North American Network Operators Group

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Re: AOL & Cogent

  • From: Richard A Steenbergen
  • Date: Sat Dec 28 17:54:50 2002

On Sat, Dec 28, 2002 at 04:43:18PM -0500, Leo Bicknell wrote:
> - Peering should cost significantly less than transit.  At least
>   half, probably less.  If you have 1.5 Gig, getting $50 a meg
>   transit is trivial today.  I can't imagine any company paying
>   $50 a meg for peering, no matter what the circumstances.

I'll make one issue about that blanket statement of the price of peering.

Consider this example: If I buy 100Mbit of transit from AboveNet in IAD,
odds are you're gonna peer off 75% of my traffic locally, without it ever
having touched expensive longhaul circuits. If I buy 100Mbit of paid
peering, odds are you're going to be burning longhaul circuits carrying
most of it all over the world, plus the same longhaul carrying it all 
back to me.

Depending on your situation, your transport costs per meg could easily end 
up exceeding the price you charge for transit, and even more so for what 
you would want to charge to peering. Now based on the price you're 
charging the customer on the other end, it might still be worth it. But 
forgetting about some of your huge costs just because you've already paid 
them and you don't have to worry about it until you need to upgrade is 
dangerous, and leads to situations like the ones many service providers 
are facing today.

There is also a big distinction between what I would call "paid peering",
and "on-net transit". Many of the people I see inquiring about paid
peering are one-location wonders looking to lower their transit cost by 
"buying" peering with everyone. This is significantly different from 
someone who is in diverse locations, but just needs a little extra to make 
the deal worth it. This might mean one side paying for the loops, or as 
you suggested paying for usage over a ratio, or otherwise some "price" 
which is less than transit.

>  Perhaps that was the point though.

At this point, I'm inclined to believe AOL is simply flexing their
newfound peering pecker on someone they perceive to be in a weak position.
But who knows, maybe AOL thinks they can make more money by helping drive
Cogent out of business, and inflate the price of transit again. :)

Everyone has their own theory about how much to charge and who to charge 
it too. Only time will tell who has it right.

Richard A Steenbergen <[email protected]>
GPG Key ID: 0xF8B12CBC (7535 7F59 8204 ED1F CC1C 53AF 4C41 5ECA F8B1 2CBC)