Backbone IP network Economics - peering and transit

Tue Apr 20 05:23:25 UTC 2004

On Mon, 19 Apr 2004, Gordon Cook wrote:

> Peering?  Who needs peering if transit can be had 
> for $20 per megabit per second?

Isnt the companies still "doped" from the bubble in 2000-2001? Price
example:

You have three cities. Two 12400 GSRs per city, and OC192 to connect them,
that's a total of 12 $150k ($225k minus rebate) cards and let's say $100k
per router for customer facing interfaces etc (unrealistically low).

If you want to pay this investment back over three years and let's say 
you'll push 10gigs of customer paying traffic (because of redundancy etc). 
You end up with close to $10 per megabit in just equipment fee to 
cisco so you have half of the money left from the initally stated price of 
$20 per megabit, this for a small inter-metro network.

Since Cisco basically hasnt lowered the price per megabit on any interface 
cards for the GSR platform, it cannot be used apart from doing very long 
distance transfer via DWDM where the links are full of revenue-generating 
traffic all the time. Juniper is even more expensive.

We like these platforms, they're very stable and well performing, but I
just cannot see where they can be justified investing in at todays megabit
price.

-- 
Mikael Abrahamsson    email: swmike at swm.pp.se