In a message written on Mon, Jul 01, 2002 at 03:51:58PM -0400, Ukyo Kuonji wrote:
that to just buy transit. When you can arrange transit contracts to be as low as $50 a megabit, and to sit in a PAIX facility costs you $150K for the router, plus $7K a month for rack and power, and monthly costs for your OC-48 into the router... What's the true cost of peering?
At last check, the largest network was still WCOM. Depending on your measure, they are somewhere between 10% and 40% of the "internet". What is important is they are not even half. Others are smaller. This means for all ISP's, the _majority_ of their traffic goes off net, across a peering connection. This gives us two very interesting possible end games: * Peering costs are less than $50 a meg for large ISP's. They make a profit on every bit. * Peering costs are more than $50 a meg, and ISP's selling at that price are losing money on every bit moved by a customer. There is no way for a company to price transit below their peering costs and make money. So the question becomes, is $50/meg too low. I believe so. I think that the companies selling at $50 a meg are in a desperate attempt to get revenue in the door, even if it comes in at a loss. If you've paid $70/meg for a peering connection a loss of $20 is better than not selling, and having a loss of $70. I'm all for taking advantage of $50/meg transit while you can get it. I wouldn't bet on your ISP staying in business though, and I wouldn't bet on the price, once this is all shaken out, being that low. -- Leo Bicknell - bicknell@ufp.org - CCIE 3440 PGP keys at http://www.ufp.org/~bicknell/ Read TMBG List - tmbg-list-request@tmbg.org, www.tmbg.org