Do ATM-based Exchange Points make sense anymore?

Thu Aug 15 21:47:31 UTC 2002

Hi all - Thanks for all the feedback and keep it coming !  I'll summarize 
the 80 or so responses so far.

As an aside, I especially liked this paper request:
       "I'd like to see a copy of your paper - please fragment it into 48 
byte chunks."

A couple points seem to come up from a bunch of folks:

1) Several folks said that they have seen transit prices at sub-$100/Mbps 
prices, some claiming the transit price quotes group around $75/Mbps.

While the lower transit price points do strengthen the paper's argument, I 
would point out:
a) there is a qualitative difference between transit providers,
b) from my conversations there were higher and lower quotes than my 
$125-$100/Mbps,
(A couple of people told me they were paying $350/Mbps, but they were at 
the tail end of a 3-year old contract that was signed when $350/Mbps was a 
great deal!)
c) terms vary and location varies (rural guys are out of luck with no price 
competition, and some markets like Dallas are still high),
d) I want to make sure that the reference transit price points in the 
Peering Model are representative of what is seen in the field.

The bottom line is that I'm pretty comfortable with these numbers; 
$125/Mbps seems to be a price point that people can accept as a reference 
point for the Peering Analysis. And I've included the spreadsheet in the 
Appendix so you can adjust the transit price points as you see fit.

2) I explicitly mentioned in the paper that I ignored the equipment costs, 
in particular the OC-x POS and ATM interface cards and the equipment that 
ISPs would place in the Ethernet-based IX. This was because of the 
difficulty in determining a reference configuration (Juniper/Cisco, what 
series, new or used?), the price (people shared that 30% is easy to get) 
for a reference platform and then the lease term or amortization schedule. 
Some said depreciate things over 18 months, most said 24-36 months was the 
norm. In the past I have punted on this equipment question, but enough 
people mentioned it as a hole in the analysis (and a benefit of the ATM 
peering model) that if possible I'd like to include it into the analysis.

So I guess I am asking for a base level reference configuration and price 
point that includes two router configurations for the peering model:
1) entry level router with an OC-3 card and FastE card to peer across an 
ethernet IX, and
2) next level router with an OC-12 card and GigE card to peer across a gigE IX

I would also need an OC-3 ATM and OC-12 ATM price point.

Round numbers are fine here as I'm looking for some reasonable number to 
plug in for equipment costs, knowing full well that everyones configuration 
will be different, and the spreadsheet will allow people to adjust the 
numbers to their situation.

3) Finally, several have pointed out that the decision about peering at an 
ATM fabric is not always a financial one. These were most common 
non-financial motivations I heard were:

-) Performance: "I need to peer with this ISP regardless of the cost of 
that peering traffic."

-) Contract Term: "We are in the middle of an n-year contract so we are 
stuck with the economics." (One ISP lost a peering session when the target 
ISP left, and is now left hanging in the wind with a fraction of their 
peering traffic to justify their peering. Moral: Before signing up with any 
IX, Make sure your target peers are not planning on moving out!)

-) Perception: "To be a 'player' you have to be at xxx-IX."

-) Let sleeping dogs lie: "If I ask my peer to change the peering session 
in any way, I fear they will use the opportunity to force us to re-qualify 
for peering."

Most common was:
-) Mathematics: "We haven't run the numbers like this yet.  Didn't realize 
the unit costs here."

Bill