A Business Case for Peering in 2010

William B. NortonExecutive Director, DrPeering.net

30-31 August 2010Frankfurt, Germany

wbn@DrPeering.net

15 YEAR ANNIVERSARY PARTY 1st DE-CIX CUSTOMER SUMMIT

This work was sponsored in partby DE-CIX and DrPeering.net

04/19/23 12:18 AM

Background

1987 – buildingInternet Ops community

1998 – buildingPeering Intelligence

2008 – consulting,education

DrPeering.net Peering Resources

• Internet Service Providers and Peering • A Business Case for Peering• About the White Paper Process• The Art of Peering - The Peering Playbook• The Art of Peering - The IX Playbook• Chief Technical Liaison• Ecosystems: 95th Percentile Measurement for

Internet Transit• Asia Pacific Peering Guidebook• Evolution of the U.S. Peering• Emerging Video Internet Ecosystems• European vs US Internet Exchange Points• Internet DataCenter Build vs Buy Decision• Internet Service Providers and Peering

• Internet Transit Pricing Historical and Projections• Modeling the value of an Internet Exchange Point• NANOG History• Peering: Motivations to Peer• A Study of 28 Peering Policies• Peering Simulation Game• Peering: Top 10 Ways to Contact Peering

Coordinators• Peering: Top 10 Reasons NOT to peer• Public vs Private Peering - the Great Debate• The Folly of Peering Ratios• Top 9 IX Selection Criteria• Video Internet - The Next Wave of Massive

Disruption to the U.S. Peering Ecosystem

All freely available

INTERNET TRANSITThis is how I level set

Definition of TransitDefinition: Internet Transit is the business relationship whereby one ISP provides (usually sells) access to all destinations in its routing table

95th%

SimpleWell definedNo netops req’dTraffic flows opposite direction of routing announcements

95th Percentile

P

Internet Transit Declines

trendNoone makes $Can’t go down

Market Prices for Transit

Source: http://drpeering.net/white-papers/Internet-Transit-Pricing-Historical-And-Projected.php

Good news – Traffic always grows

P60%V80%

Group: What happens at $0/Mbps?

• BrainStorm – shout out– Tell me how a content distribution business can

make money when– The transit price is $0/Mbps

DOES PEERING MAKE SENSE ANYMORE?

AFTER INTERNET TRANSIT

Analysis of Traffic Flow

Vs.direct

Analysis of Traffic Flow

Def.P

Definition of PeeringDefinition: Internet Peering is the business relationship whereby companies reciprocally provide access to each others’ customers.

Peering is not a perfect substitute for transit, & is not transitive. Back to traffic flow…

Analysis of Traffic Flow

Top50

Peering Top 50

http://drpeering.net/forms/peering-top-fifty-list.xlsx

Histogram

Cost

Cost of Peering

Peering is NOT FREE1) Transport Fees2) Colocation Fees3) Peering (Port,membership,etc) Fees4) Routing equipment

#s

Cost of Peering

Plug some #’s in1) 10G Transport Fees: $6K/mo2) Colocation Fees: $1K/mo3) Peering (10GPort,membership,etc) Fees: $2K/mo4) Routing equipment: $8K/moTotal Cost of Peering: $17K/moCan peer ~ 7Gbps (for free) = $17K/7000=$2.43/Mbps best case scenario

Alternative to Peering: Transit at $5/MbpsHow do we compare peering and transit?

$6000/mo

$8000/mo

$2000/mo

Colo $1000/mo

1M,2M,3M

Peering Cost $17K/month

Peering Metrics

Effective Peering Bandwidth /Minimum Cost of Traffic Exchange

Effective PeeringBandwidth=7000Mbps

Minimum Cost of Traffic Exchange=$2.34/Mbps

€

min imumCostOfTrafficExchange =cos tOfPeering

effectivePeeringBW

min imumCostOfTrafficExchange =$17KperMonth

7000Mbp= $2.34 /Mbps

Peering Break Even Point

$2.34/Mbps

Peering Break Even Point€

peeringBreakEvenPo int =cos tOfPeering

priceOfTransit

peeringBreakEvenPo int =$17,000perMonth

$5perMbps

peeringBreakEvenPo int = 3400Mbps

Range…

Effective Peering Range

$2.34/Mbps

Peering Break Even Point

€

effectivePeeringBandwidth = range(peeringBreakEvenPo int,effectivePeeringBandwidth)

effectivePeeringBandwidth$17K = range(3.4Gbps,7Gbps)

Effective Peering Bandwidth

Generalized

Peering Break Even Point

Peering Metrics

Effective Peering Range Effective Peering Bandwidth

Minimum Cost of Traffic Exchange

The Business Case for Peering in 2010

Frankfurt

MadridBudapest

Value Of an Internet Exchange

€

valueOfDECIX = mbpsExchanged * avgTransit Pr ice

valueOfDECIX2010 =1000000*$2 /Mbps

valueOfDECIX2010 = $2,000,000perMonth

If the DECIX were to disappear tomorrow, the peering population would be $2M per month worse off.

Assume that the next best alternative to peering at DECIX is transitAt $2/Mbps.

The DE-CIX is very valuable to the peering population there.

TOP TEN LISTS

Top 10 ListsTop 10 Lists

Why Peer?Why not Peer?

Top 10 ways seasoned Peering Coordinators Contact Target ISPs

Top n Lists

Top 4 Motivations to Peer

①Lower Transit Costs②Lower Latency③Usage-based traffic billing④Marketing Benefits

Top 10 Reasons NOT to Peer① Traffic Asymmetry② Transit Sales Preferred③ Ports are for Revenue④ Keep Transit Prices from sliding⑤ Prefer SLAs⑥ Traffic Ratio denial⑦ Transit is Cheaper⑧ Personality Conflicts⑨ We aren’t true Peers⑩ We don’t have the cycles

Top 10 ways to contact Peers① face-to-face at informal meeting in an Internet Operations forum like

NANOG, IETF, RIPE, GPF, APNIC, AFNOG, etc., ② face-to-face at Commercial Peering Forums like Global Peering Forum (you

must be a customer of one of the sponsoring IXes)③ face-to-face at IX Member Meetings like DECIX, LINX, or AMS-IX member

meetings.④ introductions through an IX Chief Technical Liaison or a peer that knows the

right contacts⑤ via electronic mail, using the pseudo standard peering@ispdomain.net or a

personal contact, ⑥ from contacts listed on an exchange point participant list, or peeringdb

registrations,⑦ with tech-c or admin-c from DNS or ASN registries,⑧ Google for peering contact AS peering ,⑨ from the target ISP sales force, at trade show or as part of sales process,⑩ from the target ISP NOC.

Top 9 IX Selection Criteria

①Telecommunications Issues②Deployment Issues③ISP Current Presences④Operations Issues⑤Business Issues⑥Cost Issues⑦Credibility Issues⑧Exchange Population Issues⑨Existing Exchange vs. New Exchange?

Q&A

Will this in a document form help you make the internal case for peering?What would appeal to your team?