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

[Nenad Trifunovic <nenad.trifunovic () wcom com>]

Hello,

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

Regards,
nenad


> Date: Thu, 08 Aug 2002 08:11 -0700 (PDT)
> From: "William B. Norton" <wbn () equinix com>
> To: nanog () merit edu
> Sender: owner-nanog () merit edu
> Delivered-to: nanog-outgoing () trapdoor merit edu
> Delivered-to: nanog () trapdoor merit edu
> Delivered-to: nanog () merit edu
> 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.
>
> Bill
>
> 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 wbn () equinix com and let me know when we 
> > could chat.
> >
> > Thanks -
> >
> > Bill
> >
> > 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 
> > situation.
>
> ---------------------------------------------------------------------------
> ------------------------------------
> William B. Norton <wbn () equinix com>                             650.315.8635
> Co-Founder and Chief Technical Liaison                          Equinix, Inc.
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