Re: cost of 1 gig GOOD POINT

[David Farber <dave () farber net>]

Begin forwarded message:

From: tvest () eyeconomics com
Date: April 14, 2009 9:11:43 AM EDT
To: dave () farber net
Cc: "ip" <ip () v2 listbox com>
Subject: Re: [IP] Re:  cost of 1 gig GOOD POINT

Following James' more subtle response, I think that reactions have  
been muted because the original calculations were so utterly  
nonsensical, e.g.,

1. Explicit assertion of "transit" plus "backbone provider"  
requirement in the US today.
2. Reference to highest conceivable fees, in support of the idea that  
"market" pricing should be universally ratcheted upward to match the  
costs borne by the smallest and/or least efficient of operators.  
Related to the prima facie absurd suggestion that pricing for all IP  
transport is defined in terms of T1 equivalents, regardless of the  
delivery mechanism (PLC, committed transit, burst transit, protected,  
unprotected, etc.) commercial arrangement (Short-term lease, long-term  
lease, capital lease, IRU, co/builder, etc.) or capacity involved  
(e.g., 1Gbps pricing is always equal to 647 x T1 pricing).
3. Explicit assertion that the max. conceivable cost to accommodate  
the avg. 20% of traffic that passes at "peak" times should, by itself,  
define pricing for 100% of all traffic -- rather than (assuming that  
one accepts that costs should have any relationship to pricing) the  
average of costs for all of the components of that 100%.

etc., etc., etc.

I doubt that this will elicit many more responses. I only responded to  
try to reduce the odds that someone outside of the industry might  
misapprehend the apparent reference to specific numbers in the  
original analysis as indicators of clarity, or credibility.

TV

On Apr 14, 2009, at 8:22 AM, David Farber wrote:

> Begin forwarded message:
>
> From: Adam Lynch <alynch () gmail com>
> Date: April 14, 2009 7:46:15 AM EDT
> To: dave () farber net
> Subject: Re: [IP] Re: cost of 1 gig
>
> I'm surprised nobody is up in arms about this one, yet, but:
>
> What about all the traffic that never goes off-net- like Akamai'd
> content, and other distributed content? Customers will then be charged
> for usage that *never actually leaves TW's network*?
>
> -Adam (who lives in the affected area of Rochester, NY)
>
>
> On Tue, Apr 14, 2009 at 6:13 AM, David Farber <dave () farber net> wrote:
> > Begin forwarded message:
> >
> > From: James Seng <james.seng () gmail com>
> > Date: April 14, 2009 5:26:12 AM EDT
> > To: Dave Farber <dave () farber net>
> > Cc: ip <ip () v2 listbox com>
> > Subject: Re: [IP] cost of 1 gig
> >
> > Ignoring the math aside, and I doubt time warner pays their  
> > bandwidth in
> > blocks of T1, let's   use market rate of CDN as a basis, you can  
> > get about
> > 20cent/GB. Larger players can get below 10cent. (Disney for one  
> > gets that
> > price as far as I know).
> >
> > Of cos pricing varies depend how far you are from the exchanges but  
> > CDN
> > pricing is as good estimate as you can get, bear in mind the price  
> > I quote
> > above is US market rate, profitable to CDN operator.
> >
> > Sent from my iPhone
> >
> > On Apr 14, 2009, at 5:05 PM, David Farber <dave () farber net> wrote:
> >
> > > So what does it cost off peak?? djf
> > >
> > > Begin forwarded message:
> > >
> > > From: Brett Glass <brett () lariat net>
> > > Date: April 13, 2009 10:06:43 PM EDT
> > > To: "Dave Farber" <dave () farber net>
> > > Subject: P.S.
> > >
> > > See my posting regarding the incremental cost of 1 GB at
> > >
> > >
> > > http://bennett.com/blog/2009/04/pitchforks-in-austin-time-warners-bandwidth-cap/comment-page-1/#comment-427947
> > >
> > > @matthew: Time-Warner (or any ISP) isn’t just paying for transit,  
> > > though
> > > that is an expensive component of their costs. They’re also paying a
> > > backbone provider. And since the Internet has “rush hours” (the  
> > > busiest time
> > > of day is “prime time,” when people all seem to want to start  
> > > streaming
> > > video or browsing at once), they have to buy and provision enough  
> > > capacity
> > > to keep up with the peaks in demand.
> > > $1/GB is actually pretty close to the incremental cost of pumping  
> > > another
> > > gig of data through the system during “rush hour.” Think about it:  
> > > you have
> > > an hour and a half to get that gigabyte through the pipe to the  
> > > user who’s
> > > streaming the movie. That’s 8 billion bits in 90 minutes. That  
> > > means that
> > > you have to add another 1.48 Mbps — about another T1 — of capacity.
> > > What does this cost? On a monthly basis, this much bandwidth costs  
> > > $5.50
> > > if you are co-located at an Internet peering point. The cost is  
> > > about $30 if
> > > you’re a well connected cable provider with a leased line into  
> > > that peering
> > > point. It costs you$148 if (like me) you’re a rural ISP paying  
> > > $100 per Mbps
> > > for bandwidth; and $450 if you’re a rural ISP in some other areas  
> > > of America
> > > where the only way to get bandwidth is via expensive bonded T1  
> > > lines.
> > > But back to Time Warner’s case: the $30 divided by 30 days is $1  
> > > per GB —
> > > exactly what Time Warner is charging.
> > >
> > >
> > >
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>
>
> --
> Adam Lynch <alynch () gmail com>
>
>
>
>
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