In terms of both speed and reliability, the network is the weak link in the outsourced server-based model. People who use server-based computing inhouse also depend on networks, but they control those networks. The people who depend on public networks for access to their applications—that is, people who access their application service provider (ASP) through the Internet—are much more vulnerable to outages that prevent them from accessing their applications and data. That vulnerability goes a long way toward explaining why many customers have resisted the ASP model. No matter how much it reduces a company's IT costs to outsource application and data hosting, for some companies, the possibility of not being able to access important files and applications makes the advantages moot.

Technical problems pose part of the risk to public-network reliability. Faulty DNS data can make name resolution impossible; when customers type in the name of the Web site that hosts their applications, that Web site can seem to have suddenly vanished. Wide-scale power outages can affect ISPs. DenialofService (DoS) attacks can flood servers with fake requests, keeping them from responding to legitimate ones.

But technical problems aren't the only problems that can take down a network. The Internet's original design called for a network that would function even if large parts of it were bombed. The Internet might stand up to bombing—reputedly, it did in Iraq during the Gulf War—but it doesn't necessarily stand up well to being turned off.

What supports the Internet isn't a single network but many networks of varying sizes joined together. In the United States, those networks are connected by four public hubs called Network Access Points (NAPs) and by private connections between networks. Of those private connections, some are paid arrangements for carrying an ISP's data and some are open reciprocal relationships called peering, in which networks agree to carry each other's traffic without charge.

Recently, Cable & Wireless temporarily ended its peering relationship with PSINet, thus disconnecting the two networks. The two networks could then no longer communicate, and some companies that were customers of one ISP couldn't even see their own Web sites located on the other ISP. Cable & Wireless ended the peering relationship because, according to the company, PSINet no longer had enough traffic to make the connection worthwhile. The two companies had been talking about the issue since February, a Cable & Wireless spokesperson said, so the shutdown shouldn't have been a surprise to PSINet. Although Cable & Wireless re-established the connection to PSINet 4 days later when PSINet sent a letter of intent that promised to increase its traffic to the levels Cable & Wireless demanded, this fix isn't necessarily permanent. If PSINet can't keep up the traffic levels, Cable & Wireless will close the peering link again. (PSINet could always maintain connectivity by paying for a transit agreement with Cable & Wireless or with another large provider.)

Just as the Northpoint shutdown that resulted in the loss of DSL provisioning for more than 100,000 ISP customers with it isn't just about a single DSL provider, one large ISP shutting down its peering arrangement with another ISP isn't just about the two companies involved—it's another example of how vulnerable Internet-based access can be. Some analysts say such blackouts could become even more frequent as cash-hungry telecommunications companies stop benefiting from deals with other networks to swap data traffic. And if those blackouts occur, any Internet-dependent business can suffer, either from the actual outages or from the perception that they might occur.

A similar situation couldn't affect voice networks in the United States—making it impossible, for example, for Verizon customers to communicate with PacBell customers. But the Internet's data networks aren't regulated the way voice networks are. To date, federal regulations have focused more on extending the Internet's reach and encouraging competition to keep prices down. (We'll leave the discussion of how well this strategy is working for another day.) But as the private companies that fund the networks run into financial pressures, they have incentive to reevaluate existing peering relationships and discontinue those relationships that aren't paying off.

Given the potential repercussions if part of the Internet goes down for any reason, I don't see the federal government letting data networks remain mostly unregulated much longer. And, as much as it hurts my laissez-faire tendencies to say so, I think regulation is what's called for. If two ISPs end a peering agreement and create a hole in the Internet or a major provider stops operating, the ISPs involved and their customers will suffer. But it's worse for the Internet as a whole. Businesses can't rely on an infrastructure whose stability is determined at every Tier-1 ISP's annual meeting. So we must either stop relying on the Internet—which won't happen—or take steps to make sure that private decisions don't take the network down. The state of California recently took such a step when it ruled that Northpoint was a public utility and couldn't shut down without giving its customers due notice. Watch for similar legislation to happen on a federal scale.