is that when one source is quiet, packets from other sources
|
||
|
||
use the same (relatively expensive) lines.
|
||
|
||
Although the same reversal in switch and line costs oc-
|
||
|
||
curred for voice networks, circuit-switching is still the norm
|
||
|
||
for voice. Voice is not well-suited for packetization because
|
||
|
||
of variation in delivery delays, packet loss, and packet or-
|
||
|
||
dering.11 Voice customers will not tolerate these delays in
|
||
|
||
transmission (although some packetized voice applications
|
||
|
||
are beginning to emerge as transmission speed and reliability
|
||
|
||
increases, see (Anonymous (1986)) ).12
|
||
|
||
|
||
|
||
Future Technologies
|
||
|
||
|
||
Packet-switching is not the most efficient technology for all
|
||
|
||
data communications. As we mentioned above, about 17%
|
||
|
||
of the typical packet is overhead (the TCP and IP headers).
|
||
|
||
Since the scarce resource is bandwidth, this overhead is
|
||
|
||
costly. Further, every packet from a data stream must
|
||
|
||
be individually routed through many nodes (12 seems to
|
||
|
||
be typical for a transmission within the U.S.): each node
|
||
|
||
must read the IP header on each packet, then do a routing
|
||
|
||
calculation. Transferring a modest 3 megabyte data file
|
||
_________________________________________
|
||
11 Our tests found packet delays ranging between 156 msec and 425 msec
|
||
on a trans-Atlantic route (N=2487 traces, standard deviation = 24.6 msec).
|
||
Delays were far more variable to a Nova Scotia site: the standard deviation
|
||
was 340.5 msec when the mean delay was only 226.2 msec (N=2467); the
|
||
maximum delay was 4878 msec.
|
||
|
||
12 The reversal in link and switch costs has had a profound effect on voice
|
||
networks. Indeed, Peter Huber has argued that this reversal made inevitable
|
||
the breakup of ATT (Huber (1987)). He describes the transformation of the
|
||
network from one with long lines all going into a few central offices into
|
||
a web of many switches with short lines interconnecting them so that each
|
||
call could follow the best path to its destination.
|
||
|
||
|
||
|
||
12
|
||
|
||
will require around 6,000 packets, each of which must be
|
||
|
||
individually routed through a dozen or so switches.13 Since
|
||
|
||
a file transfer is a single burst of demand there may be
|
||
|
||
little gain from packetization to share the communications
|
||
|
||
line; for some large file transfers (or perhaps real-time audio
|
||
|
||
and video transmissions) it may be more efficient to use
|
||
|
||
connection-oriented systems rather than switched packets.14
|
||
Packetization and connection-oriented transport merge in
|
||
|
||
Asynchronous Transfer Mode (ATM) which is gaining wide
|
||
|
||
acceptance as the next major link layer technology.15 ATM
|
||
|
||
does not eliminate TCP/IP packetization and thus does not
|
||
|
||
reduce that source of overhead; indeed, ATM adds a 5-byte
|
||
|
||
header to each 53-byte cell, imposing its own 9% overhead.
|
||
|
||
However, ATM opens end-to-end connections, economizing
|
||
|
||
on routing computations and the overhead from network
|
||
|
||
layer packet headers. Networks currently under development
|
||
|
||
offer speeds of 155 and 622 Mbps (3.4 to 13.8 times faster
|
||
|
||
than the current T-3 lines used by NSFNET). At those
|
||
|
||
speeds ATM networks are expected to carry both voice
|
||
_________________________________________
|
||
13 The average packet size is 350 bytes for FTP file transfers, but for large
|
||
files the packets will be about 500 bytes each. The header overhead for this
|
||
transfer would be about 8%.
|
||
|
||
14 If there is a slower-speed link on the file transfer path---say 56 kbps---
|
||
then higher speed links (T-1 or T-3) on the path will have idle capacity that
|
||
could be utilized if the network is packetized rather than connection-oriented.
|
||
|
||
15 The link layer is another layer underneath TCP/IP that handles the
|
||
routing, physical congestion control and internetworking of packets. Current
|
||
examples of such technologies are Ethernet, FDDI and Frame Relay. The
|
||
network technology can carry ``anyone's'' packets; e.g., TCP/IP packets,
|
||
AppleTalk packets, or Novell Netware packets. Using the postal service
|
||
analogy, the TCP/IP layer handles ``get the mail from New York to
|
||
Washington; the link layer specifies ``mail from NY to DC should be
|
||
packed in shipping containers and loaded onto a semi-trailer bound for
|
||
DC.''
|
||
|
||
|
||
|
||
13
|
||
|
||
and data simultaneously. A related alternative is Switched
|
||
|
||
Multi-Megabit Data Service (SMDS) (Cavanaugh and Salo
|
||
|
||
(1992)).
|
||
|
||
ATM is promising, but we may need radically new
|
||
|
||
technologies very soon. Current networks are meshes of
|
||
|
||
optic fiber connected with electronic switches that must
|
||
|
||
convert light into electronic signals and back again. We are
|
||
|
||
nearing the physical limits on the throughput of electronic
|
||
|
||
switches. All-optical networks may be the answer to this
|
||
|
||
looming bottleneck.
|
||
|
||
The NSFNET backbone is already using fiber optic
|
||
|
||
lines. A single fiber strand can support one thousand Gbps
|
||
|
||
(gigabits), or about 22,000 times as much traffic as the current
|
||
|
||
T-3 data rate. To give some sense of the astonishing capacity
|
||
|
||
of fiber optics, a single fiber thread could carry all of the
|
||
|
||
phone network traffic in the United States, including the peak
|
||
|
||
hour of Mother's Day in the United States (Green (1991)).
|
||
|
||
Yet a typical fiber bundle has 25 to 50 threads (McGarty
|
||
|
||
(1992)), and the telephone companies have already laid some
|
||
|
||
two million miles of fiber optic bundles (each being used at
|
||
|
||
no more than 1/22,000th of capacity) (Green (1991)).
|
||
|
||
Thus, although switches are cheaper than lines at the rates
|
||
|
||
that current technology can drive fiber communications, in
|
||
|
||
fact we should expect communications bandwidth to be much
|
||
|
||
cheaper than switching before long. Indeed, it is already an
|
||
|
||
electronic bottleneck that is holding us back from realizing
|
||
|
||
the seemingly limitless capacity of fiber. When capacity is
|
||
|
||
plentiful networks will use vast amounts of cheap bandwidth
|
||
|
||
to avoid using expensive switches.
