North American Network Operators Group
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Re: Current street prices for US Internet Transit

  • From: Patrick W Gilmore
  • Date: Mon Aug 16 15:07:49 2004 
On Aug 16, 2004, at 2:48 PM, Mikael Abrahamsson wrote:


On Mon, 16 Aug 2004, Patrick W Gilmore wrote:


Unfortunately, I doubt any transit provider offering these prices will
tell us if they are below cost.  (Someone care to prove me wrong? :-)
Cisco 12400 OC192 cards are $225k listprice.
You want to build a triangle with redundancy, ie 6 12400, 12 OC192 cards,
and you want to write this off in three years. You have a good discount at
50% and you're a good provider who is sincere about redundancy and only
load your links 50%.

This means you've forked out approx $1.4M in linecards, you can load these
at 50% ie 10gigabit/s of revenue-generating traffic (at best), that means
approx $4 per megabit per month in just linecard costs to haul this
between your three metro areas. No customer facing interfaces, no
interconnect to other ISPs etc. I estimate that the router+LC cost for any
GSR/juniper based network is $10/per megabit at least.

Now, you probably need to get yourself a DWDM system or some DWDM capacity
to run this network over, and you probably want to hire some qualified
people to run it. Selling 10gig of internet at $30/megabit gives you a
total revenue of $3.6M per year.

I have a hard time to see the business case in this at current prices.
Interesting analysis, but I really can't believe that 10 gigabits of connectivity costs $30/Mbps. There is not a network in the US or Europe who will not sell you a 10 gig commit for far less than $30/Mbps, and I honestly do not believe that every network is selling below cost.

Perhaps some of your assumptions are wrong. Perhaps people are making due with OC48s. Perhaps there is less redundancy or more loading. Perhaps your discount level is too low.

Who knows? Did you build an OC192 network with 6 routers and 3 links and etc.? I didn't, so maybe I'm wrong. But given the choices of A) Every single network on at least two continents is selling for less than half their cost or B) An one page e-mail to NANOG may not reflect the complex business realities of the telecommunications world - well, I'll pick B.

But that's me. :)


Would you pay $10 more per megabit to buy this capacity from someone using
12000 than from someone using let's say 7600 routers? That's something
people will have to start to figure out the way we're headed here.
What do you care which routers they use? I've seen networks buy the most expensive routers and run a crappy network, and I've seen people run stable networks on the cheap.

I just want my bits to flow quickly and reliably. I don't really care if you do it on Juniper, Force10, cisco, or tin-cans-and-string.

Why do you care?

--
TTFN,
patrick