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RE: 95th Percentile = Lame

  • From: James Thomason
  • Date: Sun Jun 03 22:21:39 2001

On Sun, 3 Jun 2001, David Schwartz wrote:
> 	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?

You could, in fact, make this statement.  This is the problem - you pay
for traffic you did not use 95% of the time, just like someone who DID use
that amount 95% of the time.  

The argument people seem to be making is that the cost of provisioning for
this bursty traffic is the justification for average-based billing.  Yet
95th percentile billing assumes that in a worst-case scenario (for the
carrier), 5 percent of bits passed are worthless. 

> 	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.

Why is this the case? Further, where is the hard data that shows this
scenario to be the case?  

Why does it make sense to let the customer have "excess bandwidth"?  Does
it not ALWAYS cost money to pass a bit across your network?

> 	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.

What is the basis for this assumption?

Facts for the service provider: 

1. Hardware costs are fixed. 
2. Leased line costs are fixed.
3. "Bandwidth" (Peering or Transit) may be variable. 

Why do "peak bits" cost more than "regular bits" ?

> 	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?

Why do I care?  Should not the cost of providing network access (at peak
usage) be my -basis- of cost that is passed on to the customer?

I guess if I bill on 95th percentile I would rather have the bursty
customer since he pays as if he used 100MBps the whole time.  

> 	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.

I disagree with you here.  However, I do not want to descend into a power
discussion on-list. :)  I do not think there is any real evidence to
substantiate the assumption that "peak power" costs more than "off peak
power".  Instead, power companies would like you to move your electricity
consumption to more convenient times well within acceptable profit

> 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?

Now, this WOULD be cool. 

> 	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

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