A Neutral Agency

Within the InterStream economy, the Escrow and Metering company fulfills a vital role.  The Escrow & Metering provider must remain neutral to all parties exchanging traffic. nuMetra, InterStream's selected Escrow & Metering provider is contracted by the association and must meet specific requirements.

The function of an escrow agent, in any economy is to insure that both parties in the transaction  fulfill their contractual obligations. As the parties buy and sell services from one another, the system must enable settlement to occur in exchange for the service being delivered.  In the InterStream system, this function is provided by the Escrow and Metering company nuMetra. By metering the streaming transaction to insure that the contracted service quality is provided, nuMetra escrows payment for the service and then settles and thus clears the transaction. In the aggregate, this is analogous to the New York or NASDAQ Stock Exchanges functions. The stock exchanges aggregate all sources through which stocks can be acquired and transactions cleared.

Each InterStream transaction follows a prescribed process by the certified Escrow and Metering Service. For each transaction, the service (1) validates receipt of digital currency into transaction escrow, (2) performs network admission control, then (3) verifies that the transaction met the required performance metric before (4) releasing escrow for settlement and (5) ultimately clearing the transaction.

“Settlement” for each transaction means that the escrow of digital currency distributed in real-time to the providers of the premium bandwidth and content. It is independent of any centralized book entry accounting system. This settlement is said to be “broker-less,” occurring automatically upon satisfaction of the performance metric. Why is it broker-less?

By definition, an “open market” requires the support of a clearinghouse function. The InterStream Escrowed Settlement Architecture will create an open market for a new commodity: premium bandwidth. The current commodity called best-effort bandwidth is sold on a "per-byte" (typically hosting centers & CDNs) or "per-bit" (IP transit) basis using a economic agreement. The InterStream architecture provides for the ability to differentiate bandwidth performance guarantees and service levels, thereby enabling a monetizing a new service beyond best-effort. Broadband Service Providers can now differentiate services on both volume and quality, as well as promote new broadband offerings.

Broker services are commonly used with a commodities exchange to enable independent buyers with the ability to purchase. With perfect knowledge of the terms of the transactions, brokers can act as arbitrageurs.  They may buying commodities at low bid price in one market and selling them at a higher price in another.

Like a commodities exchange, the InterStream architecture enables remote buyers to acquire premium bandwidth from service providers without pre-existing contracts or physical connections in a particular Internet Exchange (IX). However, there is no broker in the InterStream model. The asking price is always paid exactly. For enabling the real-time escrowed-metering system, InterStream will receive a fixed transaction fee. This eliminates any arbitrage loss to the bandwidth and content sellers while also radically reducing the cost of each transaction.

Government regulation, specifications from industry standards bodies and mandated controls on peering are not required to enable a healthy economy for premium bandwidth. Instead, the economy and its associated services could grow organically if based on the InterStream model. We forecast that as support for Escrowed Settlement grows, the overall settlement system will evolve through a network effect and thus expand exponentially. As a neutral, cross industry owned business, InterStream will define initial implementations that benefit all participants. 

The important question is whether a broker or escrow service could best fulfill the role of the “neutral agency” described in this discussion. A full understanding of the issues leads the ISP to favor a neutral escrow model. By comparison, the principal drawback of a broker model is its complete lack of neutrality. Brokers possess complete knowledge of all transaction would inevitably engage in "perfect arbitrage" as any economy evolves. That approach would neither benefit buyers nor sellers inevitably harm to overall economy. The mult-tier Internet is ready to start and expand, and the InterStream architecture provides the necessary new economic model for a healthy Internet rather new government regulation.