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Put the servers out there, and you'll raise the cost of broadband deployment and exhaust the resources that are already there. Anyone can buy space on a fast, cheap server at a server farm for far less than it costs to serve data from the edge. So, why don't the people who are running this project just do that? There's only one possible reason: they want to get users and ISPs to give them these resources for free. Which just doesn't wash. If use of these devices became widespread it would either drive up the cost of broadband tremendously or be banned from networks outright by businesses and ISPs. And deservedly so. It's a bad idea.
Another exercise would be a Micro Data Center than could be employed by small ISPs to cache content closer to their customers, and I assume that would be of greater interest.
And the NDC would be more than a P2P box, it will be your gateway to the Internet for mobile devices and what-not.
In any event, the bottom line is that shifting servers to the edge of the network is always a bad idea. It's not any more or less "democratic," because you can always feed the raw data to a server from the edge. But it doesn't make sense to distribute from the edges.
There are many applications that can't be centralized in server farms at all, because the content originates at the edge, such as personal communications in all of its many forms. And there are other forms of content that warrant caching inside the ISP network for various reasons. So it follows that personal data of most kinds lends itself to caching inside the home network, with a fast pipe to the outside world. That's one reason we have remote desktop software, isn't it?
There is no repeatedly here, either. None. I'm not running a global enterprise with 25/8 worker drones, I'm showing my mom her great-grandkids playing in the sprinkler Or showing my primary customer the layout of his network. All of whom are right here in 200 or 300 fiber miles (and often way less), not thousands.
BTW, where is the middle? It's a cloud, or pretty dang close to what I always imagined.
Scott: The fact is that a server across the country is almost certain to be "closer," network-wise, to someone on a different ISP in Texas than you are. And if you are only sending a few copies of something to a relative (Interesting how often P2Pers claim that this is what they're doing!), the impact of one file traveling a few extra miles is negligible compared to the impact of P2P. In fact, without the congestion caused by P2P, it'll get through a lot faster locally.
As for the location of the "middle": it consists of major Internet hubs, peering points, co-location centers, and backbone facilities. The Palo Alto Internet Exchange, located in an unassuming former telephone building on Ramona Street in downtown Palo Alto, California, is probably the most important of these.