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Internet Policy

Internet Policy. Day 1 - Workshop Session No. 2 Market structure Prepared for CTO by Link Centre, Witwatersrand University, South Africa. Sessions Summary. Day 1 Session 1 History and technical background Session 2 Market structure Day 2 Session 3 Governance processes

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Internet Policy

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  1. Internet Policy Day 1 - Workshop Session No. 2 Market structure Prepared for CTO by Link Centre, Witwatersrand University, South Africa

  2. Sessions Summary • Day 1 • Session 1 History and technical background • Session 2 Market structure • Day 2 • Session 3 Governance processes • Session 4 Interconnection and exchanges • Day 3 • Session 5 The impact of telecommunications regulation • Session 6 Internet specific policy issues • Day 4 • Session 7 Content on the Internet • Session 8 E-commerce issues • Day 5 • Session 9 Internet tools for regulators • Session 10 Conclusion, review and evaluation

  3. 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

  4. 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

  5. The Network

  6. The Network

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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)

  16. 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

  17. The Money: Problems • Everyone pays the United States • Imbalances in telecommunications charges mean that regional internetworking is not efficient

  18. 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)

  19. The Issues • 1st and 2nd tier ISPs • what are they and is the discussion relevant? • ISPs vs. incumbents • Competing with a critical supplier

  20. 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?

  21. 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

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