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This is analogous to a city bus that gets a flat tire on the way to work. The solution isn't to ask everyone on the bus at that moment to pitch in to pay for the new tire. However it isn't inappropriate to build the price of the new tire into the overall fee structure for the city's bus system.

In an aside, he adds, "Let's not kill the Net just so we can get broadcast-quality video into grandma's house."

Telephone access charges, however, were not what Metcalfe had in mind, because he wasn't talking about congestion on the telephone network. He was talking about the many ways he figured the Internet could die--overloading, sabotage (by hackers or even ISPs fighting for market share), the advent of audio and video, or the bugs he's convinced will surface in the software that runs on routers, the computers that figure out where traffic is supposed to go. The first of those he attributed to the absence of what he called a "messaging system" between supply and demand, and what he had in mind as a solution was to introduce "settlement."[6]

Settlement is the financial structure underpinning the workings of the post office and the telephone companies. When you drop a letter in the mail box that's destined for, say, Britain, you pay the U.S. postal service to carry it to your destination. The British postal service, however, carries the letter for part of its journey and bills the United States service for that portion. Long-distance phone calling works the same way. Huge sums of money change hands in settlement payments each year; according to The Economist, in 1994 U.S. phone companies paid out a net $4.3 billion to foreign carriers.[7]

On the Internet, life is a barter system: service providers carry each other's traffic without payment on a cooperative basis, and everyone is more or less equal. This principle lets you send an email message to Australia as cheaply as to the kid next door, and it makes real-time voice connections--known as the Internet phone--no more expensive than browsing the World-Wide Web.

The Internet phone is a good example of the bandwidth-hogging applications of the future. You hook a microphone and sound board to your PC, install one of several readily available software programs, and either log onto a Web site and see who's available to talk or, with more recent products, dial an ordinary telephone number. Some Netheads who are online all the time use the Internet phone as their normal telephone-- essentially, you just page them for a private conversation. The telephone companies will tell you that the quality isn't as good as their direct connections, and while that's true there's something about paying local call rates to talk long distance that attracts people. In June 1996, the American Carriers Telecommunication Association, an organization of 130 long-distance carriers and local phone companies, got riled enough by it to petition the FCC to step in and stop the growth of Internet telephony.

But settlement may be more of a new set of problems than a solution. For one thing, it might well split the Net, because not all service providers will agree to accept such a system. For another, chances are good that the financial burdens of installing the necessary administration and accounting systems would land disproportionately on the smaller service providers; one reason so many direct ISPs charge flat rates is that they are cheap to administer. There are more reasons than just increased access costs for Net users to be concerned about this; the best protection for net.freedoms is as much decentralization as possible. High administration costs would make it more likely that the Net would wind up in the hands of just a few big players. To some extent this is happening already: although there are still an estimated 3,000 ISPs in the United States alone, some are consolidating and others are expanding overseas. The leading U.S. domestic ISP, Netcom, has opened up in the United Kingdom and Brazil; CompuServe is worldwide; AOL has opened international services with partners in the United Kingdom and Germany; Britain's Pipex has been swallowed up twice by progressively larger U.S. telecommunications companies; and Microsoft has