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

  • From: Nenad Trifunovic
  • Date: Fri Aug 09 16:09:07 2002


Can you, please, explain why you didn't consider Frame Relay 
based exchange in your analysis?


>Date: Thu, 08 Aug 2002 08:11 -0700 (PDT)
>From: "William B. Norton" <>
>Subject: Re: Do ATM-based Exchange Points make sense anymore?
>Hi again -
>A couple points (based on some interactions with folks privately).
>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."
>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.
>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.
>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!
>There is also an Ethernet EPR Gap but it is only about 40 Mbps, and once at 
>the GigE/OC-12 capacity, it gets you an Effective Peering Range up to 475Mbps.
>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
>Let me know if you violently object to any of these data points. These are 
>culled from a lot of conversations in the field. The rest of the paper is 
>simply plugging these data points into the equations and analyzing the results.
>At 04:36 PM 8/7/2002 -0700, William B. Norton wrote:
>>Hi all -
>>I've been working with a number of ISPs on a research paper that builds on 
>>the previous peering research papers (Internet Service Providers and 
>>Peering, A Business Case for Peering, The Art of Peering, Interconnection 
>>Strategies for ISPs, etc.) that applies the Peering Modelling tools in a 
>>comparison of ATM and Ethernet-based Internet Exchanges. Both of these 
>>IXes are compared against each other and against the cost of buying 
>>transit. The paper applies recent price quotes for transport and transit, 
>>costs for ATM and Ethernet-based IX participation, to answer the question:
>>            Do ATM-based Exchange Points make sense anymore?
>>I'd like to speak with additional ISP Peering Coordinators and Network 
>>Architects  (preferable ones that have experience with peering across both 
>>ATM and Ethenet-based IXes) to walk through this paper and help me check 
>>that I have the technical and business details right. I would need about 
>>20 minutes or so on the phone to walk you through the paper, the financial 
>>models, the cost points, and get feedback on the conclusions...preferably 
>>sometime in the next couple weeks.
>>If you are a Peering Coordinator I think you will find at least a couple 
>>of findings in this research *very* interesting. In any case, if you can 
>>help, please send me an e-mail at and let me know when we 
>>could chat.
>>Thanks -
>>PS - As with any these Peering White Papers, this white paper will be 
>>freely available once enough folks have walked through it and verify that 
>>we have things right.
>>------------------------------------------ Abstract 
>>During the NSFNET transition from the Authorized Use Policy Internet to 
>>the Commercial Internet, several Network Access Points (NAPs) were created 
>>to facilitate the traffic exchange between the Internet Service Providers, 
>>two of which were ATM-based. Internet Service Providers were initially 
>>required to connect to three of the four NAPs in order to receive NSF 
>>funds (indirectly through their NSF-sponsored customers) during this 
>>transition period.
>>During the years that followed, this requirement was dropped and the costs 
>>models of Internet Operation have changed dramatically. Technologies such 
>>as Wave Division Multiplexing and Long Haul Fiber Improvements have led to 
>>radical a decrease in the cost of transport and a corresponding drop in 
>>the price of transit. At the same, the cost of peering at ATM-based 
>>exchange points has not substantially dropped in cost, leading to the 
>>question in the Peering Coordinator Community:
>>  "Do ATM-based Internet Exchange Points make sense anymore?"
>>In this paper we apply the peering financial models to this question, 
>>using current market prices to compare the price of transit against the 
>>costs of peering at ATM-based NAPs and Ethernet-based Internet Exchange 
>>Points. We build upon the previous research on Peering by introducing the 
>>notion of an Effective Peering Range (EPR) to describe the "useful life" 
>>of an Internet Exchange. We also highlight a potentially costly EPR Gap, 
>>an interim range between Peering Capacity points where peering is more 
>>expensive than transit.
>>The financial models presented that produced the graphs are included in 
>>the Appendix so that ISPs can apply these cost models to their specific 
>William B. Norton <>                             650.315.8635
>Co-Founder and Chief Technical Liaison                          Equinix, Inc.
>Yahoo Instant Messenger ID: WilliamBNorton

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