North American Network Operators Group

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RE: 95th Percentile = Lame

  • From: David Schwartz
  • Date: Sun Jun 03 15:51:12 2001

> If I am not mistaken, the true "benefit" to 95% billing is that it allows
> the provider to charge for bits they never delivered.  The average will
> skew on a burst of traffic (>5% of the average) and you pay for it as if
> you had averaged that level the entire time.

	I'm not sure what you mean by "you pay for it as if you had averaged that
level the entire time". Couldn't someone equally say that I can burst at a
full DS3 24 hours a day 7 days a week and I pay for it as if I only
sustained that bandwidth 5% of the time?

	The reality is that a customer who sustains a full DS3 24 hours a day 7
days a week costs about as much to service as a customer who sustains a full
DS3 only a smaller portion of the time. Plus, when there is excess bandwidth
available, it makes sense to let the customer have it.

> It seems like quite an irrational settlement model. Why not simply bill
> for every bit that crosses your network?  There certainly is a per-bit
> cost.

	Because bits moved at peak time cost you more than bits moved off-peak. You
have to design and build a network to tolerate your maximum sustained
bandwidth, not your average bandwidth. Plus, you want to reward customers
who can and do move bulk transfers to off-peak times.

	Which would you rather have, a customer who sustains 1Mbps 24 hours a day
seven days a week or a customer who sustains 100Mbps every Monday from 2PM
to 3PM? Do you think the cost per-bit is the same?

> Or maybe not.  Perhaps the electrical suppliers here in California
> should bill in the 95th percentile, and cite the Internet as a rational
> example.

	It's a shame that the current electricity metering and billing system has
no way to reward those people who shift some of their load off-peak. If it
did, the on-peak rate could be raised while leaving the off-peak rate the
same. This would help ease the crisis significantly while having much less
impact on poorer people who can't afford to pay 40% more for their
electricity.

	Imagine if electrical companies could bill based upon actual cost (minute
to minute). Imagine if people could set their meter to turn off different
circuits if the rate exceeded different amounts. Do you realize how much of
the problem this would solve?

	Yes, Internet billing is still in its infancy. Billing based upon peak
available bandwidth is obviously not right as it punishes people for leaving
room for growth and needlessly slows down their transfers when bandwidth is
available. Billing based just upon bits moved is obviously not right as it
fails to reward load leveling and makes it too hard to leverage existing
customers to get future ones.

	I can say from experience that 95th percentile billing seems to happen to
produce the right number.

	DS