You're certainly right about the optical gear, but it misses the point that the Tier-1s will come nowhere near filling these facilities. Non-Tier-1 players are by no means being excluded from getting into these facilities - exactly the opposite. The facility vendors are pushing to get them in. The only thing were weren't included in is the choice of facilities; if the Tier-1s want to form a consortium (they call it that, rather than a "cartel"), it's certainly within their rights to do so. I don't see this as a bad thing. What you say about price equalization followed by increases may be true, but it seems unlikely to me for a few reasons. 1. There's a fiber glut. 2. Several of the Tier-1s in the consortium are relatively new players who are still paying for their share of the fiber glut, in a market downturn. 3. Because of 1 & 2, transit prices have already plummetted this year. The best price we can get now is less than 50% what it was eight months ago. 4. Tier-2s and Content Providers have already started peering aggressively to avoid paying the Tier-1s for transit. This is likely to happen even more aggressively if we have a smaller and better known set of places to meet and peer. This is even more compelling to the larger, older, more expensive Tier-1s. If I'm in a building where three providers can give me transit at $100/Mb and four have it at $200-300/Mb, the choice is easy. Equalization may happen here, but it will be a good thing, not a bad thing, for the reasons above. In the end, Tier-1s need more transit business, and Tier-2s/Content Providers need less transit (i.e. the growth rate is decreasing). More supply, less demand. Prices will decrease. - Jeb
-----Original Message----- From: Daniel Golding [mailto:dan@netrail.net] Sent: Wednesday, July 25, 2001 12:38 PM To: jeblinton@corp.earthlink.net; 'Peering Resistance'; nanog@merit.edu Subject: RE: The large ISPs and Peering
Let's break this one down.
The large ISPs have finally started to work together, to potentially exclude smaller providers. That isn't good.
Certain colo facilities are being choosen. Others are not. This has a major business impact on the ones who aren't choosen.
Why is any of this bad? Because when X providers who control a large part of the market start to work together, you get a Cartel. This type of joint decision-making is always bad for the smaller player in the field, as the self-interest of the larger players is to preserve their own market share.
Cartels are bad for business, as they make the industry less competitive. Thats bad for everyone.
As for your remarks about these providers and their "huge" routers, and the bigness of these colos... What does that have to do with this issue? The vast majority of space would be taken up with DWDM or SONET gear in any case.
A "one-stop shop" looks good to the consumer, at least at first. What happens when the prices start to synchronize? This type of approach takes a great deal of flexibility out of the IP transit sales process. The big will get bigger, and the consumer will eventually suffer.
Earthlink is a huge consumer of transit bandwidth, so it would seem to be in your shareholder's best interest to keep competition high, and thus keep prices low.
- Daniel Golding
-----Original Message----- From: owner-nanog@merit.edu [mailto:owner-nanog@merit.edu]On Behalf Of Jeb R. Linton Sent: Wednesday, July 25, 2001 11:02 AM To: 'Peering Resistance'; nanog@merit.edu Subject: RE: The large ISPs and Peering
There's nothing sinister or secret about this.
I can't say who the winners are because the winners aren't official yet, and I also have heard only rumors. The big players are simply doing a smart thing - deciding together on points where they can all agree to meet and peer at 2.4Gb and 10Gb cheaply. It's obviously the right thing to do.
What it means for smaller ISPs, content providers, etc., is that there will now be a particular Equinix, Level(3), etc. facility, where we know all the big players will be. Those facility providers won't keep us out - they'll market the fact that the top Tier-1's are there in order to get everyone else there too.
These facilities are huge. Each Tier-1 needs space for a few Juniper M160s, Cisco 12400s, etc. The space left is more than enough for Tier-2s and content providers galore. There's nothing preventing the big guys from competing to provide transit to others in those facilities without huge local loop costs. It's basically a one-stop shop for transit circuits from anybody you want - they know this, so the competition will be pretty good.
"What happens to my favorite Co-lo?"... Well, if you're not in the facility that gets chosen, it's still likely there will be cheap connections from yours to theirs. These thing will sit on multiple metro fiber rings, so again there will be decent competition. Any old facility that doesn't hook up to the chosen ones knows they will be left out in the dark. So choose wisely.
- Jeb Linton
(My opinions only, not the opinions of EarthLink or anyone else as far as I know.)
-----Original Message----- From: owner-nanog@merit.edu [mailto:owner-nanog@merit.edu]On Behalf Of Peering Resistance Sent: Tuesday, July 24, 2001 10:50 PM To: nanog@merit.edu Subject: The large ISPs and Peering
This is an interesting tale, and one that everyone involved with the ISP world should know about.
Aproximately 8 months ago, several of the very largest ISPs, ones with names like WorldCom, Sprint, CW, Genuity, and others, came together to discuss the concept of peering. The all peered with each other, most with very large peering circuits - OC-12 or above. The problem was that the provisioning time and effort required for these circuits was getting quite out of control. Costs of interconnects were also high.
So, these large providers did the "unthinkable". They decided to issue an RFP to 8 sites around the US, which they would jointly inhabit for purposes of peering. In order to avoid the appearence of collusion, they all issued similar RFPs, each originating from their own company, but otherwise almost identical. And the sites were choosen using essentially identical criteria. So, unsurprisingly, the same 8 sites were choosen, in such cities as Dallas, Chicago, San Francisco, New York, DC, and others.
There are several rumors floating about as to which sites were choosen. This is unconfirmed and conjecture, so I won't go into it for this email.
The key questions...
1) What are the selected sites? 2) How do the rest of us play? 3) Why wasn't this process more open?
I know that this is a true situation, as I have confirmation from three different sources, and have seen copies of several of the RFCs. I eagerly await the comments of those providers involved with this effort, and hope that this will lead to a more open internet.
- PR
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