8.0 What are interchange agreements, and why should I care?

8.1 What is the Commercial Internet Exchange (CIX)?

This section of the FAQ is an intriguing history lesson on how a painfully divided organization attempted to hold up the Internet, and how it was discovered to be an Emperor without clothes. If you're not curious to hear a little history, you can probably skip this section entirely. If you've heard about the CIX and aren't sure what it is or what it can do, read on.

It's January of 1995, and the CIX has mainly slipped out of the news. In autumn of 1994, it seemed that you couldn't read your mail without another mention of controversial CIX moves. Now, however, things seem to have quieted down a great deal.

Here's how things looked, circa November-December 1994:

The Commercial Internet Exchange (CIX) is many things to many people. To some, it is the heroic institution separating small ISPs from the oblivion of disconnectedness. To others, its $ 7,500 a year annual fee is restraint of trade, monopolization or worse.

The CIX offers to do three basic things for you:

(1) Any CIX member must agree to pass through the packets of any other CIX member, without fee. So if you want to talk to a site in England, and you're going through five or ten other sites on the way, they cannot charge you for this transport service, assuming all the sites are CIX members. (Karl Denninger tells me in response to this document that they are only obligated to connect through the CIX router and nowhere else, although you are presumably guaranteed at least your access to the CIX router).

(2) The CIX operates a router, based in San Jose, CA. As part of your membership, you have to be connected to that router either directly or through a chain of CIX members. If you cannot connect to a specific site through normal means, you can use the CIX router as a last-resort option to get where you need to go. A direct connection to the router costs $ 5,000 on top of the membership charge.

(3) Unspecified lobbying and public relations efforts. Observers on the inet-access mailing list state that these efforts are negligible. However, those people are also anti-CIX for other reasons, so you may wish to take their opinions with a grain of salt. The CIX has not issued any official commentary that I know of on the specifics of these efforts.

There has been an enormous amount of talk - and we're talking about literally megabytes of stuff - about whether the CIX as it stands is a Good or Bad thing. Non-CIX members and some CIX members not on the board have made the following points:

(1) The basic principles of the CIX are worth saving. Even the most virulent hater of the organization has stated that the principles of settlement-free peering are the glue that holds the Internet together - and those principles should be supported by a trade organization people join. Gordon Cook's remarks are typical: "CIX may well go away, but if it does Sprint and MCI in a year will have life and death power over the small fry ... etc ... ie what if they forbade resale?" Gordon is no friend of the CIX in its present state; he has made many scathing commentaries on the present situation.

(2) The CIX is imposing route filtering, as of 15 November 1994. Previously, if you were a non-CIX member and were connected through a CIX site, you could still use the CIX router in the same way CIX members could. Under route filtering, the CIX router will become for the exclusive use of CIX members. Non-CIX members consider the $ 7,500 annual fee to be excessive; depending on the size of their operation, it could nearly double their operating costs.

In September 1994, the membership had an annual meeting, at which they voted to NOT impose this route filtering. The CIX Board of Directors said that they would have to impose filtering in any case, for legal reasons. Some members were relying on the CIX connection to hook themselves to all providers, whether members or no, so they actively did NOT want the filtering to occur. At the end of the meeting, people like Karl Denninger were confident that filtering would not be imposed. However, on November 1, the CIX announced that, for legal reasons, the filtering would be imposed on 15 November. At that point, Karl Denninger's provider and Net-99, a joint venture of Karl Denninger and Joseph Stroup, made a very public resignation from the CIX. See below for some additional details).

On 15 November, supposedly D-Day for filtering, someone on the Com-Priv mailing list noted that nothing had happened, and that even CIX routes were still available to all. Bob Collet admitted that the filtering was being implemented only gradually. Some people have said that filtering is impossible, given the specifics of route handling in the type of router being used by the CIX.

(3) The CIX has a router, and some people are a long, long way from it. Wouldn't it be better to have lower membership rates than a router, especially since the CIX can be thought of in some sense as competing with its own members? (In fact, one of the CIX members - PSI - operates the CIX router under contract).

All this sound and fury can be quite entertaining, unless your business depends on it. However, you may be able to relax: only 38 of 32,000 routes are unique to the CIX router. What this means is that if you're not a CIX member, route filtering will do very little for you; you lose contact with just 38 sites. If, however, you are a CIX member relying on the CIX router to connect you to the world, you may find yourself cut off from numerous non-CIX sites. As a result, most of the people connected through the CIX are apparently scrambling for alternative connections even as we speak.