|
||
|
||
``All-optical'' networks may be the way to avoid elec-
|
||
|
||
tronic switches. In an all-optical network data is broadcast
|
||
|
||
|
||
14
|
||
|
||
rather than directed to a specific destination by switches, and
|
||
|
||
the recipient tunes in to the correct frequency to extract the
|
||
|
||
intended signal. A fully-functional all-optical network has
|
||
|
||
been created by Paul Green at IBM. His Rainbow I network
|
||
|
||
connects 32 computers at speeds of 300 megabits per second,
|
||
|
||
or a total bandwidth of 9.6 gigabits---200 times as much as
|
||
|
||
the T-3-based NSFNET backbone (Green (1992)).
|
||
|
||
Despite their promise, all-optical networks will not soon
|
||
|
||
eradicate the problem of congestion. Limitations on the
|
||
|
||
number of available optical broadcast frequencies suggest
|
||
|
||
that subnetworks will be limited to about 1000 nodes, at
|
||
|
||
least in the foreseeable future (Green (1991), Green (1992)).
|
||
|
||
Thus, for an internet of networks it will be necessary to pass
|
||
|
||
traffic between optical subnetworks. The technologies for
|
||
|
||
this are much further from realization and will likely create a
|
||
|
||
congested bottleneck. Thus, although the physical nature of
|
||
|
||
congestion may change, we see a persistent long-term need
|
||
|
||
for access pricing to allocate congested resources.
|
||
|
||
|
||
|
||
Summary
|
||
|
||
|
||
We draw a few general guidelines for pricing packet-
|
||
|
||
switching backbones from our review of costs. The physical
|
||
|
||
marginal cost of sending a packet, for a given line and router
|
||
|
||
capacity, is essentially zero. Of course, if the network is
|
||
|
||
congested, there is a social cost of sending a new packet in
|
||
|
||
that response time for other users will deteriorate.
|
||
|
||
The fixed costs of a backbone network (about $14 million
|
||
|
||
per year for NSFNET at present) are dominated by the costs of
|
||
|
||
links and routers, or roughly speaking, the cost of bandwidth
|
||
|
||
(the diameter of the pipe). Rational pricing, then, should
|
||
|
||
|
||
15
|
||
|
||
focus on the long-run incremental costs of bandwidth and
|
||
|
||
the short-run social costs of congestion. More bandwidth
|
||
|
||
is needed when the network gets congested, (as indicated
|
||
|
||
by unacceptable transmission delays). A desirable pricing
|
||
|
||
structure is one that allocates congested bandwidth and sends
|
||
|
||
appropriate signals to users and network operators about the
|
||
|
||
need for expansion in capacity.
|
||
|
||
|
||
|
||
3. Congestion problems
|
||
|
||
|
||
Another aspect of cost of the Internet is congestion cost.
|
||
|
||
Although congestion costs are not paid for by the providers
|
||
|
||
of network services, they are paid for by the users of the
|
||
|
||
service. Time spent by users waiting for a file transfer
|
||
|
||
is a social cost, and should be recognized as such in any
|
||
|
||
economic accounting.
|
||
|
||
The Internet experienced severe congestion problems
|
||
|
||
in 1987. Even now congestion problems are relatively
|
||
|
||
common in parts of the Internet (although not currently on
|
||
|
||
the T-3 backbone). According to Kahin (1992): ``However,
|
||
|
||
problems arise when prolonged or simultaneous high-end
|
||
|
||
uses start degrading service for thousands of ordinary users.
|
||
|
||
In fact, the growth of high-end use strains the inherent
|
||
|
||
adaptability of the network as a common channel.'' (page
|
||
|
||
11.) It is apparent that contemplated uses, such as real-
|
||
|
||
time video and audio transmission, would lead to substantial
|
||
|
||
increases in the demand for bandwidth and that congestion
|
||
|
||
problems will only get worse in the future unless there is
|
||
|
||
substantial increase in bandwidth:
|
||
|
||
If a single remote visualization process were
|
||
to produce 100 Mbps bursts, it would take only a
|
||
|
||
|
||
16
|
||
|
||
handful of users on the national network to gener-
|
||
ate over 1Gbps load. As the remote visualization
|
||
services move from three dimensions to [animation]
|
||
the single-user bursts will increase to several hun-
|
||
dred Mbps : : :Only for periods of tens of minutes
|
||
to several hours over a 24-hour period are the high-
|
||
end requirements seen on the network. With these
|
||
applications, however, network load can jump from
|
||
average to peak instantaneously.'' Smarr and Catlett
|
||
(1992), page 167.
|
||
|
||
|
||
There are cases where this has happened. For example
|
||
|
||
during the weeks of November 9 and 16, 1992, some packet
|
||
|
||
audio/visual broadcasts caused severe delay problems, espe-
|
||
|
||
cially at heavily-used gateways to the Internet NSFNET, and
|
||
|
||
in several mid-level networks.
|
||
|
||
To investigate the nature of congestion on the Internet
|
||
|
||
we timed the delay in delivering packets to seven different
|
||
|
||
sites around the world. We ran our test hourly for 37
|
||
|
||
days during February and March, 1993. Deliveries can
|
||
|
||
be delayed for a number of reasons other than congestion-
|
||
|
||
induced bottlenecks. For example, if a router fails then
|
||
|
||
packets must be resent by a different route. However, in
|
||
|
||
a multiply-connected network, the speed of rerouting and
|
||
|
||
delivery of failed packets measures one aspect of congestion,
|
||
|
||
or the scarcity of the network's delivery bandwidth.
|
||
|
||
Our results are summarized in Figure 3 and Figure 4; we
|
||
|
||
present the results only from four of the 24 hourly probes.
|
||
|
||
Figure 3 shows the average and maximum delivery delays by
|
||
|
||
time of day. Average delays are not always proportional to
|
||
|
||
distance: the delay from Michigan to New York University
|
||
|
||
was generally longer than to Berkeley, and delays from
|
||
|
||
Michigan to Nova Scotia, Canada, were often longer than to
|
||
|
||
Oslo, Norway.
|
||
|
||
|
||
17
|
||
|
||
Figure 3. Maximum and Average Transmission Delays on
|
||
|
||
the Internet
|
||
|
||
There is substantial variability in Internet delays. For
|
||
|
||
example, the maximum and average delays in Figure 3 are
|
||
|
||
quite different by time of day. There appears to be a large
|
||
|
||
4pm peak problem on the east coast for packets to New York
|
||
|
||
and Nova Scotia, but much less for ATT Bell Labs (in New
|
||
|
||
Jersey).16 The time-of-day variation is also evident in Figure
|
||
|
||
5, borrowed from (Claffy, Polyzos, and Braun (1992)).17
|
||
_________________________________________
|
||
16 The high maximum delay for the University of Washington at 4pm is
|
||
correct, but appears to be aberrant. The maximum delay was 627 msec; the
|
||
next two highest delays (in a sample of over 2400) were about 250 msecs
|
||
each. After dropping this extreme outlier, the University of Washington
|
||
looks just like UC Berkeley.
