FAIR USE NOTICE. This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. The Managerial Economics course is making this material available as part of our mission to promote critical thinking about economic issues. We believe that this constitutes a `fair use' of the copyrighted material as provided for in section 107 of the US Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond `fair use', you must obtain permission from the copyright owner.

Editor's Note:The following opinion article, written by Whitman College Assistant
Professor of Economics Denise Hazlett, was published in the Providence (Rhode
Island) Journal-Bulletin on August 21, 1995, and was nationally syndicated on the
Gannett News Service wire.

Put Some Tollbooths Along the Information Highway

The Internet, once a sleepy pathway for academic researchers, now hums with the
traffic of some 20 million commercial, recreational and academic users. But
likening the Internet to a superhighway disguises an important feature. Highway
drivers have one vehicle apiece, so each takes up about the same amount of space.
On the Internet, one person's traffic can take up a lot more space than
another's.

You can now make telephone calls, conduct videoconferences, listen to the radio
and browse the multimedia World Wide Web over the Internet. It's all quite
amazing, and it all consumes much more capacity than the traditional uses of the
Internet, such as sending files or e-mail.

For instance, while most people send e-mail messages on the Internet, some prefer
to "reach out and touch someone," using the new Internet Phone service, which
allows them to make very cheap calls anywhere in the world. But a one-minute
Internet call uses 500 times the capacity of a comparable paragraph of e-mail.
And one minute of video covering that same paragraph uses 15,000 times as much
capacity, the equivalent of sending more than 10,000 pages of text.

Can the Internet bear the strain of this high-intensity traffic? Information
travels the Internet first-come, first served, so congestion from the new
high-intensity uses already delays and interrupts other people. What will it be
like in the future, as more people discover the exciting new uses?

Optimists believe we can keep ahead of congestion by simply adding more computers
and lines to handle the traffic. While a popular solution to Internet congestion
in the past, simply adding capacity won't work any more, for three reasons.
First, with the government phasing out its Internet subsidies, we have fewer
funds for expansion. Second, while the computers and lines that carry Internet
traffic get cheaper to buy each year, they don't get cheap enough so that the
Internet can grow faster that its traffic, which is doubling every year.

Finally, we have the new high-intensity uses waiting in the wings to soak up any
extra capacity as soon as we add it. We also have a propensity to invent more
such uses.

Extra money alone won't solve the problem of Internet congestion. But we do need
to expand, and in the absence of government subsidies, that requires generating
more revenue. Most Internet users (or more typically, their employers) currently
pay a fee that doesn't depend on their use. They are free to create as much
traffic as they like, without regard to the congestion it causes. We should raise
revenue for expansion in a way that makes the heavy users aware of the congestion
they cause.

At the same time, we should not discourage people from doing things that put
little load on the Internet, such as sending e-mail.

The old first-come, first-served rule no longer works. Instead, we should
prioritize Internet traffic according to the value users place on speedy
delivery. Want extra speed for a message? You should make a voluntary payment to
increase your priority. If you were willing to wait a second or two, you would
pay nothing.

Frustrated Internet users could then do something about congestion. Now, for
example, when an Internet Phone call gets garbled because of congestion, the only
option is to wait until later to try again. But if callers could pay to increase
their priority, then they could continue their conversation.

Audio and video don't work well if delayed, so those who want to use them are
also more likely to want increased priority. But e-mailers, or others who don't
mind a brief wait, can continue using the Internet without making priority
payments. Those who put little burden on the system need pay nothing, whereas the
high-intensity users who cause congestion would have an incentive to pay.

Allowing people to pay to overcome the effects of congestion would raise revenue
for expansion, and at the same time make the Internet a reliable resource. For
instance, a doctor who makes a priority payment could confidently use video to
treat patients remotely. On the other hand, a college student unwilling to pay
for the priority necessary to send a video to his sweetheart may settle for
e-mail.

It would be a shame if we let traffic on the Internet slow to a crawl. Instead,
we should take action to make sure the Internet realizes its potential as our
information superhighway.