[LINK] Question: volume charges

Wed Nov 20 05:16:20 EST 2002

I don't really have any problems with volume charges.  In principle it's
hard to see any other way to do it.  Time based charging is essentially
volume based charging with some assumptions about the volume people can
draw down.

The real problems with volume based charging are that not all content costs
the same to deliver.  In particular it costs more to get 1 byte from New
York to Sydney than it does to get the same byte from Melbourne to Sydney
which costs more than it does to get it from Sydney to Sydney, especially
where you stay on the same network.  Local carriers are effectively
bundling the costs of domestic and international carriage rates and
presenting them as a flat rate.  In my view carriers, if they were honest,
would give a separate rate for domestically sourced content and a separate
rate again for on net content (ie content from within their own network).
Bunded prices do nothing to discipline the market to reflect the underlying
costs (ie give people a disincentive to download international content).

Downloading 5+ CDs of your favourite Linux distribution will now be more
difficult under volume caps, but need not be if data sourced from local
mirrors are not counted against those caps.

The second thing about volume based charges is that they are artificially
inflated by legislation which forces content to move off shore/prevents
legal caching, whether that's the censorhip act or the copyright act.

There are programs which will monitor the amount of data you download
(they're hard to find, as they're mostly geared to time based charging).
However you need to keep in mind that for every 8 bits you receive 11 bits
are sent (for error checking and redundancy). You raise some interesting
points about where the data should be measured and who pays for bad
packets.

Spam, and more particularly DoS attacks (which can easily blow your
download cap) are particularly difficult problems for volume based charges.

There is a further problem out there, which is that carriers have
engineered their networks on the assumption that we are all passive
consumers.  I'm on optus and even though I'm buying a certain level of
capacity, I can't run my own server over that capacity. Instead I have to
use their [/scarcasm] fantastically generous [/sarcasm off] 10MB allowance
(a figure which hasn't changed over the last 2 or 3 years) for my website.
If I want to put a video of my son on the internet for his grandparents to
download I can't use my XGB hard disk for storage and serve it directly, I
have to use their servers - in other words I can't do it.  I assume this is
because they think I should get a value added server product from them,
which is presumably the result of too many marketers dropping too much acid
during their brainstorming sessions. Carriers ought to be encouraging end
user servers to drive traffic flows and enhance the value of their local
networks.  Instead they're pretty much forcing people to acquire content
from overseas and driving up their own costs in the process.

The final thing about volume based charges is that while charges remain
bundled and there are restrictons on home servers it is my view that the
growth of broadband in Aus will be unnecessarily limited.  Everyone but
everyone wants to communicate with their peers, but models which attempt to
encourage this have been soundly ignored or actively stymied by carriers.
They seem to think people pay $2000+ for a pc simply so it can be some sort
of substitute for a $200 television.  I find Optus' marketing strategy of
bundling content with their internet carriage service particularly
laughable (as distinct from their cable TV product).  Someone should be
clipped soundly around the ear over there. Anyone who thinks "compelling
content" is the road to internet nirvana should stop sniffing glue and get
back to the real world. Put simply: if it works on TV then it doesn't work
on the internet.

Brendan

My views, not those of my employer.

                      "Chirgwin, Richard"                                                                                   
                      <Richard.Chirgwin@info         To:      "'link@anu.edu.au'" <link@anu.edu.au>                         
                      rma.com.au>                    cc:                                                                    
                      Sent by:                       Subject: [LINK] Question: volume charges                               
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                      u                                                                                                     

                      19/11/02 05:08 PM                                                                                     

Linkers,

Reading a couple of pieces by Kate McKenzie on the Oz today (good articles
as far as I could see), there seems to me an elephant in the bathroom when
it comes to volume charges on the Internet.

At the macro level, volume charging may or may not be equitable. By this, I
mean that looking at the price of trans-Pacific gigabytes, the monopoly
rents from American carriers, and various other factors - maybe Geoff
Houston and Ramin Marzbani are speaking fairly when they say volume charges
aren't so bad.

But at the micro level, I don't see how a carrier claim fairness to its
volume charges, because of:
a) information asymmetry;
b) lack of control;
c) built-in inaccuracies.

a) Information asymmetry: I can, if I wish, write down every phone call I
make and use that to challenge a phone bill. I cannot do this with browsing
traffic with any confidence of accuracy; look for example at the Internet
usage meter debacle (BTW, journalists might usefully ask the vendor why the
product Telstra is using isn't working).

So there's an asymmetry of information: an ISP can charge for megabytes,
but
I can't challenge its measurement.

b) Lack of control: I cannot stop spam. Most users don't know how to
prevent
huge attachments from soaking up their downloads. I should expect a
tens-of-megabytes "patch" allowance. If I hit on the wrong Website, I might
get a window-bomb. Plus ads and popups and so on. Unlike telephony, where I
don't pay for junk calls, on the Australian Internet we're expected to pay
for junk data. Or look at Internet banking, something which might be
considered "necessary" - but I can't stop the bank from creating a megabyte
application if it pleases.

[BTW: this is corruptible, from a systemic point of view. A carrier could
bribe a content provider to make its applications "fat". No, I'm not
proposing a conspiracy theory here; but economic systems should avoid
creating opportunities for corrupt practise.]

c) Built-in inaccuracies. The only time I've seen a published test of IP
packet metering, it was seriously unreliable; against the "laboratory
standard" packet generator, the packet counters were good for as much as
50%
deviations. Nor have I ever heard whether errored packets, port scans etc
are included in the packet count. What about management traffic - for
example, ISP sends configuration data to the DSL modem. Is this reliably
excluded from my volume metering? (note the word "reliably" here).

I know that I could be told "you bought a megabyte, you got a megabyte,
what's the problem?" But it's the Joe Sixpack problem again: what's sold to
Joe is not presented as a megabyte, it's sold as a megabyte per second; and
Joe has no hope to understand his bill (you'd need Andersen Consulting to
audit your traffic, and they're no longer available...).

One of the people Ms McKenzie interviewed said all we get in Australia is
fast dialup instead of true broadband. Maybe so; but I wouldn't mind a fast
dialup service if it were billed accordingly.

Richard Chirgwin
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