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Re: Do ATM-based Exchange Points make sense anymore?

  • From: Alex Rubenstein
  • Date: Thu Aug 08 11:25:16 2002

Everything I say below is IMHO.

> This is not an ATM is bad, or general ATM-bashing paper. It simply applies
> the same Peering Analysis that  ISPs are applying to determine if and when
> IXes make sense. With the transit prices and transport prices dropping,
> this is a reasonable question, worthy of greater analysis than "well, ATM
> is expensive so ATM is bad."

Yes. ATM is priced expensive from the ATM NAP providers, and no one seems
to know why. Personally, I don't believe that ATM is 'bad' for
shared-fabric exchange point. I mean, it works, and solves several
problems quite easy: a) it's easily distributed via SONET services to
folks who are not next to the ATM switch, b) it makes interconnection
between networks safer (ie, not dealing with broadcast issues on a
ethernet nap), c) virtual PI connections are easily accomplished, d) there
are varying degrees of interconnection speed (agreeably, less important),
e) it allows for things other than IP, or packet-based traffic to be
exchanged (a la Verizons' video-portal service) (agreeably, again, less

> To give you a flavor, given a set of assumptions, OC-3 (155Mbps) transport
> into an ATM-based IX has an "Effective Peering Range" (where peering across
> them is cheaper than transit) of 75-90Mbps,  while given the same
> assumptions, Fast Ethernet-based IXes also at OC-3 have an Effective
> Peering Range of 40-70Mbps. The "Minimum Cost of Traffic Exchange" for this
> ATM solution is $122/Mbps while FastE is $80/Mbps.

The pricing model is wholy irrelevant of the platform used. I think that
it just happens to be that AADS and WCOM rape the folks who peer.

> At higher capacity the interconnect analysis is more dramatic: Given the
> relatively high price point of transport and port cost, the Effective
> Peering Range for ATM/OC-12 Peering is a narrow 236Mbps to 375Mbps with
> a Minimum Cost of Traffic Exchange of $69/Mbps. The GigE/OC-12
> equivalent range is 109Mbps-466Mbps with a Minimum Cost of Traffic
> Exchange of $25/Mbps.

Agreed, however, even at $25/meg, when you factor in the cost of
equipment, rack space, and the build of network to get you to the place to
peer, you can easily be over the price of purchasing bandwidth again.

> What was unexpected in this analysis was the Effective Peering Range
> Gap.  When an ISP upgrades the ATM OC-3 to OC-12, the gap between the
> Effective Peering Bandwidth of the OC-3 (90Mbps) and the Peering
> Breakeven Point (the point at which the Peering Costs are totally offset
> by the cost savings of peering vs. transit) at 208Mbps is huge. This
> 118Mbps gap is where an ISP should rationally prefer to purchase transit
> until 208Mbps can be sent in peering relationships over the ATM fabric,
> and only then upgrade the peering connection to OC-12!

Certainly a problem, but this should more be addressed as a problem with
price points that they charged not being relative to actual costs.

> In any case, this is the analysis that the paper walks through, and since
> the spreadsheets are in the paper, one can muck around with the assumptions
> and cost points, key of which are:
>       1) ATM OC-3 Port Cost $8000/mo, ATM OC-3 Circuit Cost $3000/mo,
>           ATM OC-12 Port Cost $17000/mo, ATM OC-12 Circuit Cost $8000/mo
>       2) FastE Port & Rack Space $2500/mo, OC-3 Circuit $3500/mo,
>          GigE Port & Rack Price$5000/mo, OC-12 Circuit $7000/mo
>       3) Transit Price: if you peer at OC-3, you probably pay $125/Mbps,
> peer at OC-12,$110/Mbps
>       4) ATM Overhead (aka cell tax): 20%
>       5) Assumption that ISP upgrade capacity when avg utilization >75%
> Effective Peering BW

I am not looking to start a "my transit provider is cheaper than yours"
arguement, but at 100 mbit/second committments, they are a wide variety of
providers in the $50 to $100/meg range (with a nice cluster around $75).

-- Alex Rubenstein, AR97, K2AHR,, latency, Al Reuben --
--    Net Access Corporation, 800-NET-ME-36,   --

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