[49463] in North American Network Operators' Group
Re: Sprint peering policy
daemon@ATHENA.MIT.EDU (Leo Bicknell)
Mon Jul 1 18:31:46 2002
Date: Mon, 1 Jul 2002 18:30:10 -0400
From: Leo Bicknell <bicknell@ufp.org>
To: nanog@merit.edu
Mail-Followup-To: nanog@merit.edu
In-Reply-To: <F211azJAKs4jg4a1nSm000035e8@hotmail.com>
Errors-To: owner-nanog-outgoing@merit.edu
In a message written on Mon, Jul 01, 2002 at 03:51:58PM -0400, Ukyo Kuonji wrote:
> that to just buy transit. When you can arrange transit contracts to be as
> low as $50 a megabit, and to sit in a PAIX facility costs you $150K for the
> router, plus $7K a month for rack and power, and monthly costs for your
> OC-48 into the router... What's the true cost of peering?
At last check, the largest network was still WCOM. Depending on
your measure, they are somewhere between 10% and 40% of the
"internet". What is important is they are not even half. Others
are smaller.
This means for all ISP's, the _majority_ of their traffic goes off
net, across a peering connection.
This gives us two very interesting possible end games:
* Peering costs are less than $50 a meg for large ISP's. They make
a profit on every bit.
* Peering costs are more than $50 a meg, and ISP's selling at that
price are losing money on every bit moved by a customer.
There is no way for a company to price transit below their peering
costs and make money. So the question becomes, is $50/meg too low.
I believe so. I think that the companies selling at $50 a meg are
in a desperate attempt to get revenue in the door, even if it comes
in at a loss. If you've paid $70/meg for a peering connection a
loss of $20 is better than not selling, and having a loss of $70.
I'm all for taking advantage of $50/meg transit while you can get
it. I wouldn't bet on your ISP staying in business though, and I
wouldn't bet on the price, once this is all shaken out, being that
low.
--
Leo Bicknell - bicknell@ufp.org - CCIE 3440
PGP keys at http://www.ufp.org/~bicknell/
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