|
||
|
||
17 Note that the Claffy et al. data were for the old, congested T-1 network.
|
||
|
||
|
||
|
||
18
|
||
|
||
|
||
|
||
|
||
Figure 4. Variability in Internet Transmission Delays
|
||
|
||
|
||
Figure 5. Utilization of Most Heavily Used Link in Each
|
||
|
||
Fifteen Minute Interval (Claffy et al. (1992))
|
||
|
||
|
||
Figure 4 shows the standard deviation of delays by time
|
||
_________________________________________
|
||
We reproduce their figure to illustrate the time-of-day variation in usage;
|
||
the actual levels of link utilization are generally much lower in the current
|
||
T-3 backbone.
|
||
|
||
|
||
|
||
19
|
||
|
||
of day for each destination. The delays to Canada are
|
||
|
||
extraordinarily variable, yet the delays to Oslo have no more
|
||
|
||
variability than does transmission to New Jersey (ATT).
|
||
|
||
Variability in delays itself fluctuates widely across times of
|
||
|
||
day, as we would expect in a system with bursty traffic, but
|
||
|
||
follows no obvious pattern.
|
||
|
||
According to Kleinrock (1992), ``One of the least un-
|
||
|
||
derstood aspects of today's networking technology is that of
|
||
|
||
network control, which entails congestion control, routing
|
||
|
||
control, and bandwidth access and allocation.'' We expect
|
||
|
||
that if access to Internet bandwidth continues to be provided
|
||
|
||
at a zero cost there will inevitably be congestion. Essen-
|
||
|
||
tially, this is the classic problem of the commons: unless
|
||
|
||
the congestion externality is priced, there will inevitably be
|
||
|
||
inefficient use of the common resource. As long as users face
|
||
|
||
a zero price for access, they will continue to ``overgraze.''
|
||
|
||
Hence, it makes sense to consider how networks such as the
|
||
|
||
Internet should be priced.
|
||
|
||
As far as we can tell this question has received little
|
||
|
||
attention. Gerla and Kleinrock (1988) have considered some
|
||
|
||
engineering aspects of congestion control. Faulhaber (1992)
|
||
|
||
has considered some of the economic issues. He suggests
|
||
|
||
that ``transactions among institutions are most efficiently
|
||
|
||
based on capacity per unit time. We would expect the ANS
|
||
|
||
to charge mid-level networks or institutions a monthly or
|
||
|
||
annual fee that varied with the size of the electronic pipe
|
||
|
||
provided to them. If the cost of providing the pipe to an
|
||
|
||
institution were higher than to a mid-level network : : :the
|
||
|
||
fee would be higher.''
|
||
|
||
Faulhaber's suggestion makes sense for a dedicated line--
|
||
|
||
-e.g., a line connecting an institution to the Internet backbone.
|
||
|
||
|
||
20
|
||
|
||
But we don't think that it is necessarily appropriate for
|
||
|
||
charging for backbone traffic itself. The reason is that the
|
||
|
||
bandwidth on the backbone is inherently a shared resource-
|
||
|
||
--many packets ``compete'' for the same bandwidth. There
|
||
|
||
is an overall constraint on capacity, but there are is no such
|
||
|
||
thing as individual capacity level on the backbone.18
|
||
|
||
Although we agree that it is appropriate to charge a
|
||
|
||
flat fee for connection to the network, we also think that
|
||
|
||
it is important to charge on a per packet basis, at least
|
||
|
||
when the network is congested. After all, during times of
|
||
|
||
congestion the scarce resource is bandwidth for additional
|
||
|
||
packets.19 The problem with this proposal is the overhead,
|
||
|
||
or, in economics terms, the transactions cost. If one literally
|
||
|
||
charged for each individual packet, it would be extremely
|
||
|
||
costly to maintain adequate records. However, given the
|
||
|
||
astronomical units involved there should be no difficulty in
|
||
|
||
basing charges on a statistical sample of the packets sent.
|
||
|
||
Furthermore, accounting can be done in parallel to routing
|
||
|
||
using much less expensive computers.
|
||
|
||
Conversely when the network is not congested there
|
||
|
||
is very small marginal cost of sending additional packets
|
||
|
||
through the routers. It would therefore be appropriate to
|
||
|
||
charge users a very small price for packets when the system
|
||
|
||
is not congested.
|
||
_________________________________________
|
||
18 Although it may be true that an institution's use of the backbo*
|
||
*ne
|
||
bandwidth is more-or-less proportional to the bandwidth of its connection
|
||
to the backbone. That is, the size of an institution's dedicated line to
|
||
the backbone may be a good signal of its intended usage of the common
|
||
backbone.
|
||
|
||
19 As we have already pointed out the major bottleneck in backbone
|
||
capacity is not the bandwidth of the medium itself, but the switch technology.
|
||
We use the term bandwidth to refer to the overall capacity of the network.
|
||
|
||
|
||
|
||
21
|
||
|
||
There has been substantial recent work on designing
|
||
|
||
mechanisms for usage accounting on the Internet. The In-
|
||
|
||
ternet Accounting Working Group has published a draft
|
||
|
||
architecture for Internet usage reporting (Internet Account-
|
||
|
||
ing: Usage Reporting Architecture, July 9, 1992 draft). ANS
|
||
|
||
has developed a usage sampling and reporting system it
|
||
|
||
calls COMBits. COMBits was developed to address the
|
||
|
||
need to allocate costs between government-sponsored re-
|
||
|
||
search and educational use, and commercial usage, which is
|
||
|
||
rapidly growing. COMBits collects an aggregate measure of
|
||
|
||
packets and bytes usage, using a statistical sampling tech-
|
||
|
||
nique. However, COMBits only collects data down to the
|
||
|
||
network-to-network level of source and destination. Thus,
|
||
|
||
the resulting data can only be used to charge at the level of the
|
||
|
||
subnetwork; the local network administrator is responsible
|
||
|
||
for splitting up the bill, if desired (Ruth and Mills (1992)).20
|
||
|
||
|
||
|
||
4. Current Pricing Mechanisms
|
||
|
||
|
||
NSFNET, the primary backbone network of the Internet,
|
||
|
||
has been paid for by the NSF, IBM, MCI and the State of
|
||
|
||
Michigan until the present.21 However, most organizations
|
||
|
||
do not connect directly to the NSFNET. A typical university
|
||
|
||
will connect to its regional mid-level network; the mid-
|
||
|
||
level maintains a connection to the NSFNET. The mid-level
|
||
|
||
networks (and a few alternative backbone networks) charge
|
||
|
||
their customers for access.
