Re: Do ATM-based Exchange Points make sense anymore?

["William B. Norton" <wbn () equinix com>]

Hi again -

A couple points (based on some interactions with folks privately).

This is not an ATM is bad, or general ATM-bashing paper. It simply applies 
the same Peering Analysis that  ISPs are applying to determine if and when 
IXes make sense. With the transit prices and transport prices dropping, 
this is a reasonable question, worthy of greater analysis than "well, ATM 
is expensive so ATM is bad."

To give you a flavor, given a set of assumptions, OC-3 (155Mbps) transport 
into an ATM-based IX has an "Effective Peering Range" (where peering across 
them is cheaper than transit) of 75-90Mbps,  while given the same 
assumptions, Fast Ethernet-based IXes also at OC-3 have an Effective 
Peering Range of 40-70Mbps. The "Minimum Cost of Traffic Exchange" for this 
ATM solution is $122/Mbps while FastE is $80/Mbps.

At higher capacity the interconnect analysis is more dramatic: Given the 
relatively high price point of transport and port cost, the Effective 
Peering Range for ATM/OC-12 Peering is a narrow 236Mbps to 375Mbps with a 
Minimum Cost of Traffic Exchange of $69/Mbps. The GigE/OC-12 equivalent 
range is 109Mbps-466Mbps with a Minimum Cost of Traffic Exchange of $25/Mbps.

What was unexpected in this analysis was the Effective Peering Range Gap. 
When an ISP upgrades the  ATM OC-3 to OC-12, the gap between the Effective 
Peering Bandwidth of the OC-3 (90Mbps) and the Peering Breakeven Point (the 
point at which the Peering Costs are totally offset by the cost savings of 
peering vs. transit) at 208Mbps is huge. This 118Mbps gap is where an ISP 
should rationally prefer to purchase transit until 208Mbps can be sent in 
peering relationships over the ATM fabric, and only then upgrade the 
peering connection to OC-12!

There is also an Ethernet EPR Gap but it is only about 40 Mbps, and once at 
the GigE/OC-12 capacity, it gets you an Effective Peering Range up to 475Mbps.

In any case, this is the analysis that the paper walks through, and since 
the spreadsheets are in the paper, one can muck around with the assumptions 
and cost points, key of which are:
     1) ATM OC-3 Port Cost $8000/mo, ATM OC-3 Circuit Cost $3000/mo,
         ATM OC-12 Port Cost $17000/mo, ATM OC-12 Circuit Cost $8000/mo
     2) FastE Port & Rack Space $2500/mo, OC-3 Circuit $3500/mo,
        GigE Port & Rack Price$5000/mo, OC-12 Circuit $7000/mo
     3) Transit Price: if you peer at OC-3, you probably pay $125/Mbps, 
peer at OC-12,$110/Mbps
     4) ATM Overhead (aka cell tax): 20%
     5) Assumption that ISP upgrade capacity when avg utilization >75% 
Effective Peering BW

Let me know if you violently object to any of these data points. These are 
culled from a lot of conversations in the field. The rest of the paper is 
simply plugging these data points into the equations and analyzing the results.

Bill

At 04:36 PM 8/7/2002 -0700, William B. Norton wrote:

> Hi all -
>
> I've been working with a number of ISPs on a research paper that builds on 
> the previous peering research papers (Internet Service Providers and 
> Peering, A Business Case for Peering, The Art of Peering, Interconnection 
> Strategies for ISPs, etc.) that applies the Peering Modelling tools in a 
> comparison of ATM and Ethernet-based Internet Exchanges. Both of these 
> IXes are compared against each other and against the cost of buying 
> transit. The paper applies recent price quotes for transport and transit, 
> costs for ATM and Ethernet-based IX participation, to answer the question:
>
>            Do ATM-based Exchange Points make sense anymore?
>
> I'd like to speak with additional ISP Peering Coordinators and Network 
> Architects  (preferable ones that have experience with peering across both 
> ATM and Ethenet-based IXes) to walk through this paper and help me check 
> that I have the technical and business details right. I would need about 
> 20 minutes or so on the phone to walk you through the paper, the financial 
> models, the cost points, and get feedback on the conclusions...preferably 
> sometime in the next couple weeks.
>
> If you are a Peering Coordinator I think you will find at least a couple 
> of findings in this research *very* interesting. In any case, if you can 
> help, please send me an e-mail at wbn () equinix com and let me know when we 
> could chat.
>
> Thanks -
>
> Bill
>
> PS - As with any these Peering White Papers, this white paper will be 
> freely available once enough folks have walked through it and verify that 
> we have things right.
>
> ------------------------------------------ Abstract 
> ---------------------------------------------------
> During the NSFNET transition from the Authorized Use Policy Internet to 
> the Commercial Internet, several Network Access Points (NAPs) were created 
> to facilitate the traffic exchange between the Internet Service Providers, 
> two of which were ATM-based. Internet Service Providers were initially 
> required to connect to three of the four NAPs in order to receive NSF 
> funds (indirectly through their NSF-sponsored customers) during this 
> transition period.
>
> During the years that followed, this requirement was dropped and the costs 
> models of Internet Operation have changed dramatically. Technologies such 
> as Wave Division Multiplexing and Long Haul Fiber Improvements have led to 
> radical a decrease in the cost of transport and a corresponding drop in 
> the price of transit. At the same, the cost of peering at ATM-based 
> exchange points has not substantially dropped in cost, leading to the 
> question in the Peering Coordinator Community:
>
>  "Do ATM-based Internet Exchange Points make sense anymore?"
>
> In this paper we apply the peering financial models to this question, 
> using current market prices to compare the price of transit against the 
> costs of peering at ATM-based NAPs and Ethernet-based Internet Exchange 
> Points. We build upon the previous research on Peering by introducing the 
> notion of an Effective Peering Range (EPR) to describe the "useful life" 
> of an Internet Exchange. We also highlight a potentially costly EPR Gap, 
> an interim range between Peering Capacity points where peering is more 
> expensive than transit.
>
> The financial models presented that produced the graphs are included in 
> the Appendix so that ISPs can apply these cost models to their specific 
> situation.

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William B. Norton <wbn () equinix com>                             650.315.8635
Co-Founder and Chief Technical Liaison                          Equinix, Inc.
Yahoo Instant Messenger ID: WilliamBNorton