The Internet has changed dramatically over the past decade
There is one point that deserves special attention in the cross-arguments and counter-arguments regarding the proposition that large traffic generators should contribute fairly to the costs they incur in telecommunications networks. It is often pointed out that this issue has been brought up for more than a decade and has not received the necessary support to move forward, and since nothing has changed there is no point in bringing it up again after ten years. The claim that nothing has changed on the Internet in the last ten years is surprising.
The truth is that in the last ten years Everything has changed On the Internet: The network architecture of the Internet has changed, business models have changed, the volume of traffic has grown exponentially, and the balance between the companies that make up the Internet ecosystem has changed.
From an early internet based on websites with a balanced ecosystem between a large number of companies and content producers and consumers and the telecom operators carrying that content, the last decade has seen an internet consolidation dominated by a very small network. number of companies: hyperscalers. Their business acumen and “winner takes all” With the trend in Internet business models, these companies have achieved a position of dominance in the Internet ecosystem that is already unquestioned and undisputed by 2022, leading to a structural problem that requires solving. This situation has led regions such as the European Union to promote legislative responses such as the Digital Markets Act (DMA).
If this reality cannot be denied, all companies and authorities concerned with the future and proper functioning of the digital ecosystem should consider that it is time to reconsider some of the rules and models agreed upon in the early Internet era. It already corresponds to the reality of 2022. It is time to lay a stronger foundation for the new era of the Internet than the current one, which can only be done by understanding the Internet architecture and its evolution.
Early Internet architecture
The Internet is a network of networks, consists of thousands of interconnected networks. The interconnection architecture of networks on the Internet was originally hierarchical. There were 3 levels of networks: Level 1 global networks their interconnection provided full access to any content or any user anywhere in the world; Level 2 was appropriate regional networksIt was Tier 3 local networks which Internet users and content and software providers (CAP) are connected. Tier 1 is what is traditionally known as the Internet spinal column.
In the early stages of the Internet, application and content providers and users connected to an operator that provided Internet access service and was responsible for connecting to a higher-level operator to achieve transit to the global Internet.
Apparently, the interaction between the different networks that make up the Internet was done using two different services. When a lower-level network connects to a higher level, it pays the so-called transit service. This service allows the user of this network to reach any destination or access any content on any network connected to the Internet. Networks of the same level can also communicate directly using the word interlocutor contract. By connecting the two networks directly, the use of transit service is avoided. This service provided direct access to users and content of two interconnected networks, but did not provide visibility to users and content of other networks.
At the commercial level, in transit contracts, the “downstream” network paid the “upstream” network for the service. On the contrary, peering agreements based on the number of users and content providers on each network and unadjusted criteria for traffic exchanged. Since the operators seeking interconnection have similar network structures, the services provided to each other and the costs associated with them can be compared. Implicit assumption of network symmetry (especially symmetry in access networks) and costs are often free glance arrangements based on the assumption that payments made to cover costs to the counterparty’s network will be offset against payments received from that counterparty. The symmetry parameter in traffic exchange became the guiding criterion in negotiations in this early Internet model. glance contracts.
Flattening the Internet architecture
The architecture of the Internet is based on video traffic (or video flow). Over the years, several elements have been introduced that have dramatically changed the architecture of the Internet. On the one hand, video required capabilities that the underlying Internet architecture could not provide. This led to the introduction of one element, CDNs (Content Delivery Networks), clouds specializes in video streaming this has reduced the need for increased capacity and reduced latency (the time it takes for content to reach the end user) on higher tier networks (1 and 2), thus improving the user experience. On the other hand, as the large hyperscalers grew and consolidated their platform models, they began to build their own selective transport networks (at the most profitable levels) and their own selective CDN infrastructure.
This change brought a A complete transformation in the technical architecture of the Internet. However, the interoperability business model associated with the early Internet architecture failed to thrive. None of the rules of interaction created for the early Internet could be changed. Rather, we can say that hyperscalers have not allowed these rules to change, considering the benefit they derive from this interaction model and using their undisputed market advantage to impose terms and conditions.
With the introduction of these elements, the Internet has become a flatter network in the last decade, where the original levels and hierarchy have disappeared. Hyperscalers that have reached a dominant position and sufficient business scale for this bypass the transit networks and connect directly to the networks of many operators at the cheapest levels. but not as internet usersas they did in the early stages, but “Operators” using glance contracts. Building their own infrastructures allowed large hyperscalers to avoid not only paying Internet transit costs, but also the costs of distributing their content, thus gaining a competitive advantage over other players who did not have a dominant position and therefore could not force free peering. contracts.
The architecture of the Internet has been highly centralized and dependent on a few players, large hyperscalers.
Internet Users, Telecommunications Operators or Content Providers?
The majority of Internet transit traffic is now generated by large hyperscalers. Furthermore, the delivery of their content to end consumers bypasses the traditional Internet hierarchy. Today, 3 of the top 5 Internet transit connection providers are hyperscalers. These companies can access most networks directly without going through the Internet hierarchy.
Surely it’s time to ask if Internet giants are connection providers Under the control of and subject to the decisions of National Regulatory Authorities or they software and content providers or Internet users, is obliged to pay for the received communication service. What role should they play in the interaction model of the Internet?
The advantage of not having to pay for using operators’ networks
When traffic from large hyperscalers increased and these companies aggregated most of the Internet traffic, they created their own private networks to avoid transit fees. They downgraded their relationship with local operators under traditional conditions and related by forcing free to other networks glance.
These companies have become a “category” that was not originally envisioned in the Internet interaction model: they ceased to be Internet users and “private” network operators with neither an access network nor a national network, but with content that clearly gives them a dominant position in negotiations glance contracts.
This is important to understand when the hyperscalar negotiates a glance if he signs a contract with a telecommunication operator, on what principles he does not do so glance contracts are negotiated between operators. Providing basic content and apps (due to consumer demand) gives them bargaining power, which usually ends up being free glance contracts. They claim the advantage of not paying to use the transport service for the traffic provided by the operators.
This does not appear to be a sign of balanced bargaining power between operators and large hyperscalers. On the contrary, it shows a distortion of the market that failure to adapt to the evolution of the Internet can lead to an unsustainable situation dominated by a few companies that only set the rules, the conditions and manage to capture the majority of the generated value. in the digital ecosystem.
Mixing the reality of networks with the reality of large hyperscalers in the interconnection market has resulted in a distorted market. The current definition of the Internet interconnection market is no longer relevant because it does not take into account the reality of the new interconnection model. CDN and cloud infrastructure of hyperscalers.
Given that this situation was never envisioned in the original Internet model, it should make us wonder if this is the right basis to fund the investment efforts that telecom operators face in deploying national backbones and access networks.
Key discussions on how to build a fairer and more sustainable digital ecosystem
The debate about the fair contribution of the big Internet companies is a debate about the need to review assumptions agreed upon in the 1990s, and 30 years later it still applies to an Internet that bears little resemblance to the Internet that emerged in the 1990s. 1990s.
It is legitimate for the companies that favor these rules the most to want to keep them even in the Web 3.0 era, but there is a broad global consensus that these rules need to be revised to ensure a fairer and more balanced internet ecosystem. Legitimate counterarguments to telecommunications operators’ claims must be based on information and facts from today’s Internet, not from the internet that no longer exists.