Peering and Network Cost

Thu May 21 16:02:12 UTC 2015

On 21 May 2015 at 13:40, Rafael Possamai <rafael at gav.ufsc.br> wrote:
> James, curious to know... what size ISPs are they? In the last few years
> with the larger ones it has always been about lowering cost and increasing
> revenue, which throws the original idea of peering out the window (unless
> you are willing to pay).

Yes agreed, I have seen the same behaviour too with larger companies
although peering can lower costs as I will show below in the 2nd
example. Typically though I hear what you are saying, if you are a
larger transit consumer with larger commits you really have the weight
to stand on your transit provider’s neck until they give you the price
you want (which is pretty effective, transit really is dirt cheap
these days if you have the traffic levels to back it up).

With regards to your question I can't say too much as I'm not sure
what I can and can't disclose. The first ISP was a small one with
circa 1Gbps of total transit volume (at the time I carried them
through the peering process, could be different now). They managed to
peer off a third of their transit traffic requirement, so dropping a
third of their transit made them a small but acceptable cost saving
(since at the time they only had circa 1Gbps of total ingress/egress
traffic). For them the marketing aspect of being at a big well know IX
was/is very important. So from that rather small cost saving gained
from reducing their transit commit with the overhead of peering, the
value add for them was greatly boosted by being able to market their
IX presence.

In the period that followed joining their first IXP that ISP then
gained further from a technical perspective as we managed to take
direct peering’s across that IXP LAN to some VoIP upstreams and
downstreams of theirs and a hosted service provider that ISP works
with, and in all those cases that has reduced latency and packet loss
which customers have directly noted on having a positive impact.

The second ISP I'm now running this exercise for is a medium size ISP,
they have about 5Gbps of transit requirements at present and are
hoping to peer off half of that. They also intent to increase the
transit requirements to circa 10G within the next couple of years, so
if they peer off 50% ingress/egress traffic they stand to save quite a
bit of money. A 10G peering port is usually a fixed priced so they
will just see the ROI on that port grow over time hopefully. One
important reason they will make a significant cost saving is due to
legacy contracts such as some old PA space they can drop off which is
very costly and old transit contracts still on high cost-per-Mbps
tariffs My colleague on this expects to cut the transit bill literally
in half by the end of the first year.

Cheers,
James.