internet policy day 1 - workshop session no. 2 market structure prepared for cto by link centre,...
TRANSCRIPT
Internet PolicyDay 1 - Workshop Session No. 2
Market structure
Prepared for CTO by Link Centre, Witwatersrand University, South Africa
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Sessions Summary Day 1
– Session 1History and technical background– Session 2 Market structure
Day 2– Session 3Governance processes– Session 4Interconnection and exchanges
Day 3– Session 5The impact of telecommunications regulation– Session 6Internet specific policy issues
Day 4– Session 7Content on the Internet – Session 8E-commerce issues
Day 5– Session 9Internet tools for regulators– Session 10 Conclusion, review and evaluation
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Internet Market Structure
The purpose of this session is to explore the business structures operating within the global Internet, to get an overview of the economics of the Internet and to identify potential problems with the current models.
Specifically, the objectives are to understand the roles played by different players in the Internet industry:– Telcos– ISPs– End-users
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Topics of Discussion
The network – Local topology– International topology– Regional networking
The money The issues
– First and second tier ISPs – ISPs vs. Incumbents – IAPs vs. ISPs
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Local Topology
Customer connects to an ISP Connects via telephone lines to an ISP’s
network Temporary (telephone, ISDN) or
permanent (leased line) connection Different types of connections have
different speeds – ADSL – Mobile/Cellular – Wireless
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Local Topology
End user– Increasing number of owner-build
wireless metropolitan networks– End users may not actually be “end”
users and may, in turn, resell
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Local Topology
Corporate networks– Could have one Internet connection,
or more than one – Security concerns mean that access
to Internet services is often more limited than private connections
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Local Topology
The ISP connects to the Internet– ISP has connections to large parts of the Internet – ISP also has an international connection (usually
to the US). Multiple connections, where affordable, provide a level of redundancy
– Connection may be via undersea cable or via satellite
– This is usually the most expensive component of the cost of Internet access from outside the US
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Local Topology
Interconnection (ISP-ISP)– Internet interconnection
points are sometimes referred to as “peering points”
– More efficient to have a means of keeping local traffic local
Latency Cost
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: International Topology
Backbone carriers– Telecommunications companies– Largest ISPs
Major exchanges – Much like in the national situation, Internet exchange
points enable like-sized networks to exchange traffic– Examples include MAE-East and MAE-West
Smaller ISPs – Connect to backbone carriers – Pay a transit fee for their traffic to be carried to
exchange points
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Network: Regional Networking
The US operates as a global hub for Internet traffic
Most Internet links are to the US or to the US via the network of a neighbouring country
Often a national as well as a regional problem
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Money: Who pays?
The customer pays the ISP– Monthly subscription charges or traffic-based
charges – What about “free” providers
The customer pays the telephone company– Telephone bill – call charges and line rental– Highest portion of the cost in developing countries
The ISP pays the telephone company
– Rental of equipment and lines
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Money: Who pays?
The telephone company pays the ISP
– Gain interconnection fees from customers of other telcos dialing into ISP facilities via their network
– Commission on traffic brought into the network (this forms the basic business model for many “free” ISPs in the UK)
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Money: Who pays?
The ISP pays another ISP – Peering charges, transit charges– Virtual ISP services
The telephone company pays another telephone company – Co-location, transit, interconnection
charges
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Money: Problems
Everyone pays the United States
Imbalances in telecommunications charges mean that regional internetworking is not efficient
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Other forms of ISP
IAPs vs. ISPs – Definition vs. usage
Hosting companies Content development companies Security companies
Related issues– Paying for content– Linking content to access (M-Web)
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
The Issues
1st and 2nd tier ISPs– what are they and
is the discussion relevant?
ISPs vs.
incumbents– Competing with a
critical supplier
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Discussion: Cheating the system
Buy a large Internet pipe (assume to the US) Negotiate with a US operator to handle voice
traffic coming from your network Begin moving all international voice traffic
onto the Internet pipe Watch as the international settlement system
swings in your favour Use the money generated to fund the Internet
pipe.
So -- what’s the catch?
CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002
Summary
ISPs operate at several different levels It is difficult to define an ‘ISP’ exactly ISPs use IXPs to exchange traffic cost-
effectively and efficiently Most Internet traffic passes across a the
US ‘hub’ Billing for Internet traffic is complex and
depends mostly on perceived value