Re: Packet level accounting in IP routers?

Sun, 17 Apr 88 18:48:29 -0400

Vint et al,

One way we have found useful to think about accounting and charging in
networks is to think of the network as a business. It has customers
today, and offers a set of services to those customers with some charging
policy ($0.45 an "ounce"?). In order to deliver those services it needs
to acquire capital assets (lines, switches, satellites), and provide
operations services (operators, field service, administrators). It can
make a business decision between providing the services to its
customers by use of its own assets (e.g., buy a satellite) or by use
of services obtained from somewhere else (e.g., use dial-up trunks
to provide service).

At any point in time, the charter of the business is to provide the services
to its clients at least cost, and to allocate those costs across the clients.

Here's where it gets sticky. Clients' needs change, as new technology
is introduced (e.g., 3D color workstations), and available communications
technology changes as well as technology advances (fiber, etc.). Thus in
order to stay in business, the network must plan to invest in new
technologies, and must make smart business decisions about what to do
and when in order to keep costs low, and remain competitive in the

In addition to these 'engineering' kinds of decisions, the network must
make 'marketing' decisions. For example, it might price a new service
"unfairly" low, in order to encourage clients to upgrade (maybe mail
should be cheaper if one uses the full domain server system?). There are
also costs associated with "marketing", such as advertising (NIC management

The point is that there is a large body of science and practice with
elements such as depreciation, revenue, IR&D, etc which allows someone
to place the network management into a business context.

The real question is the one which the CEO of this hypothetical business
has to answer - what is my business plan, how will I market my services,
what should I invest in to remain competitive, etc. In the government
network context, one should probably add the constraint that the network
be non-profit, because of the limited competition and 'infrastructure'
nature of the network.

As far as charging algorithms go, that is the province of the hypothetical
marketing department - how do I price my product. In the context of
the current mail discussion, I think it is best to assume that somehow
all of the costs must be recovered by charges, including costs for
investments for the future. The real question is how to use a pricing
policy to encourage the desired behavior. Perhaps triple charges for
any host failing to obey a quench?

As someone else pointed out, this is a real hot topic right now, and in
fact I think it is a not insignificant flaw in the research activities
that the methodology for 'chargeback' was not developed as part of
the network architecture from day one. No one has 'the right answer' as
far as I can see.

Are there any MBAs or business school students who need a good meaty
research area out there?????


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