...Internet
The authors wish to acknowledge support from National Science Foundation grant SBR-9230481. The most current version of this paper will be available for anonymous ftp, gopher, and in HTML format for World Wide Web access at gopher.econ.lsa.umich.edu. Both authors are members of the Department of Economics, University of Michigan, Ann Arbor, MI 48109-1220. They can be reached at jmm@umich.edu and Hal.Varian@umich.edu.
...Perspectives.
We are grateful to the American Economics Association for permission to reprint substantial portions of that material.
...Center
Beginning in the early 1990s, the statistics do not reflect the size of the total U.S. network because alternative backbones began appearing. It is generally believed that the NSFNET accounted for at least 75 of U.S. backbone traffic until around September 1994, after which its share rapidly fells as the NSFNET was gradually phased out. Shutdown occurred on 30 April 1995.
...network.
Recall that a byte is equivalent to one ASCII character.
...customers.
Because most cable networks are one-way, many of these initial efforts use an ``asymmetric'' network connector that brings the input in through the TV cable at 10 Mbps, but sends the output out through a regular phone line at about 14.4 Kbps. This scheme may be popular since most users tend to download more information than they upload.
...problem.
The single largest current use of network capacity is file transfer, much of which is distribution of files from central archives to distributed local archives. The timing for a large fraction of file transfer is likely to be flexible. Just as most fax machines allow faxes to be transmitted at off-peak times, large data files could easily be transferred at off-peak times---if users had appropriate incentives to adopt such practices.
...degradation.
The effects of network congestion are usually negligible until usage is very close to capacity.
...not?
Many university employees routinely use email rather than the phone to communicate with friends and family at other Internet-connected sites. Likewise, a service is now being offered to transmit faxes between cities over the Internet for free, then paying only the local phone call charges to deliver them to the intended fax machine. And during early 1985, several versions of Internet voice telephone software have been released, allowing people to hold two-way conversattions --- using large amounts of bandwidth --- but paying nothing to offset the service quality degradation they are imposing on other users.
...cost.
See [Gupta et al. 1994] for a related study of priority pricing to manage Internet congestion.
...changed.
[MacKie-Mason et al. 1995a] and [Murphy and Murphy1994] describe an alternative congestion pricing scheme that would set prices based on a current measure of congestion in a gateway, then communicate these to the user. The user would then decide how much traffic to send during the current pricing interval. This mechanism is easier to implement, but at least in principle it does not match the efficiency of the smart market.
...zero.
Since most users are willing to tolerate some delay for email, file transfer and so forth, most traffic should be able to go through with acceptable delays at a zero congestion price, but time-critical traffic will typically pay a positive price.
...request.
Public file servers in Chile and New Zealand already face this problem: any packets they send in response to requests from foreign hosts are charged by the network. Network administrators in New Zealand are concerned that this blind charging scheme is stifling the production of information public goods. For now, those public archives that do exist have a sign-on notice pleading with international users to be considerate of the costs they are imposing on the archive providers.
...packets.
Statistical sampling could lower costs substantially, but its acceptability depends on the level at which usage is measured---e.g., user or organization---and on the statistical distribution of demand. For example, strong serial correlation can cause problems.
...traffic.
If this example doesn't seem compelling because the costs are borne by the networks whose users are generating the demand for the large Web traffic flows, then imagine that the free-riding provider instead services junk email servers that send out vast quantities of unsolicited email. Other users don't want to reach these servers, so this net does not have to provide capacity to handle incoming traffic.

Jeffrey K. MacKie-Mason
Tue Jul 11 10:21:32 EDT 1995