Current street prices for US Internet Transit

Tue Aug 17 03:50:39 UTC 2004

> William B. Norton wrote:
> Three said that these transit prices were TOO LOW, in
> one case they paid about double these numbers. It was
> interesting that these three were a content company,

The really interesting question IMHO is this: does said content company
also peers, or just buys transit? I read in Bill Norton's papers that a
content company is a good candidate to peer with large tier-2s.

And, an even more interesting question is: if said content company does
peer, what kind of price would they be available to negotiate with their
transit if they stopped peering and stick to transit-only?

> Given the adjustment, I thought you might be interested
> in how the U.S. transit prices compare against a handful
> of other Peering Ecosystems:
>         The Cost of Internet Transit in..
> Commit  AU      SG      JP      HK      USA
> 1 Mbps  $720    $625    $490    $185    $125
> 10 Mbps $410    $350    $150    $100    $80
> 100 Mbps        $325    $210    $110    $80     $45
> 1000 Mbps       $305    $115    $50     $50     $30

Someone mentioned that this was comparing apples to oranges. Indeed it
is, but nevertheless remains extremely interesting as related to a
thread we had earlier about regional differences in P2P. The way I see
things, we are greatly unequal depending on where we live. However, I
have theorized the following thoughts that I would like to run by the
list:

<me puts the asbestos suit on>

No matter where you leave, the deal you get as a hard-core swapper
(remember, we're talking about P2P now) is about what it costs to buy or
build transit in bulk. The operator/provider makes no profit out of
hardcore swappers, just tries not to loose money.

In other words: in Australia, an unlimited and unmetered megabit
residential link will cost hundreds of dollars, which is about the
transit cost. In California, I pay $36.99/mo for 2.5 mpbs unlimited
unmetered, which is also about the transit cost.

</me puts the asbestos suit on>

> one can pick up a used 7500 series router equipment
> now for about $9K ! The configuration was with an OC-3,
> and FastE for peering, for about 25% of the new cost

Sounds like a lot of money to me for a 7500; if this is the eBay cost
only it's more around $3.5k I would say. For $9k one could get a 12008.
OTOH if it includes re-licensing and some support it sounds about right.

> Deepak Jain wrote:
> Other than packet buffer depths and some theoretical ACL
> limits, is there any reason why a 7600 network would be
> worse than a 12000 built one?

<me owns a few Cisco shares>

There is one: Cisco wants you to buy 12000s. Don't expect them to make
it easy to run the same network on 7600s :-)

</me owns a few Cisco shares>

That being said, what you mention is probably why you find 12000s for
peanuts on eBay.....

> Patrick W Gilmore wrote:
> and I honestly do not believe that every network is
> selling below cost.

No, but there are enough to do it that the other ones are not too far
behind.

Economics 101: low prices mean there is more supply than demand, which
also means that either the demand has to grow or the supply diminish. A
common strategy is to sell at loss to capture a better/significant
market share, which will ensure that the taxpayer and shareholders will
pay the bankruptcy bill, as the disruptions caused by disappearance of a
large fish are even more costly.

Michel.