Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system.
Networks prior to the Internet were largely closed systems, and the cost of communicating was extraordinarily high. In those days, the free exchange of ideas at all levels was held back by cost. On the Internet, for a cost proportional to a desired amount of access bandwidth, one can communicate with a billion others. This has propelled human achievement forward over the last 20 years. By way of Metcalfe’s law, the Internet’s value is immeasurably larger than any private network ever will be.
So why do large private service delivery networks still exist?
The answer lies primarily in one word: reliability. What Metcalfe’s law doesn’t cover is the reliability of communication of connected users, and the implications of a lack of reliability on the value of services delivered. Although Internet reliability is improving, much like the highway system, it still faces certain challenges inherent with open and unbiased systems.
On a well run private network, bandwidth and communications are regulated to deliver an optimal experience, and network issues are addressed more rapidly as all components are managed by a single operator. The Internet on the other hand is a network of networks wherein network operators do not have sufficient incentive to transport data for which they are not adequately compensated.
Growing high volume content services such as video streaming place unrelenting strain on the backbones and peering interfaces of Internet service providers. With network neutrality and the corresponding lack of QoS on the Internet, ISPs have to maintain significant backbone and peering capacity to ensure other communication continue to function in the presence of these high volume traffic. However ISP operators have demonstrated that they are much more inclined to provide capacity to their direct customers than they are to those who are not on their network.
Some large ISPs refuse to better manage their peering capacity yet they host a large number of end users. These end users are, in a qualitative sense, locked inside their ISP. This seems to be forcing large web and video content providers to buy capacity directly from the ISP of their mutual users in order to deliver content to them. Despite this latter trend, peering (and many backbone) links continue to be challenged.
(Note: With some ISP there is a qualitative difference between business Internet service and consumer Internet service when it comes to backbone and peering capacity)
For private enterprises that want to engage in business-to-business communications over the Internet, these “noisy neighbor” dynamics do not lend well to reliable service delivery and/or to cost management. It is cost prohibitive to buy Internet access from many ISPs for the purpose of B2B communications and, conversely, buying access from only a few ISPs puts the communication between two business entities on different ISP at risk of being routed via a congested peering link. Unfortunately BGP does not take path quality into account when choosing them.
On the outside, it seems straight-forward enough for businesses to continue to peer directly over private leased lines. However there is a trend that is putting pressure on this model. An increasing number of private businesses are leveraging an emerging landscape of SaaS and IaaS services. This is driving a general acceptance of the Internet as a primary medium for B2B communication. Private connectivity also comes with the baggage of added capital and operational costs.
For many businesses, Internet-based B2B communication “as is” may be fine for SaaS services such as HR and billing where a temporary loss of service is survivable. But there are a class of services and communications that are too-important-to-fail for many businesses and even for larger ecosystem such as capital markets. Reliable infrastructure is a prerequirement for engaging in these services.
The prevalent Internet access models fail to bring the Internet to a consistent level of reliability needed by many businesses. The support of B2B communication over the Internet needs to improve as more businesses adopt the Internet for their core business communication needs. Needless to say, I have my thoughts on how this should happen which I share on my next blog.
(Note: I have intentionally avoided DDoS and security related problems that also come with being on the Internet. I believe these can be better handled once the more fundamental problem with the plumbing is dealt with.)