|
||
_________________________________________
|
||
20 COMBits has been plagued by problems and resistance and currently
|
||
is used by almost none of the mid-level networks.
|
||
|
||
21 NSF restricts the use of the backbone to traffic with a research or
|
||
educational purpose, as defined in the Acceptable Use Policies.
|
||
|
||
|
||
|
||
22
|
||
|
||
There are dozens of companies that offer connections
|
||
|
||
|
||
to the Internet. Most large organizations obtain direct con-
|
||
|
||
|
||
nections, which use a leased line that permits unlimited
|
||
|
||
|
||
usage subject to the bandwidth of the line. Some customers
|
||
|
||
|
||
purchase ``dial-up'' service which provides an intermittent
|
||
|
||
|
||
connection, usually at much lower speeds. We will discuss
|
||
|
||
|
||
only direct connections below.
|
||
Table 3 summarizes the prices offered to large universi-
|
||
|
||
|
||
ties by ten of the major providers for T-1 access (1.5 mbps).22
|
||
|
||
|
||
There are three major components: an annual access fee, an
|
||
|
||
|
||
initial connection fee and in some cases a separate charge
|
||
|
||
|
||
for the customer premises equipment (a router to serve as
|
||
|
||
|
||
a gateway between the customer network and the Internet
|
||
|
||
|
||
provider's network).23 The current annualized total cost per
|
||
|
||
|
||
T-1 connection is about $30--35,000.
|
||
|
||
|
||
|
||
_________________________________________
|
||
22 The fees for some providers are dramatically lower due to public
|
||
subsidies.
|
||
23 Customers will generally also have to pay a monthly ``local loop''
|
||
charge to a telephone company for the line between the customer's site and
|
||
the Internet provider's ``point of presence'' (POP), but this charge depends
|
||
on mileage and will generally be set by the telephone company, not the
|
||
Internet provider.
|
||
|
||
|
||
23
|
||
|
||
|
||
|
||
|
||
All of the providers use the same type of pricing: annual
|
||
|
||
fee for unlimited access, based on the bandwidth of the
|
||
|
||
connection. This is the type of pricing recommended by
|
||
|
||
Faulhaber (1992). However, these pricing schemes provide
|
||
|
||
no incentives to flatten peak demands, nor any mechanism for
|
||
|
||
allocating network bandwidth during periods of congestion.
|
||
|
||
It would be relatively simple for a provider to monitor a
|
||
|
||
customer's usage and bill by the packet or byte. Monitoring
|
||
|
||
requires only that the outgoing packets be counted at a single
|
||
|
||
point: the customer's gateway router.
|
||
|
||
However, pricing by the packet would not necessarily
|
||
|
||
increase the efficiency of network service provision, because
|
||
|
||
the marginal cost of a packet is nearly zero. As we have
|
||
|
||
shown, the important scarce resource is bandwidth, and thus
|
||
|
||
|
||
24
|
||
|
||
efficient prices need to reflect the current state of the network.
|
||
|
||
Neither a flat price per packet nor even time-of-day prices
|
||
|
||
would come very close to efficient pricing.
|
||
|
||
|
||
|
||
5. Proposals for pricing the network
|
||
|
||
|
||
We think that it is worthwhile thinking about how such a
|
||
|
||
pricing mechanism might work. Obviously, our suggestions
|
||
|
||
must be viewed as extremely tentative. However, we hope
|
||
|
||
that an explicit proposal, such as we describe below, can at
|
||
|
||
least serve as a starting point for further discussion.
|
||
|
||
We wholeheartedly adopt the viewpoint of Clark (1989)
|
||
|
||
who says ``It is useful to think of the interconnected [net-
|
||
|
||
works] as a marketplace, in which various services are of-
|
||
|
||
fered and users select among these services to obtain packet
|
||
|
||
transport.'' We take this point of view further to examine
|
||
|
||
what kind of pricing policy makes sense in the context of a
|
||
|
||
connectionless, packet-switched network.
|
||
|
||
There are many aspects of network usage that might be
|
||
|
||
priced. Cocchi, Estrin, Shenker, and Zhang (1992) make
|
||
|
||
this point quite clearly and describe how a general network
|
||
|
||
pricing problem can be formulated and analyzed. However,
|
||
|
||
we will analyze only one particular aspect of the general
|
||
|
||
network pricing problem in this paper: pricing access and
|
||
|
||
usage of the network backbone.
|
||
|
||
The backbone has a finite capacity, so if enough packets
|
||
|
||
are being sent, other packets will not be able to be sent.
|
||
|
||
Furthermore, as capacity is approached, the quality of ser-
|
||
|
||
vice deteriorates, imposing congestion costs on users of the
|
||
|
||
system. How should a pricing mechanism determine who
|
||
|
||
will be able to use the network at a given time?
|
||
|
||
|
||
25
|
||
|
||
6. General observations on pricing
|
||
|
||
|
||
Network engineers tend to take the behavior of the network
|
||
|
||
users as fixed, and try to adapt the technology to fit this
|
||
|
||
behavior. Economists tend to take the technology as fixed
|
||
|
||
and design a resource allocation mechanism that adapts
|
||
|
||
the users' behavior to the technological limitations of the
|
||
|
||
network. Obviously these approaches are complementary!
|
||
|
||
Let us consider some traditional pricing models for net-
|
||
|
||
work access. One traditional model is zero-priced access.
|
||
|
||
This is commonly used in highway traffic, for example. This
|
||
|
||
has the well-known defect of the problem of the commons-
|
||
|
||
--if each user faces a zero price for access, the network
|
||
|
||
resources tend to become congested.
|
||
|
||
Most common forms of pricing for network access use
|
||
|
||
posted prices: a fixed price schedule for different priorities of
|
||
|
||
access at different times. For example, the post office charges
|
||
|
||
a fixed price for different priorities of delivery service, and
|
||
|
||
telephone companies provide a fixed charge for connections
|
||
|
||
to different locations at different times of day.
|
||
|
||
The trouble with posted prices is that they are generally
|
||
|
||
not sufficiently flexible to indicate the actual state of the
|
||
|
||
network at a particular time. If, at a point in time, there is
|
||
|
||
unused capacity, it would be efficient to sell access to the
|
||
|
||
network at marginal cost, which is presumably close to zero.
