net neutrality and peering wars continue

Fri Jun 21 01:10:20 UTC 2013

Maybe someone could enlighten my ignorance on this issue.

Why is there a variable charge for bandwidth anyways?

In a very simplistic setup, if I have a router that costs $X and I run a $5
CAT6 cable to someone elses router which cost them $Y, plus a bit of
maintenance time to set up the connections, tweak ACLs, etc...

So now there's an interconnect between two providers at 1 gigabit, and the
only issue I see is the routers needing to be replaced within Z years when
it dies or when it needs to handle a 10 gigabit connection.

So it seems I should be able to say "Here's a 1 gigabit connection.  It
will cost $Q over Z years or you can pay $Q/Z yearly", etc...

And wouldn't the costs go down if I had a bunch of dialup/DSL/cable/fiber
users as they are paying to lower the costs of interconnects so they get
content with less latency and fewer bottlenecks?

-A

On Thu, Jun 20, 2013 at 4:18 PM, Leo Bicknell <bicknell at ufp.org> wrote:

>
> On Jun 20, 2013, at 5:47 PM, Robert M. Enger <NANOG at enger.us> wrote:
>
> > Perhaps last-mile operators should
> > A) advertise each of their metropolitan regional systems as a separate AS
> > B) establish an interconnection point in each region where they will
> accept traffic destined for their in-region customers without charging any
> fee
>
> C) Buck up and carry the traffic their customers are paying them to carry.
>
> Least I just sound like a complainer, I actually think this makes rational
> business sense.
>
> The concept of peering was always "equal benefit", not "equal cost".  No
> one ever compares the price of building last mile transport to the cost of
> building huge data centers all over with content close to the users.  The
> whole "bit-mile" thing represents an insignificant portion of the cost,
> long haul (in large quantities) is dirt cheap compared to last mile or data
> center build costs.  If you think of a pure content play peering with a
> pure eyeball play there is equal benefit, in fact symbiosis, neither could
> exist without the other.  The traffic flow will be highly asymmetric.
>
> Eyeball networks also artificially cap their own ratios with their
> products.  Cable and DSL are both 3x-10x down, x up products.  Their TOS
> policies prohibit running servers.  Any eyeball network with a asymmetric
> edge technology and no-server TOS need only look in the mirror to see why
> their aggregate ratio is hosed.
>
> Lastly, simple economics.   Let's theorize about a large eyeball network
> with say 20M subscribers, and a large content network with say 100G of
> peering traffic to go to those subscribers.
>
> * Choice A would be to squeeze the peer for bad ratio in the hope of
> getting them to pay for, or be behind some other transit customer.  Let's
> be generous and say $3/meg/month, so the 100G of traffic might generate
> $300,000/month of revenue.  Let's even say you can squeeze 5 CDN's for that
> amount, $1.5M/month total.
>
> * Choice B would be to squeeze the subscribers for more revenue to carry
> the 100G of "imbalanced traffic".  Perhaps an extra $0.10/sub/month.  That
> would be $2M/month in extra revenue.
>
> Now, consider the customer satisfaction issue?  Would your broadband
> customers pay an extra $0.10 per month if Netflix and Amazon streaming
> never went out in the middle of a movie?  Would they move up to a higher
> tier of service?
>
> A smart end user ISP would find a way to get uncongested paths to the
> content their users want, and make it rock solid reliable.  The good
> service will more than support not only cost recovery, but higher revenue
> levels than squeezing peers.  Of course we have evidence that most end user
> ISP's are not smart, they squeeze peers and have some of the lowest
> customer satisfaction rankings of not just ISP's, but all service
> providers!  They want to claim consumers don't want Gigabit fiber, but then
> congest peers so badly there's no reason for a consumer to pay for more
> than the slowest speed.
>
> Squeezing peers is a prime case of cutting off your nose to spite your
> face.
>
> --
>        Leo Bicknell - bicknell at ufp.org - CCIE 3440
>         PGP keys at http://www.ufp.org/~bicknell/
>
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