MPLS billing model

Richard A Steenbergen ras at
Tue Nov 25 21:50:07 UTC 2003

On Tue, Nov 25, 2003 at 11:04:55AM -0800, Dan Lockwood wrote:
> For those of you who sell MPLS VPNs, what components of the service do
> you charge for and how do you do the billing?  E.g. per port + traffic,
> per site + traffic, etc.  I am not interested in buying MPLS services
> just how the billing happens.  Thanks!

I have seen (and use) three primary models:

1) "The Cogent Model". A customer pays $X amount per kind of port (say 
$2000 for a FastE, or $8000 for a GigE, etc), and has the ability to 
exchange traffic with any other such port they purchase, distance 
insensitive, any point to any point, with no further usage charges.

2) "The Circuit Emulation Model". A customer pays $X amount for transport
between two points based on a fixed (by port capacity or rate-limit)
amount of bandwidth and the distance (or otherwise costs involved in
supplying transport). Remember that while it may be one or more point to
point circuit(s), it may be delivered over a single handoff (say a GigE
with vlan trunking).

3) "The Transit-like Model". A customer pays $X amount per Mbps, with a 
minimum committment and measured 95th percentile burst. This may be on a 
per-circuit basis, or it may be the sum of all circuits billed on an 
aggregate and flat rate basis, depending on the product and locations.

Each has their advantages and disadvantages, varying wildly depending on
the pricing, customers' traffic and growth patterns, customers' financial 
situation, locations involved, and even the way the customer chooses to 
look at it. Nothing makes my head hurt faster than someone asking for a 
pricing comparison between the different options so they can decide which 
one is cheaper for them, but hey it's good to have options I guess. :)

Richard A Steenbergen <ras at>
GPG Key ID: 0xF8B12CBC (7535 7F59 8204 ED1F CC1C 53AF 4C41 5ECA F8B1 2CBC)

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