|
||
|
||
Conversely, if the network is at capacity, some users with
|
||
|
||
high willingness-to-pay may be unable to access the network,
|
||
|
||
even though other users with lower willingness-to-pay have
|
||
|
||
access. Pricing by time-of-day helps to achieve an efficient
|
||
|
||
pattern of usage of network capacity, but it is a rather blunt
|
||
|
||
|
||
26
|
||
|
||
instrument to achieve a fully efficient allocation of network
|
||
|
||
bandwidth.24
|
||
|
||
|
||
|
||
7. An ideal but impractical solution
|
||
|
||
|
||
An ``ideal'' model for network access would be a continuous
|
||
|
||
market in network availability. At each point there would be
|
||
|
||
a price for access to the network. Users who were willing to
|
||
|
||
pay the price for delivery of a packet would be given access;
|
||
|
||
users who weren't would be denied access. The price would
|
||
|
||
be set so as to achieve an optimal level of congestion.
|
||
|
||
How should the access price be determined? One mech-
|
||
|
||
anism would be a ``Walrasian tatonnement.'' A tentative
|
||
|
||
access price would be set. Users would examine the access
|
||
|
||
price and see if they wanted access. If the sum of the demands
|
||
|
||
for access exceed the network capacity the price would be
|
||
|
||
adjusted upward, and so on.
|
||
|
||
The trouble with this scheme is that the user has to
|
||
|
||
observe the current price in order to determine whether or not
|
||
|
||
he wants access. If the time pattern of usage were completely
|
||
|
||
predictable, there would be no problem. However, packet
|
||
|
||
traffic on the Internet usage is known to be highly ``bursty.''
|
||
|
||
|
||
|
||
8. A smart market
|
||
|
||
|
||
One way to alleviate this problem is to use a ``smart market''
|
||
|
||
for setting the price of network access at different priorities.25
|
||
_________________________________________
|
||
24 Posted, flat prices have some benefits. First, accounting and billing use
|
||
resources too, and may be too high to justify. Second, many planner and
|
||
budget officers want predictable prices so they can authorize fixed funding
|
||
levels in advance.
|
||
|
||
25 The term ``smart market'' seems to be due to Vernon Smith. The
|
||
version we describe here is a variation on the Vickrey auction.
|
||
|
||
|
||
|
||
27
|
||
|
||
In a smart market users have only to indicate the maximum
|
||
|
||
willingness-to-pay for network access. We will refer to this
|
||
|
||
maximum willingness to pay as the user's ``bid'' for network
|
||
|
||
access. The router notes the bid attached to each packet and
|
||
|
||
admits all packets with bids greater than some cutoff value.
|
||
|
||
We depict the determination of the cutoff priority value
|
||
|
||
in Figure 6. The staircase depicted is simply a demand curve-
|
||
|
||
--it indicates how many packets there are at each different
|
||
|
||
bid.
|
||
|
||
Figure 6. Demand and supply for network bandwidth.
|
||
|
||
|
||
|
||
We take the capacity of the network to be fixed, and we
|
||
|
||
indicate it by a vertical line in Figure 6. In the case depicted
|
||
|
||
the demand curve intersects the supply curve at price 8.
|
||
|
||
Hence, this is the price charged to all users---even those who
|
||
|
||
have packets with higher bids.
|
||
|
||
Note that the bid price can be interpreted as a priority
|
||
|
||
price, since packets with higher bids automatically have
|
||
|
||
higher priority in the sense that they will be admitted before
|
||
|
||
packets with lower bids. Note how this is different from
|
||
|
||
priority-pricing by say, the post office. In the post-office
|
||
|
||
model you pay for first-class mail even if there is enough
|
||
|
||
excess capacity that second-class mail could move at the
|
||
|
||
|
||
28
|
||
|
||
same speed. In the smart market described here, a user pays
|
||
|
||
at most their bid.
|
||
|
||
The smart market has many desirable features. It is
|
||
|
||
obvious from the diagram that the outcome is the classic
|
||
|
||
supply-equals-demand level of service. The equilibrium
|
||
|
||
price, at any point in time, is the bid of the marginal
|
||
|
||
user. Each infra-marginal user is charged this price, so each
|
||
|
||
infra-marginal user gets positive consumer surplus from his
|
||
|
||
purchase.
|
||
|
||
The major differences from the textbook demand and
|
||
|
||
supply story is that no iteration is needed to determine the
|
||
|
||
market-clearing price---the market is cleared as soon as the
|
||
|
||
users have submitted their bids for access.26 This mechanism
|
||
|
||
can also be viewed as a Vickrey auction where the n highest
|
||
|
||
bidders gain access at the n + 1st highest price bid.27
|
||
|
||
We have assumed that the bid-price set by the users
|
||
|
||
accurately reflects the true willingness-to-pay. One might
|
||
|
||
well ask whether users have the correct incentives to reveal
|
||
|
||
this value: is there anything to be gained by trying to ``fool''
|
||
|
||
the smart market? It turns out that the answer is ``no.'' It
|
||
|
||
can be shown that it is a dominant strategy in the Vickrey
|
||
|
||
auction to bid your true value, so users have no incentive to
|
||
|
||
misprepresent their bids for network access. By the nature of
|
||
|
||
the auction, you are assured that you will never be charged
|
||
_________________________________________
|
||
26 Of course, in real time operation, one would presumably cumulate
|
||
demand over some time interval. It is an interesting research issue to
|
||
consider how often the market price should be adjusted. The bursty nature
|
||
of Internet activity suggests a fairly short time interval. However, if users
|
||
were charged for packets, it is possible that the bursts would be dampened.
|
||
|
||
27 Waldspurger, Hogg, Huberman, Kephart, and Stornetta (1992) de-
|
||
scribes some (generally positive) experiences in using this kind of ``second-
|
||
bid'' auction to allocate network resources. However, they do not examine
|
||
network access itself, as we are proposing here.
|
||
|
||
|
||
|
||
29
|
||
|
||
more than this amount and normally you will be charged
|
||
|
||
much less.
|
||
|
||
|
||
|
||
9. Remarks about the smart market solution
|
||
|
||
|
||
Here we consider several aspects of using efficient prices for
|
||
|
||
packet access to the Internet.
|
||
|
||
|
||
|
||
Who sets the bids?
|
||
|
||
|
||
We expect that choice of bids would be done by three parties:
|
||
|
||
the local administrator who controls access to the net, the
|
||
|
||
user of the computer, and the computer software itself.
