Re: Peering and Network Cost

[Mark Tinka <mark.tinka () seacom mu>]

On 15/Apr/15 22:07, Baldur Norddahl wrote:
> Transit cost is down but IX cost remains the same. Therefore IX is longer
> cost effective for a small ISP.
>
> As an (non US) example, here in Copenhagen, Denmark we have two internet
> exchanges DIX and Netnod. We also have many major transit providers,
> including Hurricane Electric and Cogent.
>
> Netnod price for a 1 Gbps port is 40000 SEK = 4500 USD / year
> http://www.netnod.se/ix/join/prices. DIX is 40000 DKK = 5700 USD / year
> http://dix.dk/serviceinformation/
>
> HE.net is offering 1 Gbps flatrate for 450 USD / month list price = 5400
> USD /year.
>
> Cogent can match that.
>
> So why would a small ISP pay 4500 USD for a service with no guarantee of
> how much traffic they will be able to peer away?
>
> You need to get a 10 Gbps port and be able to peer at least 2-3 Gbps before
> it is even break even with the deals you get from the transit providers.
> But then you will notice that all the traffic is only with a few peers and
> you can just peer directly with those and skip the middleman.

Even though you get more bandwidth at an exchange point for the price
you pay a transit provider for less bandwidth, the value you extract
from the more cost-efficient peering port is directly proportional to
how much peering you can get off of it.

If you are unable to offload enough of your traffic on to peering that
an incremental transit service cost can justify, you're likely better
off with a transit provider if budget is your constraint.

Mark.