[IP] paper on pricing and architectures for the Internet
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Mon, 29 Dec 2003 21:23:12 -0600 (CST)
From: odlyzko@xxxxxxxxxxx (Andrew Odlyzko)
Subject: for IP: paper on pricing and architectures for the Internet
To: dave@xxxxxxxxxx
Dave,
This might be of interest to your subscribers.
Best regards, and Happy New Year,
Andrew
Title: Pricing and architecture of the Internet: Historical perspectives
from telecommunications and transportation
Author: Andrew Odlyzko
URL: <http://www.dtc.umn.edu/~odlyzko/doc/pricing.architecture.pdf>
Abstract: With telecommunications in a slump, the search is on for
ways to re-invigorate this key industry. The main problems are clearly
economic much more than technological, and many of the proposed remedies
would lead to new architectures for the Internet that would provide for
greater control by carriers. They would drastically reduce the role of
the end-to-end principle, the main foundation for the success of the
Internet, in which functionality resides at the edges of the network.
The proposals to restrict voice over Internet (VoIP) are just one part
of this trend.
Historical precedents from telecommunications for introduction of
differentiated services and sophisticated charging methods on the Internet
are discouraging. The almost universal trend has been towards decreasing
price discrimination and simpler pricing.
The history of transportation presents a different picture, with frequent
movements towards increasing price discrimination and more complicated
pricing (although with many noteworthy reversals). Charging according to
the nature of the goods being transported has been and continues to be
the norm. Since the incentives to price discriminate are increasing,
and the ability to do so is also growing, it is conceivable that
telecommunications might break with its historical record and follow
the example of transportation. It is therefore of interest to examine
the evolution of pricing and quality differentiation in transportation.
Some historical sketches on the evolution of pricing in transportation
are presented. Their implications for telecommunications, and especially
for Internet pricing and architecture, are discussed.
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