|
||
|
||
An organization with limited resources, for example, might
|
||
|
||
choose low bid prices for all sorts of access. This would mean
|
||
|
||
that they may not have access during peak times, but still
|
||
|
||
would have access during off peak periods. Normally, the
|
||
|
||
software program that uses the network would have default
|
||
|
||
values for service---e-mail would be lower than telnet, telnet
|
||
|
||
would be lower than audio, and so on. The user could
|
||
|
||
override these default values to express his own preferences-
|
||
|
||
--if he was willing to pay for the increased congestion during
|
||
|
||
peak periods.
|
||
|
||
Note that this access control mechanism only guarantees
|
||
|
||
relative priority, not absolute priority. A packet with a
|
||
|
||
high bid is guaranteed access sooner than a low bid, but no
|
||
|
||
absolute guarantees of delivery time can be made.28 Rejected
|
||
|
||
packets would be bounced back to the users, or be routed to
|
||
|
||
a slower network.
|
||
|
||
_________________________________________
|
||
28 It is hard to see how absolute guarantees can be made on a connection-
|
||
less network.
|
||
|
||
|
||
|
||
30
|
||
|
||
Partial congestion
|
||
|
||
|
||
In our discussion we have taken the network capacity to
|
||
|
||
be exogenously given. However, it is easy to extend the
|
||
|
||
mechanism to the case where an additional packet creates
|
||
|
||
congestion for other packets, but does not entirely exclude
|
||
|
||
them. To do this, we simply need use an upward sloping
|
||
|
||
marginal cost/supply curve, rather than a vertical one. We
|
||
|
||
still solve for the same intersection of supply and demand.
|
||
|
||
|
||
Offline accounting
|
||
|
||
|
||
If the smart market system is used with the sampling system
|
||
|
||
suggested earlier the accounting overhead doesn't have to
|
||
|
||
slow things down much since it can be done in parallel. All
|
||
|
||
the router has to do is to compare the bid of a packet with the
|
||
|
||
current value of the cutoff. The accounting information on
|
||
|
||
every 1000th packet, say, is sent to a dedicated accounting
|
||
|
||
machine that determines the equilibrium access price and
|
||
|
||
records the usage for later billing.29 Such sampling would
|
||
|
||
require changes in current router technology, however. The
|
||
|
||
NSFNET modified some routers to collect sampled usage
|
||
|
||
data; the cost of the monitoring system is significant.
|
||
|
||
|
||
Network stability
|
||
|
||
|
||
Adding bidding for priority to the routing system should
|
||
|
||
help maintain network stability, since the highest priority
|
||
|
||
packets should presumably be the packets sent between
|
||
|
||
routers that indicate the state of the network. These network
|
||
|
||
``traffic cops'' could displace ordinary packets so as to get
|
||
|
||
information through the system as quickly as possible.
|
||
_________________________________________
|
||
29 We don't discuss the mechanics of the billing system here. Obviously,
|
||
there is a need for COD, third-party pricing, and other similar services.
|
||
|
||
|
||
|
||
31
|
||
|
||
Routing
|
||
|
||
|
||
As we have mentioned several times, the Internet is a connec-
|
||
|
||
tionless network. Each router knows the final destination of a
|
||
|
||
packet, and determines, from its routing tables, what the best
|
||
|
||
way is to get from the current location to the next location.
|
||
|
||
These routing tables are updated continuously to indicate the
|
||
|
||
current topology (but not the congestion) of the network.
|
||
|
||
Routing tables change to reflect failed links and new nodes,
|
||
|
||
but they do not change to reflect congestion on various links
|
||
|
||
of the network. Indeed, there is no standard measurement for
|
||
|
||
congestion available on the current NSFNET T-3 network.
|
||
|
||
Currently, there is no prioritization of packets: all packets
|
||
|
||
follow the same route at a given time. However, if each packet
|
||
|
||
carried a bid price, as we have suggested, this information
|
||
|
||
could be used to facilitate routing through the Internet. For
|
||
|
||
example, packets with higher bids could take faster routes,
|
||
|
||
while packets with lower bids could be routed through slower
|
||
|
||
links.
|
||
|
||
The routers could assign access prices to each link in
|
||
|
||
the net, so that only packets that were ``willing to pay'' for
|
||
|
||
access to that link would be given access. Obviously this
|
||
|
||
description is very incomplete, but it seems likely that having
|
||
|
||
packets bid for access will help to distribute packets through
|
||
|
||
the network in a more efficient way.
|
||
|
||
|
||
|
||
Capacity expansion
|
||
|
||
|
||
It is well-known that optimal prices send the correct signals
|
||
|
||
for capacity expansion, at least under constant or decreasing
|
||
|
||
returns to scale. That is, if an optimally priced network
|
||
|
||
generates sufficient revenue to pay the cost of new capacity,
|
||
|
||
|
||
32
|
||
|
||
then it is appropriate to add that capacity. It appears from our
|
||
|
||
examination of the cost structure of the Internet that constant
|
||
|
||
returns to scale is not a bad approximation, at least for small
|
||
|
||
changes in scale. Hence, the access prices we have described
|
||
|
||
should serve as useful guides for capacity expansion.
|
||
Distributional aspects
|
||
|
||
|
||
The issue of pricing the Internet is highly politicized. Since
|
||
|
||
the net has been free for many years, there is a large
|
||
|
||
constituency that is quite opposed to paying for access. One
|
||
|
||
nice feature of smart market pricing is that low-priority
|
||
|
||
access to the Internet (such as e-mail) would continue to
|
||
|
||
have a very low cost. Indeed, with relatively minor public
|
||
|
||
subsidies to cover the marginal resource costs, it would be
|
||
|
||
possible to have efficient pricing with a price of close to zero
|
||
|
||
most of the time, since the network is usually not congested.
|
||
|
||
If there are several competing carriers, the usual logic of
|
||
|
||
competitive bidding suggests that the price for low-priority
|
||
|
||
packets should approach marginal cost---which, as we have
|
||
|
||
argued, is essentially zero. In the plan that we have outlined
|
||
|
||
the high priority users would end up paying most of the costs
|
||
|
||
of the Internet.
|
||
|
||
In any case, our discussion has focused on obtaining an
|
||
|
||
efficient allocation of scarce network resources conditional
|
||
|
||
on the pre-existing distribution of budgetary resources. Noth-
|
||
|
||
ing about efficient pricing precludes the government from
|
||
|
||
providing cash subsidies for some groups of users to allow
|
||
|
||
them to purchase network access.