What seems to have happened is that connectivity providers such as Sprint and Net-99 are in practice taking care of routing for their customers. As a result, the CIX router has become very nearly worthless, especially since it's been heavily overloaded. Bob Collet's latest statement is that "a phased deactivation of the router" will occur, probably to conclude in late 1995. At that time, the CIX will then become a (cheaper) trade association which will continue working for the settlement free system as described at the beginning of this section. Other CIX Board members, however, are hurling insults at all who would dare to ask them questions.

The following comments have been made by people on the Com-Priv mailing list on this subject:

* If you're connected by a provider that has access to MAE-EAST, a major interconnect point, you'll be able to connect to people hooked in to all major providers, since they're all there. This, for example, should cover both Sprint and Net-99 customers well.

* However, you will NOT be able to connect to people who are hooked in solely to the CIX router, unless you become a CIX member. Fortunately, very few sites appear to be in this category, and most of them are scrambling for alternative arrangements even as we speak.

* Providers don't advertise all their interconnected routes to MAE-EAST; they only advertise those routes which help provide connectivity to their customers. For example, if PSI has a direct link to Hong Kong, and PSI is connected at MAE-EAST, you'll be able to hook up to all PSI customers, but not necessarily Hong Kong. However - just to confuse things - if the Hong Kong Supernet, a specific site, was connected through PSI, you would of course be able to hook up to it.

As a result of this CIX filtering, Karl Denninger's MCS-NET and Net-99, his joint venture with Joseph Stroup, have resigned from the CIX effective immediately. Their complaint is that the obvious wishes of the membership (as voted on in the earlier meeting) were ignored. Bob Collet has asked them to suspend their resignations temporarily, while he attempts to put together a solution to please all parties. As a result, they have not yet put their resignations in writing, but their very deep displeasure with the CIX and its representatives could hardly be more clear. The CIX response has been that the filtering is a legal necessity, according to advice of counsel. Others say that the law could be read either way, and that the primary goal of the CIX is to expand connectivity; filtering is unquestionably not going to advance this goal.

It's worth repeating the requirements for filtering, to give us a better understanding of what's going on. Filtering would affect you if:

- The site that feeds you is not a CIX member

- You are not a CIX member -AND- you sell SLIP/PPP access, or any other form of IP connectivity (56k lines, T1, etc).

Otherwise, you can relax and ignore this issue completely. So if you sell shell or BBS accounts, and the site you're connected to is a CIX member, then you have full CIX connectivity and can cheerfully ignore this issue. Otherwise, the bottom line seems to be that you could ignore it anyway. Stay tuned, though: this optimistic vision is probably good for the next 30 days and no longer.

Bob Collet (rcollet@sprint.net), a spokesperson for the CIX Board, was kind enough to review the above. As his conclusion to a short list of suggestions, he wrote: "Suggest toning down the personal opinion flavor of the document." His belief is that my anti-CIX prejudices are showing rather blatantly, and that an impartial document would be more neutral in tone. I have invited Mr Collet or any representative he wishes to choose to contribute a statement of CIX policy, which I will insert here verbatim if and when it arrives.

Bob Washburn was Executive Director of the CIX until a month or two ago. Mr Washburn was taking care of most of the public relations for the organization, and his departure seems to have left the PR tasks up to members of the board. They are presently searching for a replacement, which may be one reason the flow of information out of the CIX is so sluggish. There are now approximately 100 CIX members.

It is thus worth noting that this document consists of an analysis created by me using the best information I know - the various messages I read on the inet-access and com-priv mailing lists. While I hope it has been of value, clearly it cannot guarantee anyone's future policy, and does not constitute legal advice. I will definitely plead guilty to making an attempt to give this rather dry material a bit of entertainment value.

8.2 What is NET-99?

(This section is largely obsolete, since Net-99 is effectively no more. See the previous section on national providers).

According to Karl Denninger , one of the founding members:

"Net99 is a commercial effort by Joe Stroup and myself to provide a resale-encouraged, peering-mandatory, backbone environment for the small and medium sized reseller. Net99 is not a cooperative, or a non-profit. Net99 is, however, an alternative project which should, if preliminary indications are good, provide a reasonable and affordable alternative for the reseller of Internet connectivity when squared off against the large companies now domainating this portion of the network infrastructure."

