Re: transit and peering costs projections

[Matthew Petach <mpetach () netflight com>]

On Sun, Oct 15, 2023 at 9:47 AM Dave Taht <dave.taht () gmail com> wrote:

> [...]
> The three forms of traffic I care most about are voip, gaming, and
> videoconferencing, which are rewarding to have at lower latencies.
> When I was a kid, we had switched phone networks, and while the sound
> quality was poorer than today, the voice latency cross-town was just
> like "being there". Nowadays we see 500+ms latencies for this kind of
> traffic.

When you were a kid, the cost of voice calls across town were completely
dwarfed by the cost of long distance calls, which were insane by today's
standards.  But let's take the $10/month local-only dialtone fee from 1980;
a typical household would spend less than 600 minutes a month on local
calls,
for a per-minute cost for local calls of about 1.6 cents/minute.
(data from https://babel.hathitrust.org/cgi/pt?id=umn.319510029171372&seq=75
)

Each call would use up a single trunk line--today, we would think of that
as an
ISDN BRI at 64Kbits.  Doing the math, that meant on average you were using
64Kbit/sec*600minutes*60sec/min or 2304000Kbit per month (2.3 Gbit/month).

A 1Mbit/sec circuit, running constantly, has a capacity to transfer
2592Gbit/month.
So, a typical household used about 1/1000th of a 1Mbit/sec circuit, on
average,
but paid about $10/month for that.  That works out to a comparative cost of
$10,000/Mbit/month in revenue from those local voice calls.

You can afford to put in a *LOT* of "just like "being there""
infrastructure when
 you're charging your customers the equivalent of $10,000/month per Mbit to
talk across town.  Remember, this isn't adding in any long-distance charges,
this is *just* for you to ring up Aunt Maude on the other side of town to
ask when
the bake sale starts on Saturday.  So, that revenue is going into covering
the costs of backhaul to the local IXP, and to your ports on the local IXP,
to put it into modern terms.


> As to how to make calls across town work that well again, cost-wise, I
> do not know, but the volume of traffic that would be better served by
> these interconnects quite low, respective to the overall gains in
> lower latency experiences for them.

If you can figure out how to charge your customers equivalent pricing
again today, you'll have no trouble getting those calls across town to
work that well again.
Unfortunately, the consumers have gotten used to much lower
prices, and it's really, really hard to stuff the cat back into the
genie bottle again, to bludgeon a dead metaphor.
Not to mention customers have gotten much more used to the
smaller world we live in today, where everything IP is considered "local",
and you won't find many willing customers to pay a higher price for
communicating with far-away websites.  Good luck getting customers
to sign up for split contracts, with one price for talking to the local IXP
in town, and a different, more expensive price to send traffic outside
the city to some far-away place like Prineville, OR!  ;)

 I think we often forget just how much of a massive inversion the
communications industry has undergone; back in the 80s, when
I started working in networking, everything was DS0 voice channels,
and data was just a strange side business that nobody in the telcos
really understood or wanted to sell to.  At the time, the volume of money
being raked in from those DS0/VGE channels was mammoth compared
to the data networking side; we weren't even a rounding error.  But as the
roles reversed and the pyramid inverted, the data networking costs didn't
rise to meet the voice costs (no matter how hard the telcos tried to push
VGE-mileage-based pricing models!
-- see https://transition.fcc.gov/form477/FVS/definitions_fvs.pdf)
Instead, once VoIP became possible, the high-revenue voice circuits
got pillaged, with more and more of the traffic being pulled off over to
the cheaper data side, until even internally the telcos saw the writing
on the wall, and started to move their trunked voice traffic over to IP
as well.
But as we moved away from the SS7-based signalling, with explicit
information about the locality of the destination exchange giving way
to more generic IP datagrams, the distinction of "local" versus
"long-distance"
became less meaningful, outside the regulatory tariff domain.
When everything is IP datagrams, making a call from you to a person on
the other side of town may just as easily be exchanged at an exchange point
1,000 miles away as it would be locally in town, depending upon where your
carrier and your friend's carriers happen to be network co-incident.  So,
for
the consumer, the prices go drastically down, but in return, we accept
potentially higher latencies to exchange traffic that in earlier days would
have been kept strictly local.

Long-winded way of saying "yes, you can go back to how it was when
you were a kid--but can you get all your customers to agree to go back
to those pricing models as well?"   ^_^;

Thanks!

Matt


> --
> Oct 30:
> https://netdevconf.info/0x17/news/the-maestro-and-the-music-bof.html
> Dave Täht CSO, LibreQos