|
||
|
||
33
|
||
|
||
10. Role of public and private sector
|
||
|
||
|
||
As we have seen, current private providers of access to
|
||
|
||
the Internet generally charge for the ``size of the pipe''
|
||
|
||
connecting users to the net. This sort of pricing is probably
|
||
|
||
not too bad from an efficiency point of view since the ``size
|
||
|
||
of the pipe'' is more-or-less proportional to contemplated
|
||
|
||
peak usage.
|
||
|
||
The problem is that there is no pricing for access to
|
||
|
||
the common backbone. In December of 1992, the NSF an-
|
||
|
||
nounced that it will stop providing direct operational funding
|
||
|
||
for the ANS T-3 Internet backbone. It is not yet clear when
|
||
|
||
this will actually happen, although the cooperative agree-
|
||
|
||
ment between NSF and Merit has been extended through
|
||
|
||
April 1994. According to the solicitation for new proposals,
|
||
|
||
the NSF intends to create a new very high speed network
|
||
|
||
to connect the supercomputer centers which would not be
|
||
|
||
used for general purpose traffic. In addition, the NSF would
|
||
|
||
provide funding to regional networks that they could use to
|
||
|
||
pay for access to backbone networks like ANSnet, PSInet
|
||
|
||
and Alternet.
|
||
|
||
The NSF plan is moving the Internet away from the
|
||
|
||
``Interstate'' model, and towards the ``turnpike'' model.
|
||
|
||
The ``Interstate'' approach is for the government to develop
|
||
|
||
the ``electronic superhighways of the future'' as part of an
|
||
|
||
investment in infrastructure. The ``turnpike'' approach is that
|
||
|
||
the private sector should develop the network infrastructure
|
||
|
||
for Internet-like operations, with the government providing
|
||
|
||
subsidies to offset the cost of access to the private networks.
|
||
|
||
Both funding models have their advantages and disad-
|
||
|
||
vantages. But we think that an intermediate solution is
|
||
|
||
|
||
34
|
||
|
||
necessary. The private sector is probably more flexible and
|
||
|
||
responsive than a government bureaucracy. However, the
|
||
|
||
danger is that competing network standards would lead to an
|
||
|
||
electronic Tower of Babel. It is important to remember that
|
||
|
||
turnpikes have the same traffic regulations as the Interstates:
|
||
|
||
there is likely a role for the government in coordinating
|
||
|
||
standards setting for network traffic. In particular, we think
|
||
|
||
that it makes sense for the government, or some industry
|
||
|
||
consortium, to develop a coherent plan for pricing Internet
|
||
|
||
traffic at a packet level.
|
||
|
||
A pricing standard has to be carefully designed to contain
|
||
|
||
enough information to encourage efficient use of network
|
||
|
||
bandwidth, as well as containing the necessary hooks for
|
||
|
||
accounting and rebilling information. A privatized network
|
||
|
||
is simply not viable without such standards, and work should
|
||
|
||
start immediately on developing them.
|
||
|
||
|
||
|
||
35
|
||
|
||
Glossary30
|
||
|
||
Asynchronous Transfer Mode (ATM)
|
||
|
||
A method for the dynamic allocation of bandwidth using
|
||
a fixed- size packet (called a cell). ATM is also known as
|
||
"fast packet".
|
||
|
||
backbone
|
||
|
||
The top level in a hierarchical network. Stub and transit
|
||
networks which connect to the same backbone are guaranteed
|
||
to be interconnected. See also: stub network, transit network.
|
||
|
||
bandwidth
|
||
|
||
Technically, the difference, in Hertz (Hz), between the
|
||
highest and lowest frequencies of a transmission channel.
|
||
However, as typically used, the amount of data that can be
|
||
sent through a given communications circuit.
|
||
|
||
Bitnet
|
||
|
||
An academic computer network that provides interactive
|
||
electronic mail and file transfer services, using a store-
|
||
and-forward protocol, based on IBM Network Job Entry
|
||
protocols. Bitnet-II encapsulates the Bitnet protocol within
|
||
IP packets and depends on the Internet to route them.
|
||
|
||
circuit switching
|
||
|
||
A communications paradigm in which a dedicated com-
|
||
munication path is established between two hosts, and on
|
||
which all packets travel. The telephone system is an example
|
||
of a circuit switched network.
|
||
|
||
connectionless
|
||
|
||
The data communication method in which communica-
|
||
tion occurs between hosts with no previous setup. Packets
|
||
between two hosts may take different routes, as each is
|
||
independent of the other. UDP is a connectionless protocol.
|
||
|
||
Gopher
|
||
|
||
A distributed information service that makes available
|
||
hierarchical collections of information across the Internet.
|
||
_________________________________________
|
||
30 Most of these definitions are taken from Malkin and Parker (1992).
|
||
36
|
||
|
||
Gopher uses a simple protocol that allows a single Gopher
|
||
client to access information from any accessible Gopher
|
||
server, providing the user with a single "Gopher space"of
|
||
information. Public domain versions of the client and server
|
||
are available.
|
||
37
|
||
|
||
header
|
||
|
||
The portion of a packet, preceding the actual data, con-
|
||
taining source and destination addresses, and error checking
|
||
and other fields. A header is also the part of an electronic mail
|
||
message that precedes the body of a message and contains,
|
||
among other things, the message originator, date and time.
|
||
|
||
hop
|
||
|
||
A term used in routing. A path to a destination on a
|
||
network is a series of hops, through routers, away from the
|
||
origin.
|
||
|
||
host
|
||
|
||
A computer that allows users to communicate with other
|
||
host computers on a network. Individual users communicate
|
||
by using application programs, such as electronic mail,
|
||
Telnet and FTP.
|
||
|
||
internet
|
||
|
||
While an internet is a network, the term "internet"is usu-
|
||
ally used to refer to a collection of networks interconnected
|
||
with routers.
|
||
|
||
Internet
|
||
|
||
(note the capital "I") The Internet is the largest internet in
|
||
the world. Is a three level hierarchy composed of backbone
|
||
networks (e.g., NSFNET, MILNET), mid-level networks,
|
||
and stub networks. The Internet is a multiprotocol internet.
|
||
|
||
Internet Protocol (IP)
|
||
|
||
The Internet Protocol, defined in STD 5, RFC 791, is
|
||
the network layer for the TCP/IP Protocol Suite. It is a
|
||
connectionless, best-effort packet switching protocol.
|
||
|
||
National Research and Education Network (NREN)
|
||
|
||
The NREN is the realization of an interconnected gigabit
|
||
computer network devoted to Hign Performance Computing
|
||
and Communications.
