Question on 95th percentile and Over-usage transit pricing

Thu Sep 22 01:58:04 UTC 2011

Hello NANOG,

I have a fundamental question regarding 95th percentile pricing. I will
make some prerequisite assumptions to set $/Mbps values before posting
my actual question.

Eg., For 1Gbps commitment, I will pay roughly $3/Mbps. Similarly for
10Gbps, 100Gbps I may pay $2/Mbps and $1/Mbps.

This appears like a sub-linear economy of scale pricing model followed
in transit pricing.

Now if I commit 1 Gbps over a 10Gbps provisioned link, I will pay fixed
monthly fee of $3000 for the 95th peak not exceeding the committed rate
of 1Gbps.

Now if my 95th peak is above the committed rate, say, 2Gbps or 4 Gbps or
8 Gbps, I believe I have to pay: $3000 + [over-usage_bandwidth_charges]
monthly.

Question: Does this over-usage bandwidth charge a linear cost function
or is it sub-linear like the committed bandwidth pricing? I mean, will
it cost me the same $/Mbps as over-usage charges for all 2Gbps, 4Gbps
and 8Gbps 95th percentile peaks? or is it

Over-usage_charges(2Gbps) > Over-usage_charges(4Gbps) >
Over-usage_charges(8Gbps) ?

I will be grateful for the replies!  

With regards

Pradeep Bangera
Research Assistant
Institute IMDEA Networks
Madrid, Spain