What problems will the Internet face in the next 2 years?
We think that the major network service challenge in the next 2 years will be to find ways to support interconnection. The technical problems are relatively straightforward; it’s the accounting and economic problems that are tricky. We think it inevitable that a system of settlements will emerge. What are settlements? When you place a call to Paris, you transit at least 3 telco networks: your local provider, a long distance company, and France Telecom. These companies keep track of calls and make payments to each other based on how much traffic flows in each direction through their networks. There is a similar system in place for post offices. Some economists have suggested that such a settlement policy will likely arise for the Internet. Since one carrier imposes costs on another by sending it incremental traffic, it seems appropriate that some monetary payments accompany this traffic. Others argue that traffic flows are sufficiently symmetric that a “no settlements” policy is worka
