Backbone IP network Economics - peering and transit

Thu Apr 22 19:18:39 UTC 2004

alex at yuriev.com wrote:
>>>>where's the "lot of cost"?
>>
>>>Stephen J. Wilcox
>>>This is private vs public..
>>
>>Even if it's private, and assuming that you're clever enough not to peer
>>for a modem's worth of traffic, the cost is a no-brainer, IMHO.
>>Someone checks my math please:
>>At $20 per megabit for transit (which I find very low, but let's go for
>>it anyway) a GE link for peering with an average use of 10% means $24000
>>per year saved; pays for the xconnect.
> 
> 
> If you have a gig of traffic to peer out to a single AS, you need quite a
> bit of infrastructure to support the peering and that infrastructure does
> not come cheap.
> 

But that structure doesn't vary vastly if you'd traffic out that gig via 
transit vs direct connect. It does vary (and add lots of infrastructure) 
if you don't aggregate your traffic at IXes and instead use loops to 
bring transit to you instead of going to it. (say a few 100Mb/s or OC3s 
in a few places instead of a GigE at an IX).

Perhaps we should (for technical reasons) describe peering as "direct 
connecting". Business reasons aside, technically the difference is that 
with transit you are expecting access via indirect connections to 
networks. With peering you expect direct connections into a network.

Deepak Jain
AiNET