Capacity/transit costs vs growth

Rafael Possamai rafael at
Thu May 28 00:10:03 UTC 2015

If I understand your question correctly, the answer is: it depends. You can
model the cost of delivering your service and keep track of three types of
cost: fixed, variable and marginal. Here is a really good video that
explains these:

You might find an industry average for certain economies of scale, but each
system is so unique in it's cost structure that you have to model it from
scratch. Just keep in mind that every model works with TRASH IN => TRASH
OUT, so if you make the wrong assumptions, your answers won't be realistic.

On Wed, May 27, 2015 at 6:54 PM, Jean-Francois Mezei <
jfmezei_nanog at> wrote:

> On 15-05-27 19:20, Faisal Imtiaz wrote:
> > The above hypothesis why imply that the 20% linear increase is not fair,
> vs directly making the case that the base rate, set in some point in the
> past is not fair/appropriate anymore ?
> These rates cover aggregation between an end user's CO and a central CO
> where an ISP connects. For instance, a Toronto based ISP can serve all
> of Bell Canada's DSL footprint by connecting to the Adelaide Street CO
> in Toronto.  BUT, Bell charges $1016 per 100mbps to carry traffic
> between that point and the CO serving an end user. (for Cable, I am not
> 100% sure if it include the fibre to the node, or just aggregation to
> the CMTS).
> there is a separate fixed fee for the "last mile" infrastructure.
> The point i am trying to make that that during the period where usage
> increase, the cost per gbps decreases, so it shgould not be a 1:1
> relationship over time.  Currently, the CRTC sets 1:1 relationship over
> 10 years.
> So having *rough* idea of decreases in per gbps of capacity over the
> years would help me make the point that the current rate structure is
> flawed.  (I don't need precise at this point, just rough ideas).
> Different slant to question:
> when you move from 1gbps to 10gbps to 40gbps links, what sort of
> price/gnps reduction do you get ? 20% ? 30% ?

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