|
||
|
||
packet
|
||
|
||
The unit of data sent across a network. "Packet"a generic
|
||
term used to describe unit of data at all levels of the protocol
|
||
stack, but it is most correctly used to describe application
|
||
data units.
|
||
|
||
|
||
|
||
38
|
||
|
||
packet switching
|
||
|
||
A communications paradigm in which packets (mes-
|
||
sages) are individually routed between hosts, with no previ-
|
||
ously established communication path.
|
||
|
||
protocol
|
||
|
||
A formal description of message formats and the rules
|
||
two computers must follow to exchange those messages. Pro-
|
||
tocols can describe low-level details of machine-to-machine
|
||
interfaces (e.g., the order in which bits and bytes are sent
|
||
across a wire) or high-level exchanges between allocation
|
||
programs (e.g., the way in which two programs transfer a
|
||
file across the Internet).
|
||
|
||
route
|
||
|
||
The path that network traffic takes from its source to
|
||
its destination. Also, a possible path from a given host to
|
||
another host or destination.
|
||
|
||
router
|
||
|
||
A device which forwards traffic between networks. The
|
||
forwarding decision is based on network layer information
|
||
and routing tables, often constructed by routing protocols.
|
||
|
||
Switched Multimegabit Data Service (SMDS)
|
||
|
||
An emerging high-speed datagram-based public data
|
||
network service developed by Bellcore and expected to be
|
||
widely used by telephone companies as the basis for their
|
||
data networks.
|
||
|
||
T1
|
||
|
||
An AT&T term for a digital carrier facility used to
|
||
transmit a DS-1 formatted digital signal at 1.544 megabits
|
||
per second.
|
||
|
||
T3
|
||
|
||
A term for a digital carrier facility used to transmit a
|
||
DS-3 formatted digital signal at 44.746 megabits per second.
|
||
|
||
Transmission Control Protocol (TCP)
|
||
|
||
An Internet Standard transport layer protocol defined in
|
||
STD 7, RFC 793. It is connection-oriented and stream-
|
||
oriented, as opposed to UDP.
|
||
39
|
||
|
||
References
|
||
|
||
|
||
|
||
Anonymous (1986). Stratacom, inc. introduces `packetized
|
||
voice system'. Communications Week, 2.
|
||
|
||
Cavanaugh, J. D., and Salo, T. J. (1992). Internetworking
|
||
with atm wans. Tech. rep., Minnesota Supercomputer
|
||
Center, Inc.
|
||
|
||
Claffy, K. C., Polyzos, G. C., and Braun, H.-W. (1992).
|
||
Traffic characteristics of the t1 nsfnet backbone. Tech.
|
||
rep. CS92-252, UCSD. Available via Merit gopher in
|
||
Introducing the Internet directory.
|
||
|
||
Clark, D. (1989). Policy routing in internet protocols.
|
||
Tech. rep. RFC1102, M.I.T. Laboratory for Computer
|
||
Science.
|
||
|
||
Cocchi, R., Estrin, D., Shenker, S., and Zhang, L. (1992).
|
||
Pricing in computer networks: Motivation, formula-
|
||
tion, and example. Tech. rep., University of Southern
|
||
California.
|
||
|
||
Faulhaber, G. R. (1992). Pricing Internet: The efficient
|
||
subsidy. In Kahin, B. (Ed.), Building Information
|
||
Infrastructure. McGraw-Hill Primis.
|
||
|
||
Gerla, M., and Kleinrock, L. (1988). Congestion control in
|
||
interconnected lans. IEEE Network, 2(1), 72--76.
|
||
|
||
Green, P. E. (1991). The future of fiber-0ptic computer
|
||
networks. IEEE Computer, ?, 78--87.
|
||
|
||
Green, P. E. (1992). An all-optical computer network:
|
||
Lessons learned. Network Magazine, ?
|
||
|
||
Huber, P. W. (1987). The Geodesic Network: 1987 Report
|
||
on Competition in the Telephone Industry. U.S. Gov't
|
||
Printing Office, Washington, DC.
|
||
|
||
Kahin, B. (1992). Overview: Understanding the NREN. In
|
||
Kahin, B. (Ed.), Building Information Infrastructure.
|
||
McGraw-Hill Primis, NY.
|
||
|
||
Kleinrock, L. (1992). Technology issues in the design
|
||
of NREN. In Kahin, B. (Ed.), Building Information
|
||
Infrastructure. McGraw-Hill Primis.
|
||
|
||
Krol, E. (1992). The Whole Internet. O'Reilly & Associates,
|
||
Inc., Sebastopol, CA.
|
||
|
||
|
||
40
|
||
|
||
Lynch, D. C. (1993). Historical evolution. In Internet System
|
||
Handbook. Addison Wesley, Reading, MA.
|
||
|
||
Malkin, G., and Parker, T. L. (1992). Internet users' glossary.
|
||
Tech. rep., Xylogics, Incl. and University of Texas.
|
||
|
||
Mandelbaum, R., and Mandelbaum, P. A. (1992). The
|
||
strategic future of the mid-level networks. In Kahin, B.
|
||
(Ed.), Building Information Infrastructure. McGraw-
|
||
Hill Primis.
|
||
|
||
McGarty, T. P. (1992). Alternative networking architectures:
|
||
Pricing, policy, and competition. In Kahin, B. (Ed.),
|
||
Building Information Infrastructure. McGraw-Hill
|
||
Primis.
|
||
|
||
Roberts, L. G. (1974). Data by the packet. IEEE Spectrum,
|
||
XX, 46--51.
|
||
|
||
Ruth, G., and Mills, C. (1992). Usage-based cost recovery
|
||
in internetworks. Business Communications Review,
|
||
xx, 38--42.
|
||
|
||
Smarr, L. L., and Catlett, C. E. (1992). Life after Internet:
|
||
Making room for new applications. In Kahin, B. (Ed.),
|
||
Building Information Infrastructure. McGraw-Hill
|
||
Primis.
|
||
|
||
Waldspurger, C. A., Hogg, T., Huberman, B. A., Kephart,
|
||
J. O., and Stornetta, W. S. (1992). Spawn: A dis-
|
||
tributed computational economy. IEEE Transactions
|
||
on Software Engineering, 18(2), 103--117.
|
||
|
||
|
||
|
||
41
|
||
|
||
|
||
|
||
|
||
|
||
|
||
-----------------------------------------------------------------------
|
||
|
||
This file passed through SEA OF NOISE, +1 203 886 1441...
|
||
|
||
SHARE & ENJOY!
|
||
|
||
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|
||
|
||
|