Cost of transit and options in APAC

Patrick W. Gilmore patrick at
Thu Aug 12 18:29:02 UTC 2010

On Aug 11, 2010, at 10:01 PM, Matthew Palmer wrote:
> On Wed, Aug 11, 2010 at 12:53:18PM -0700, Joel Jaeggli wrote:
>> On 8/11/10 12:29 PM, Franck Martin wrote:
>>> Nice to see this change....
>>> APAC has been obliged to pay the cost to peer with the US (long
>>> distance links are expensive). Now that US wants to peer with Asia,
>>> pricing may become more balanced...
>> I think the question is more like why am I being quoted $100 A megabit
>> in India for transit in India? Not why am I being charged for for the
>> transport cost across the pacific.
> Because the percentage of traffic that actually stays in India, as compared
> to that which transits the Pacific, is miniscule.  If you're asking for
> enough bandwidth / throwing enough money around, I'm sure you could get an
> Indian-only deal, but you'd need to make it worth the while for the provider
> to setup the config, given that either way they'll be getting your money,
> and you won't be using a lot of transpacific traffic.  Note also that it's
> unlikely that the provider will be getting a differentiated rate from their
> upstreams for internal traffic, and you may have to settle for peering-only
> access (if your chosen provider is connected to any peering points).

You do not need to throw a lot of money around.  Lots of places in Asia give you separate in-country and "international" rates, and charge you accordingly.  People have been talking about distance-sensitive pricing for IP traffic for years, without realizing people have been doing it in Asia for years.

Back to topic of why prices are high in some places (and it is not just Asia), it is trivial to prove objectively that monopoly power keeps prices ridiculously high.  Before anyone jumps on me, there are many reasons for high prices.  Monopoly power is only one, but clearly and obviously the biggest one.

When I say "objectively", I mean it.  Look at any country which has gone through any type of transition from "gov't owned monopoly telco" to "competition-based market".  South Africa instantly springs to mind.  Prices are still high, but have dropped, what, 75% in just a year or two once the monopoly power was broken?  And this is after a decade or more of little to no decrease.

Of course, this does not mean .za will have $1/Mbps transit like the US any time soon.  As I said, there are other factors - geography, scale, local economy, even import policies, etc.  But getting prices to go from US$2000/Mbps to, say, $100/Mbps is more important than the $100 -> $1 drop.  (Hrmm, I wonder who will say "the first is only 20 times, the second is 100 times!" to prove me wrong? :)  Plus there are a myriad of factors keeping that last step from happening, not just one.  So wich do you think is more important, the monopoly power or the dozens of other factors?

That said, this is not really on-topic for NANOG.  So if you would like to argue the point, please e-mail privately, or let's take it to another list.

End of day, the important thing is to break the monopoly.  After that, prices will almost always drop, then you can work on other stuff.


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