Re: Why charge for packets

Ittai Hershman (ittai@vx2.GBA.NYU.EDU)
Wed, 27 Apr 1988 18:37:25 EDT

I have been sitting on the sidelines watching the discussion on
network costing/charging. I am afraid that some people have missed
the forest for the trees. Craig Partridge has put us back on the
right track.

The Internet is a tool to increase R&D and productivity. Because this
increase is a result of sharing among competitors (regardless of
whether these are profit-making or non-profit institutions, sharing of
information results in a loss of competitive edge). Yet it promotes a
common good and the rules-of-the-game are changed by this sharing:
standards are formed, technology is advanced, and competition is

This, in my opinion, is precisely why the Internet is an
"infrastructure issue" as are interstate highways; like interstate
highways, the cost of the network infrastructure -- the PSNs and the
trunks which interconnect them -- should be federally funded from
general revenues. I suspect that the Internet infrastructure
operating and capital costs can be budgeted with a high degree of

Furthermore, the States have gotten involved, and we now have a bunch
of regional networks with State funding as well. So the model is one
of a federally funded national infrastructure which serves two
subordinate layers: federal institutions, and regional subnets. The
regional networks, in turn have subordinate institutions. And
finally, the institutions are responsible for their own internal

All of this, I think, conforms to the spirit of FCCSET.

The pragmatic problem, of course, is that it is (unfortunately)
unlikely that the Congress and the State Legislatures will value the
Internet as we (who are biased consumers of it) do.

And so, in this imperfect world, we must find a way to raise some of
the money ourselves. And since many of the consumers of this resource
are cash poor, we struggle to find an equitable method of cost
distribution which does not negate the raison-d'etre.

I agree with Craig. Charging by "bandwidth" is both equitable and
reasonable. Look at the rousing sucess of BITnet -- it permitted
virtually all institutions of higher education an affordable but
minimal level of service. A lifeline service. Mail.
To get more, you pay more.

To further raise revenues, I think the Internet should allow/encourage
involvement of commercial companies. Aside from the computer
manufacturers and software houses, there are many commercial companies
involved in (non-defense) research and would benefit from Internet
access. For example, the financial institutions in the Wall Street
area hire PHDs (and faculty) galore and have more advanced computer
technology than most CS departments. Many would be interested, and
certainly could be "sold" on joining. They would be charged higher
fees, since their return to the Internet will be less direct. The
fees could be used to subsidize the non-profits. (Note that we would
not be selling communications media, rather the data, so I think this
can be justified legally).

Lastly, I suspect that the most expensive (read: inefficient) part of
the Internet at present is not the traffic per se. Rather, that the
redundency is at the site level rather than at the infrastructure
level. NYU, for example, has three Internet connections: MILnet,
JVNCnet, and NYSERnet. Wouldn't the resources required for all of
this (computers, gateways, leased lines) be better spent on the
PSN/trunk level?!? Reorganizing the whole mess will probably save
enough money to make some needed capital improvements.

On a final note, as a member of the University-wide network planning
committee at NYU, I see that we are a microcosm of the Internet. We
are a huge institution, spanning unwieldy amounts of real estate, with
decentralized control. We have "rich schools" and "poor schools" and
the rich subsidize the poor. We have not found a good method of
charging for network services, and I suspect we never will.

You can't quantify the loss of an infrastructure service -- only what
it costs a part to run, and what it costs to replace that part if it
fails. The value of the whole is immeasurable.

Apologies for the length...


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