Current street prices for US Internet Transit

Mon Aug 16 18:48:19 UTC 2004

On Mon, 16 Aug 2004, Patrick W Gilmore wrote:

> Unfortunately, I doubt any transit provider offering these prices will 
> tell us if they are below cost.  (Someone care to prove me wrong? :-)  

Cisco 12400 OC192 cards are $225k listprice.
You want to build a triangle with redundancy, ie 6 12400, 12 OC192 cards, 
and you want to write this off in three years. You have a good discount at 
50% and you're a good provider who is sincere about redundancy and only 
load your links 50%. 

This means you've forked out approx $1.4M in linecards, you can load these 
at 50% ie 10gigabit/s of revenue-generating traffic (at best), that means 
approx $4 per megabit per month in just linecard costs to haul this 
between your three metro areas. No customer facing interfaces, no 
interconnect to other ISPs etc. I estimate that the router+LC cost for any 
GSR/juniper based network is $10/per megabit at least.

Now, you probably need to get yourself a DWDM system or some DWDM capacity 
to run this network over, and you probably want to hire some qualified 
people to run it. Selling 10gig of internet at $30/megabit gives you a 
total revenue of $3.6M per year.

I have a hard time to see the business case in this at current prices.  

Time to go back to the drawing board and find another way of doing this?

Would you pay $10 more per megabit to buy this capacity from someone using 
12000 than from someone using let's say 7600 routers? That's something 
people will have to start to figure out the way we're headed here.

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