Sprint peering policy

Leo Bicknell bicknell at ufp.org
Mon Jul 1 22:30:10 UTC 2002


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 at ufp.org - CCIE 3440
        PGP keys at http://www.ufp.org/~bicknell/
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