Educational opportunities for all could increase as more people participate in the Internet if networking infrastructure, services and applications develop in ways that help people contribute to the information infrastructure.
The e-mail software needs to provide hooks for a user to set a default bid price, and to override the default when desired … The user specifies her maximum willingness to pay, but the actual price for each packet may (and typically will) be lower. However, since the TCP protocol offers positive acknowledgment of each packet, the acknowledging packets that are returned can contain the actual price charged so that the host database can record user-specific charges.
The growth and development of the Internet will be best served if network services are priced according to cost (including congestion costs), and subsidies should be distributed so that users pay those charges. Implementing subsidies instead by continuing to charge zero prices would give the biggest subsidies to the wrong users, would not provide useful signals to guide investments in network expansion and upgrading. Using an efficient pricing scheme instead will encourage growth in network use and capacity, and guide resources to the highest-value users.
One role for government is to ensure interconnectivity between competing network providers. It may also be important for governments to provide the regulatory framework for in-line accounting and billing. Whether protocols for actually implementing accounting and billing should be defined by a public body or an industry consortium is not immediately obvious … A pricing standard must contain enough information to encourage efficient use of network bandwidth, and contain information for accounting and billing. A privatized network is simply not viable without such standards: work should start immediately on developing them
We think the development of the future broadband Internet with mechanism for accounting and usage-sensitive pricing will also require government involvement … Customer demand for low-delay uncongested networks will give providers an incentive to implement some form of congestion-control pricing, but individual network providers will probably not choose to implement such methods unless there is coordination in standards and widespread adoption of the mechanism. We think that there is an important role for public and quasi-public bodies in designing coordinated policies and protocols for congestion control, accounting and usage-sensitive pricing.
An efficient pricing mechanism would have the following structure: (1) a packet charge close to zero when the network is not congested; (2) a positive packet charge when the network is congested; (3) a fixed connection charge that differs from institution to institution. Current pricing is almost always limited to a fixed connection charge. The main difference in what we propose is the addition of usage-sensitive charge when the network is congested … The price to send a packet would vary minute-by-minute to reflect the current degree of network congestion … Each packet would have a ‘bid’ field in its header to indicate how much its sender is willing to pay to send it
The largest constituency on the Internet is apparently e-mail users; a proposal to charge high prices for e-mail is likely to be politically infeasible. However, e-mail can usually tolerate moderate delays. Under congestion pricing of the sort we are describing, e-mail users could put a low or zero-bid price on their traffic, and would continue to face a very low cost.
It may be that the public at large benefits from having more users connected, so that it would be efficient to provide a connection subsidy to ensure that some users who would not otherwise connect do so. This does not mean that when there are network externalities all connections should be free, but that it would be efficient to have some subsidy per connection that is related to the public gain from and additional connection. Theoretically, an even more efficient scheme would target those users who are most likely to abstain without a subsidy, but targeted subsidies are difficult to implement.
It would be relatively simple for a provider to monitor a customer’s usage and bill by the packet or byte … However, pricing every packet would not necessarily increase efficiency, because the marginal cost of a packet is nearly zero. Since it is bandwidth that is scarce, efficient prices must reflect the current availability of bandwidth. Neither a flat price per packet nor time-of-day prices would closely approximate efficient pricing.
No one argues that use of all transportation networks should be free. The interstate highway system might be viewed as the one-size-fits-all universal access option (for those who can afford cars), with the option to pay for using a mode with a different combination of service characteristics. Likewise, a government might want to provide universal, free access to a baseline set of Internet transport services, and allow charges for usage of other services above a threshold. Appropriate free services might include plain-text e-mail (with lower priority when the network is congested) but not guaranteed, zero-delay multimedia broadcast. Universal access and a base endowment of usage for all citizens could be provided through vouchers or other redistribution schemes.