Re: net neutrality and peering wars continue

[Leo Bicknell <bicknell () ufp org>]

On Jun 20, 2013, at 5:47 PM, Robert M. Enger <NANOG () enger us> wrote:

> Perhaps last-mile operators should
> A) advertise each of their metropolitan regional systems as a separate AS
> B) establish an interconnection point in each region where they will accept traffic destined for their in-region 
> customers without charging any fee

C) Buck up and carry the traffic their customers are paying them to carry.

Least I just sound like a complainer, I actually think this makes rational business sense.

The concept of peering was always "equal benefit", not "equal cost".  No one ever compares the price of building last 
mile transport to the cost of building huge data centers all over with content close to the users.  The whole 
"bit-mile" thing represents an insignificant portion of the cost, long haul (in large quantities) is dirt cheap 
compared to last mile or data center build costs.  If you think of a pure content play peering with a pure eyeball play 
there is equal benefit, in fact symbiosis, neither could exist without the other.  The traffic flow will be highly 
asymmetric.

Eyeball networks also artificially cap their own ratios with their products.  Cable and DSL are both 3x-10x down, x up 
products.  Their TOS policies prohibit running servers.  Any eyeball network with a asymmetric edge technology and 
no-server TOS need only look in the mirror to see why their aggregate ratio is hosed.

Lastly, simple economics.   Let's theorize about a large eyeball network with say 20M subscribers, and a large content 
network with say 100G of peering traffic to go to those subscribers.  

* Choice A would be to squeeze the peer for bad ratio in the hope of getting them to pay for, or be behind some other 
transit customer.  Let's be generous and say $3/meg/month, so the 100G of traffic might generate $300,000/month of 
revenue.  Let's even say you can squeeze 5 CDN's for that amount, $1.5M/month total.

* Choice B would be to squeeze the subscribers for more revenue to carry the 100G of "imbalanced traffic".  Perhaps an 
extra $0.10/sub/month.  That would be $2M/month in extra revenue.

Now, consider the customer satisfaction issue?  Would your broadband customers pay an extra $0.10 per month if Netflix 
and Amazon streaming never went out in the middle of a movie?  Would they move up to a higher tier of service?

A smart end user ISP would find a way to get uncongested paths to the content their users want, and make it rock solid 
reliable.  The good service will more than support not only cost recovery, but higher revenue levels than squeezing 
peers.  Of course we have evidence that most end user ISP's are not smart, they squeeze peers and have some of the 
lowest customer satisfaction rankings of not just ISP's, but all service providers!  They want to claim consumers don't 
want Gigabit fiber, but then congest peers so badly there's no reason for a consumer to pay for more than the slowest 
speed.

Squeezing peers is a prime case of cutting off your nose to spite your face.

-- 
       Leo Bicknell - bicknell () ufp org - CCIE 3440
        PGP keys at http://www.ufp.org/~bicknell/

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