100G Peering Break even Point

[Bill Norton]

Hi guys - Here is an early draft of what will post Friday. Comments
welcome.

DrPeering -

What is the best cost of peering I can hope for if I fully utilize a
100G peering port?

J Tinkerton
----------------------------

The Business Case for Peering at 100G Greatly simplified

Assumptions
Let’s assume that the 100G switch is available let’s further assume
that the next best alternative to peering at this time is paying a
metered transit rate of $0.63/Mbps.

Let’s consider the three pricing cases:
1) 100G peering port is priced to $25K/mo,
2) 100G peering port is priced to $15K/mo and
3) 100G peering port is priced to $10K/mo.
(We are ignoring the cost of colo, equipment, transport to the IX,
etc. for now and considering a simple aggregate cost of peering.)

Cost of Peering, vs Transit=BreakEvenPoint, --> up to Capacity,
yielding a range of
$25,000 $0.63/Mbps =39.7Gbps → 70 Gbps 30.3 Gbps
$15,000 $0.63/Mbps =23.8 Gbps → 70 Gbps 46.2 Gbps
$10,000 $0.63/Mbps =15.9 Gbps → 70 Gbps 54.1 Gbps

The Peering break even point is where ISP is financially indifferent
between sending traffic to its upstream ISP(s) at $0.63/Mbps or
sending that traffic to a peering port with at a fixed aggregate
monthly fee of $25,000.

The effective Peering Range is between 39.7Gbps and 70Gbps is the
peering cost is $25,000 per month
between 23.8Gbps and 70Gbps if the peering cost is $15,000 per month,
and a nice wide 15.9Gbps to 70Gbps if the peering cost is $10,000 per
month.

So to answer your question, the best case scenario if that 100G
peering in aggregate costs $10,000 per month and let's say you can
push 70Gbps at the 95 percentile.

That would be a cost of $10,000 / 70,000Mbps = $0.14/Mbps

[David Temkin]

Bill,

Isn't this ignoring the cost of that 100G peering port?

The cost of the ports are built into transit. If my transit is $.63/
Mbit, some large portion of that is amortizing the cost of carrying
that traffic, including what will likely be incredibly expensive 100G
ports. If I'm "peering", I'm bearing the cost of that physical port
(and potentially the cost of transport, which, at 100G can't be
assumed to "come out in the wash") and that needs to be amortized into
the cost of carrying that traffic.

-Dave

[Bill Norton]

On Aug 3, 9:55 am, David Temkin <d...@temk.in> wrote:
> Bill,
>
> Isn't this ignoring the cost of that 100G peering port?

Do you mean ignoring the 100G port on the ISP router side? Or the 100G
port on the IX switch side?

> The cost of the ports are built into transit.  If my transit is $.63/
> Mbit, some large portion of that is amortizing the cost of carrying
> that traffic, including what will likely be incredibly expensive 100G
> ports.  If I'm "peering", I'm bearing the cost of that physical port
> (and potentially the cost of transport, which, at 100G can't be
> assumed to "come out in the wash") and that needs to be amortized into
> the cost of carrying that traffic.

Agreed that it will not be a trivial cost. Do you have any estimates
for what it might cost to bring 100G into an IX?

What I am trying to do is aggregate the cost of peering into a single
number to allocate across the # of Mbps peered for an example. One can
adjust that number up - it sounds like you are saying it should go up
maybe quite a bit.

Do I understand your point to be that the price of transit includes
transport to your content? So that transit price of $0.63/Mbps
includes the cost of transport, while the case for peering needs to
include the 100G transport? I guess I was assuming the 100G was to an
IX in both cases. Maybe I should make that explicit, with a drawing.

The question asked at NANOG was what is the best possible cost of
traffic exchange I could realize with 100G? I asked a couple IX
operators at NANOG what pricing might be and I heard $25K/mo down to
$15K/mo from one IXP and another said they couldn't sell it at $15K
and maybe $10K/mo was more reasonable. The latter IXP said that the
prices of ISP peering ports tends to be 4x the cost for 10x the
bandwidth. So if $2500/mo is the price for 10G ports, one can expect
the price of 100G ports to settle down to about $10K, hence the
pricing points. (maybe I should include this paragraph in the
article?).

Thanks for the note and in advance for any further suggestions ! I'll
take another swipe at it tonight. :-)

[Bill Norton]

Here is an update based on some more data and a few conversations
today...

http://drpeering.net/AskDrPeering/blog/articles/A_100G_Peering_Break_Even_Point.html

I may need to send it out this evening...