Can high quality be provided economically for all transmissions on the Internet? Current work assumes that it cannot, and concentrates on providing differentiated service levels. However, an examination of patterns of use and economics of data networks suggests that providing enough bandwidth for uniformly high quality transmission may be practical. If this turns out not to be possible, only the simplest schemes that require minimal involvement by end users and network administrators are likely to be accepted. On the other hand, there are substantial inefficiencies in the current data networks, inefficiencies that can be alleviated even without complicated pricing or network engineering systems.

The public Internet is currently far smaller, in both capacity and traffic, than the switched voice network. The private line networks are considerably larger in aggregate capacity than the Internet. They are about as large as the voice network in the U.S., but carry less traffic. On the other hand, the growth rate of traffic on the public Internet, while lower than is often cited, is still about 100% per year, much higher than for traffic on other networks. Hence, if present growth trends continue, data traffic in the U.S. will overtake voice traffic around the year 2002 and will be dominated by the Internet.

The Internet is the latest in a long succession of communication technologies. The goal of this work is to draw lessons from the evolution of all these services. Little attention is paid to technology as such, since that has changed radically many times. Instead, the stress is on the steady growth in volume of communication, the evolution in the type of traffic sent, the qualitative change this growth produces in how people treat communication, and the evolution of pricing. The focus is on the user, and in particular on how quality and price differentiation have been used by service providers to influence consumer behavior, and how consumers have reacted.