ATM Utility

Karl Denninger karl at
Tue Nov 1 21:41:52 UTC 1994

> On Mon, 31 Oct 1994, Vadim Antonov wrote:
> > >cost-effective in a number of applications today.  In particular,
> > >the cost of wide-area DS-3 ATM services can be very attractive
> > >when compared to a number of point-to-point DS-3s.
> > 
> > TAANSTAFL.  You keep forgetting that underneath ATM there are the same
> > SONET or clearline DS-3s/OC-3s etc.  So, just by using IP routers
> > instead of ATM switches you get 30% more bandwidth for the same price.
> > ATM does not appear to make economical sense when applied to both
> > data and voice communications.  So, from the point of view of a user
> > purchasing something carriers offer ATM may make sense (if carrier
> > does not offer native IP) -- but from the point of view of a carrier
> > ATM does not look that attractive.
> > 
> > You still have to run IP over ATM (there's no such thing as native ATM
> > applications yet), and the extra level of encapsulation does not bring
> > anything worth 30% of bandwidth.
> > 
> > In terms of real switching capacity (i.e. user data payload) the new
> > generation of IP routers is pretty much close to ATM switches --
> > and quite cheaper.
>   But, if you don't need the full 45 Mb/s, you can find a more 
> cost-effective solution in the wide-area Fast-packet services.  In the 
> case of the MCI Hyperstream offerings, you don't have to pay for the 
> full amount of a circuit from point A to point B -- you simply pay a 
> monthly subscription fee and then a usage charge per Megabyte of data.
>   So, you can build a multi-megabit/s backbone that is (say) 10 Mb/s and 
> not end up having to purchase the entirety of the DS3 circuits needed to 
> provision it.

Tell you what -- go run the numbers for any reasonable-sized IP provider,
and tell me whether or not they are better off on "metered" service of this
type, or with full-time dedicated circuits.

Metered service will *always* be more expensive at reasonable to high loads,
because the metering and billing costs money to do!

Karl Denninger (karl at MCS.Net)| MCSNet - The Finest Internet Connectivity
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