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Re: Do ATM-based Exchange Points make sense anymore?
- From: William B. Norton
- Date: Thu Aug 15 11:10:48 2002
Hi all -
I have walked about 30 people through the "Do ATM-based Internet Exchange
Points make sense anymore?" white paper and have received some really good
feedback, suggestions and price points to calibrate the Peering Financial
Model. I have applied these calibrations and I am ready to release the
paper for wider review, but I'd like to share first the assumptions and
calibration points for the model along with a few of the more interesting
The Business Case for Peering at an ATM-based Internet Exchange Point
Peering looks pretty dismal in todays market. As I mentioned in an earlier
message, the dominant issue is that transit and transport have dropped
dramatically,while the cost of ATM-based peering has not dropped in kind.
In todays market (from quotes shared with me) we see:
Assumptions and Calibration Points
Transit $125/Mbps with 500Mbps commit, $100/Mbps with 1000 Mbps commit.
Transport (DC-ASH) $2500/mo for OC-3, $5000/mo for OC-12
Eth-IX fees: $2500/mo for 1/2 rack and FastE, $5000 for 1/2 rack and GigE
Eth Framing Overhead: 6%
HDLC Overhead: 4%
ATM-IX fees: $11,000/mo for OC-3, and $26,000 for OC-12 transport and Port
ATM cell tax: %20
Effective Peering Bandwidth=75% average utilization of available bandwidth
(this means we assume that ISPs (for policy reasons) upgrade the peering
infrastructure when the average utilization is 75%)
These numbers are empirical and based on averages from the Internet
Operations Community. The paper footnotes the sources.
When these numbers are plugged into the Peering Financial Models, we see
that OC-3 ATM-based peering is "Effective" (less expensive than transit)
for the very narrow range of 88Mbps-90Mbps. If an ISP can't send at least
88Mbps over the OC-3 to the ATM-IX, it would save money by simply buying
transit. At 90 Mbps the OC-3 ATM must be upgraded. This narrow range leads
me to believe that OC-3 ATM peering is simply not cost effective. Under the
same assumptions (OC-3 into FastE IX), the Fast Ethernet-based Effective
Peering Range is 40Mbps-70Mbps, a more reasonable range for medium scale
Applying the model to the ATM-OC-12 we see the Peering Breakeven Point is
260Mbps; if you don't send at least 260Mbps to the peering population then
you should prefer simply to purchase transit. This peering infrastructure
scales to 375 Mbps at which time it must be upgraded. In this Effective
Peering Range the cost of traffic exchange ranges from $100/Mbps down to
$69/Mbps when the Effective Peering Bandwidth is fully utilized.
The same analysis applied to Gigabit Ethernet shows a much lower Peering
Breakeven Point (100Mbps) with a broader range, scaling up to 448Mbps
before the OC-12 must be upgraded, at which point the cost of peering
traffic exchange is $22/Mbps.
The bottom line is that the cost of the ATM Peering infrastructure, and the
dropping price of transit and transport, have conspired to destroy the
value proposition of ATM-based Internet Exchanges. Ethernet-based IXes are
less expensive and have a broader "useful life", defined in this paper as
"Effective Peering Range."
As I walked folks through this paper I got the sense that most folks had
not done this analysis and we opened some eyes here. Thanks to those who
provided the empirical HDLC, ATM, and ethernet overhead figures. Including
these provides a more fair comparison between ATM and Ethernet-based IXes.
If you would like a copy of the paper please send e-mail to email@example.com
and I'd be glad to send you a copy. As always, I'd love to hear your
feedback; that is how these papers become valuable resources for the community.