Subject: RE: [RRG] Renumbering...

From: "Fleischman, Eric" <[email-masked]>
Date: Mon, 18 Aug 2008 15:03:43 -0700

From: Tony Li [mailto:[email-masked]] 
|I fault the IETF (and RRG) for consistently failing to recognize some 
|exceedingly elementary economics: if you want to stay in business, then

|you don't waste money on needless non-business expenses. Therefore, if 
|anybody is going to renumber, it will be an organization that has a 
|positive business case to do so, such as an ISP.

>Which will then pass along the costs.  Perhaps you might want to 
>understand all of the interactions in the economic solution, because 
>there are many interactions here  that will have a variety of economic 
>repurcussions.  The issue is not so black and white, in the long run.

I concur that this is a very complex issue. However, the ISP always has
the liberty to try to pass on their costs to their customers and the
customer has the liberty to do business with whichever ISP offers the
best deal. Because of this, I would be very surprised if all customers
pay the same rates for the same services -- such pricing models rarely
make good business sense. "Volume discounts", "preferred customer
discounts", etc. are the reason that I expect large end user's PI
addresses to always be supported by ISPs.

|Let's change topics slightly to talk a bit more about elementary 
|economics. End users pay ISPs for their Internet connectivity. It is 
|therefore the ISP's responsibility to deliver Internet connectivity. If

|they can't, then they will go out of business. ISPs are therefore 
|motivated to eventually solve the Internet scaling problem -- whether 
|publicly or privately -- because they know that if they don't deliver 
|effective Internet connectivity, then the end users will use some other

|ISP or, worse case, develop alternative marketplaces that exclude them.
|Only a suicidal ISP would dare to suggest that a large end user 
|renumber as part of an ISP solution because that would negatively 
|differentiate themselves from their competitors and they would 
|consequently lose market share, perhaps insurmountably.

>If you accept this premise, then you implicitly empower the ISP to 
>apply whatever solution it sees fit.  One alternative is to raise
prices 
>(arbitrarily and unilaterally?).  Another is to use alternate
technology 
>(e.g., NAT) to renumber your site semi-transparently for you.  Are
those 
>alternatives that you're willing to accept?  And does that hold true
for 
>all other end-sites as well?

>ISPs are a business too, and driving them all out of business doesn't
help.

Your points are logical but they are not the only possibilities. The
repercussions may be technical, financial (business), or some
combination.

I view Internet scaling to primarily be an ISP problem because it
directly impacts the ISPs' business -- unless they choose to also make
it also become an end user problem, which would have direct business
repercussions with their customers (i.e., the alternative we have been
exploring together). 

It seems logical that if aggregating addresses actually has direct and
qualifiable costs to ISPs, their market will react to widespread PI
usage somehow. Perhaps the reaction would cause the larger ISPs to
become even more dominant than they currently are? If that results in
reducing end user choices, then that will probably drive end users to a
more technical response such as those you indicate above. Alternatively,
if that market reacts by creating highly allied communities of smaller
ISPs or large ISPs suddenly having strong market positions in new world
regions (e.g., Deutsche Telecomm within North America), then that will
have a different effect on the marketplace, probably causing ISPs to
court large end users by themselves bearing most or all of these costs. 

Whatever happens, the ISPs will need to carefully consider their pricing
models to their largest customers. It should not be lost on them that
slightly more than a decade ago large end users switched from having
their own private industry association networks to using ISP services.
Consequently, it is quite possible for large end users to again
re-deploy private industry association networks if their business cases
should indicate that doing so is a preferable alternative. This is
definitely not an all or nothing situation -- important related issues
include end user voice, video and data convergence; Telco/ISP
convergence; Wired vs. 3GPP Cellular vs. WiFi vs. WLAN hotspots; etc.
Telecommunications is currently undergoing many different sea changes.

My key point is that these are not solely technical issues. Business
cases will hopefully drive whatever businesses do. Relationships can be
complex and today's models are not the only alternatives. 

--Eric

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