How the Mediated Bandwidth Agreement insures Common Carriage

We've been articulating InterStream's vision for a premium service Internet for some time now. It is becoming increasingly clear that ISPs want to use our approach and technology because they see the potential to sell significant new services in addition to reducing their costs of peering and/or transit. It is important to understand that the economic model the Mediated Bandwidth Agreement (MBA) also insures that common carriage will be inherent on the Internet backbone.

Principles of the Agreement

There are two key tenets in the MBA. The first is reciprocity and the second is transitive service. These principles are already present in the wholesale agreements we have today on the network. Peering is a bilateral or reciprocal agreement by which one Internet Service Provider (ISP) exchanges traffic with another. The way bandwidth is sold at a wholesale network is known as IP Transit. This term is derived from the transitive nature in which the service works end-to-end across the network.

Reciprocity and Net Neutrality

Under the MBA, each ISP agrees to exchange premium traffic with one another. With such an agreement, each party has certain relative strengths that they may offer in the relationship. When best-effort bandwidth peering agreements are negotiated today, typically one ISP considers the number of broadband households and other endpoints they're connecting with in addition to the amount of traffic being exchanged between the two parties. Of course, there may be other factors in the negotiation as well. Each party uses subjective and objective measures to determine if they should enter into a sender keep all peering agreement.

The MBA adds a new set of objective and subjective factors into the negotiation. Since each ISP agrees to carry premium service end-to-end across their network, ISPs with larger broadband presences may be determined to bring greater value to the relationship. By making the agreement reciprocal so that each ISP is required to carry that traffic all the way to the household and meet the quality requirements of the Association, ISPs enter into a mutually beneficial relationship. They each get to reach the other's customers with their premium service traffic. Of course, ISPs who have few or no end customers may not have as much negotiating power.

 

Under this arrangement a wholesale service emerges that will not allow discrimination against particular users of those premium "diamond lane" services. Since each ISP provides service to its customers who are using those premium services and every other ISP who is peered with them must carry the premium traffic all the way into the home, there cannot be any discrimination. It would require collusion of every ISP who has signed than MBA to block a particular customer of the network. With more the 10,000 ISPs out there in the world today, this is impossible. The only requirement that has to be met by the customers of the system is to adhere to InterStream's terms of service as I outlined in my previous post.

Transitive Service means End-to-End access across the Network

The other effect of the MBA is to leverage existing transit agreements. By insuring that all InterStream ISPs interconnect with one another under the MBA, an end-to-end service can be offered. When ISPs sign the MBA and use the mediation technology provided, either quasi-guaranteed or truly guaranteed services may be offered. ISPs who don't participate in the association will use the new TCP system across their network to provide quasi-guaranteed service. ISPs who sign in, can either choose to use the designated TCP technology or deploy secure mediation controllers (SMCs) in their network. By doing so, InterStream can offer premium services end-to-end over the entire network while also allowing the initial tier 1 participant ISPs with a key advantage. Those initial participants will be able to offer premium end-to-end service across the entire Internet as they do today with best-effort service. Downstream non-InterStream ISPs will offer quasi-guaranteed service while true guarantees can made for all other InterStream providers.

 


 

Rack Rate Pricing insures Common Carriage

There is a corner case however. When broadband ISPs aren't directly connected to the backbone via an InterStream transit supplier, then no business relationship has been established between them and the backbone. In this case it is necessary for those ISPs who cannot negotiate a peering or transit agreement directly to be able to participate as an InterStreamSM ISP. These ISPs may, under the MBA, set a "rack-rate" price for their premium bandwidth services and later in phase III of our pilot will enable them to participate in the Association. By offering premium bandwidth services, they will be able to receive corresponding compensation even if they're not directly connected to the InterStream backbone.

Economic Incentives

Obviously, ISPs are not going to enter into any agreement which doesn't enable them to generate more revenue or reduce their costs. The MBA does both. One of the ISPs who may joining InterStream as a provider calls the initial group of InterStream providers the new "Tier 0" club. The initial InterStream ISPs gain an obvious economic advantage in the same way the initial list of Tier 1s had several years ago. Tier 2s and 3s who participate later gain the advantage through incremental revenue from the sale of both their network as well as downstream network customer's premium services. For many of these ISPs, this will mean a dramatic reduction in costs for interconnecting themselves to the Internet backbone. In addition, all of the InterStream commercial sponsors have an economic incentive to make sure the ISTP plugins are broadly distributed on the network. This creates a virtuous cycle for all participants in the InterStream economy.

The InterStream model enables the industry to quickly offer premium bandwidth capability end-to-end over the Internet while also insuring common carriage. Under this approach, ISPs can benefit from the incremental revenue ISTP bandwidth service provides while protecting consumers and new market entrants with an industry model that prevent discriminatory practices. Thus, this industry model guarantees net neutrality through fair, reasonable, and non-discriminatory access.

Jeff Turner

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