Net-99 beat their November 1 deadline by a very considerable margin, having POPs up in mid-October. They presently offer service in the following cities:

New York, Houston, Los Angeles, Chicago, San Jose, Boston, Philadelphia

When asked for the number of sites presently on Net-99, Karl said, "Can't give you an accurate count; its growing incredibly rapidly!"

Robert Gibson writes us as follows:

"We have a connection via T1 to NET99, and it works very well. We also have other T1 connections into the Internet via Sprint, Navy. I have found the connectivity and support GREAT. ... NET99 is *great* in terms of service, and I would gladly pay a few $$$ for service, and enough $$$ to keep the network growing."

Other Net-99 customers have been similarly effusive; I have yet to hear a single complaint, which is quite rare on the net.

8.3 What is Metering, and why are people so emotional about it?

Metering is the idea that users and service providers should be charged depending on how much use they make of the service. At first blush, it seems only fair; if you're on the net for an hour a week, you should pay less than those who are on for five hours a day. For customers of metered services, however, it tends to be a very bad idea indeed.

There are really two types of metering: Usage-based charging of users, and usage-based charges made by backbone providers. Very few people have much against the former, since free competition seems to be eliminating it (other than the toll-free number options of many vendors, which have to charge by the hour to pay the phone company's cut).

The latter, however, is a different kettle of fish. Most of the time, when people talk about metering, they are talking about charges per packet for Internet use. As a provider, you would be charged for backbone use by your connection provider (such as SprintNet). The problem, of course, is that this means you'd have to pass those charges to your users in the form of hourly fees; this would effectively eliminate the flat-rate pricing model that's been so successful.

What's the argument for flat-rate pricing? There are really three:

People are much more eager to use a resource when it's not metered. Most people won't use a service for anything but the most vital needs when they hear the clock ticking in their heads. The net's ethic is founded on volenteer work of all kinds, like the production of FAQs such as this one, the moderation of newsgroups, and so on. This work would be prohibitively expensive with metered use, and the amount of information available would be much lower.

Second, flat-rate is almost always cheaper for the user than the metered option. Consider two pricing models I've seen:

$ 6/month plus $ 2/hour (UUNET) $ 17.50/month flat rate (Netcom)

If you spend just 6 hours on the net each month, the flat rate becomes cheaper than the metered price. If you really enjoy the net and spent 3 hours a day on the system, your bill would be nearly $ 200 a month!

Finally, measured accounts can be a real hassle due to the difficulty of administrating the timed accounts. This administration costs a remarkably high percentage of the gain in revenues obtained.

The Internet has become the lively, fun and often bizarre resource it is today largely BECAUSE people didn't have to pay by the hour or by the packet. If the big communications near-monopolies ganged together and offered only hourly rates, the Internet would be changed beyond recognition. This is why people who are normally the most ardent free market advocates are pushing for some kind of regulation of backbone services.

8.4 What is a Firewall, and do I need one?

Sort answer: If you are an Internet provider, you almost certainly don't need or want a firewall.

Long answer: A firewall is a machine that separates your internal company network from the wild and wooly Internet. Ideally, it will let employees of your company do things such as send mail and browse the web without exposing your systems to the security risks that normally would come with such.

Here's a simplified diagram:

Internet Router Firewall Your machines

Note that all packets coming in from the Internet go through the firewall. The strictest form of firewall doesn't pass any packets between it and your machines at all; mail, for example, will run on the firewall machine and stay there until it is called for by one of your company machines. Packets thus cannot go directly between your company's machines (in the internal network) and the Internet.

The problem with this, of course, is that your machines cannot perform useful work, either. You cannot surf the WWW or FTP files from your PC, since packets won't go through the firewall.

A program called a Proxy Server can help with this. A proxy server takes HTTP requests from your internal network and sends them along to the outside world; then it takes the responses and returns them to your internal network. As a special bonus, this server can also cache (save) pages to the firewall system's local disk drive; then later requests can be fulfulled instantly, without the delay of full transfer via the Internet. (This is what the Prodigy and AOL browsers do).

If you're an Internet provider, of course, your users will expect full and direct access to the Internet. Thus, you really cannot use a firewall machine for an Internet provider.

For detailed information on firewalls and other security considerations, check out this URL: http://www.telstra.com.au/info/security.html

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