I am looking for some rough estimates of the ratio of capacity (equipment) pricing declines versus average increase in end user capacity. For instance, say end user average capcity usage increases 50% over 3 years, would the ISP's costs also increase by 50% ? Or would increased efficency of equipment result in a 50% decrease in capacity costs yielding roughly the same total cost to the service provider ? So I am looking are some sort of ratio of gross costs increases/decreases relative to end user usage increase in usage over time. Context: Wholesale services in Canada are priced linearly and there is a process trying to convince the CRTC to review them ASAP. So if average use grows from 1mbps during peak to 1.2mbps, we are looking at 20% increase in costs in a linear pricing scheme. But if this happens over a period where there have been improvements in equipment/efficiency, then one would think the increase in costs would be less than 20%. So I am looking for any and all information that can help convince the regulator that current linear increase is not right and needs a review. any help appreciated.
On 27/May/15 23:36, Jean-Francois Mezei wrote:
I am looking for some rough estimates of the ratio of capacity (equipment) pricing declines versus average increase in end user capacity.
For instance, say end user average capcity usage increases 50% over 3 years, would the ISP's costs also increase by 50% ? Or would increased efficency of equipment result in a 50% decrease in capacity costs yielding roughly the same total cost to the service provider ?
So I am looking are some sort of ratio of gross costs increases/decreases relative to end user usage increase in usage over time.
To be more accurate with this, you might want to consider what portion of every part of the overall network is attributed to the costs your customer burdens you with. This isn't necessarily easy to do, but is more accurate than thinking of only the box the customer physically connects to. You will spend differently in different parts of the network, e.g., peering, core, edge, services, e.t.c. How much of that goes back to (or is caused by) your customers? Mark.
But if this happens over a period where there have been improvements in equipment/efficiency, then one would think the increase in costs would be less than 20%.
The above hypothesis why imply that the 20% linear increase is not fair, vs directly making the case that the base rate, set in some point in the past is not fair/appropriate anymore ? Faisal Imtiaz Snappy Internet & Telecom ----- Original Message -----
From: "Jean-Francois Mezei" <jfmezei_nanog@vaxination.ca> To: Nanog@nanog.org Sent: Wednesday, May 27, 2015 5:36:23 PM Subject: Capacity/transit costs vs growth
I am looking for some rough estimates of the ratio of capacity (equipment) pricing declines versus average increase in end user capacity.
For instance, say end user average capcity usage increases 50% over 3 years, would the ISP's costs also increase by 50% ? Or would increased efficency of equipment result in a 50% decrease in capacity costs yielding roughly the same total cost to the service provider ?
So I am looking are some sort of ratio of gross costs increases/decreases relative to end user usage increase in usage over time.
Context:
Wholesale services in Canada are priced linearly and there is a process trying to convince the CRTC to review them ASAP. So if average use grows from 1mbps during peak to 1.2mbps, we are looking at 20% increase in costs in a linear pricing scheme. But if this happens over a period where there have been improvements in equipment/efficiency, then one would think the increase in costs would be less than 20%.
So I am looking for any and all information that can help convince the regulator that current linear increase is not right and needs a review.
any help appreciated.
On 15-05-27 19:20, Faisal Imtiaz wrote:
The above hypothesis why imply that the 20% linear increase is not fair, vs directly making the case that the base rate, set in some point in the past is not fair/appropriate anymore ?
These rates cover aggregation between an end user's CO and a central CO where an ISP connects. For instance, a Toronto based ISP can serve all of Bell Canada's DSL footprint by connecting to the Adelaide Street CO in Toronto. BUT, Bell charges $1016 per 100mbps to carry traffic between that point and the CO serving an end user. (for Cable, I am not 100% sure if it include the fibre to the node, or just aggregation to the CMTS). there is a separate fixed fee for the "last mile" infrastructure. The point i am trying to make that that during the period where usage increase, the cost per gbps decreases, so it shgould not be a 1:1 relationship over time. Currently, the CRTC sets 1:1 relationship over 10 years. So having *rough* idea of decreases in per gbps of capacity over the years would help me make the point that the current rate structure is flawed. (I don't need precise at this point, just rough ideas). Different slant to question: when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
If I understand your question correctly, the answer is: it depends. You can model the cost of delivering your service and keep track of three types of cost: fixed, variable and marginal. Here is a really good video that explains these: https://youtu.be/bBQVaRnHqLs You might find an industry average for certain economies of scale, but each system is so unique in it's cost structure that you have to model it from scratch. Just keep in mind that every model works with TRASH IN => TRASH OUT, so if you make the wrong assumptions, your answers won't be realistic. On Wed, May 27, 2015 at 6:54 PM, Jean-Francois Mezei < jfmezei_nanog@vaxination.ca> wrote:
On 15-05-27 19:20, Faisal Imtiaz wrote:
The above hypothesis why imply that the 20% linear increase is not fair, vs directly making the case that the base rate, set in some point in the past is not fair/appropriate anymore ?
These rates cover aggregation between an end user's CO and a central CO where an ISP connects. For instance, a Toronto based ISP can serve all of Bell Canada's DSL footprint by connecting to the Adelaide Street CO in Toronto. BUT, Bell charges $1016 per 100mbps to carry traffic between that point and the CO serving an end user. (for Cable, I am not 100% sure if it include the fibre to the node, or just aggregation to the CMTS).
there is a separate fixed fee for the "last mile" infrastructure.
The point i am trying to make that that during the period where usage increase, the cost per gbps decreases, so it shgould not be a 1:1 relationship over time. Currently, the CRTC sets 1:1 relationship over 10 years.
So having *rough* idea of decreases in per gbps of capacity over the years would help me make the point that the current rate structure is flawed. (I don't need precise at this point, just rough ideas).
Different slant to question:
when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
Telco's cost structure model is very different from Cable Co's. Additionally the way they are regulated is also very different. Based on the additional details you have shared, you are saying that Bell charges $1016/100meg of Colo to Colo Transport ? Now you also need to add a bit more info, like. What type of transport is this ? (Layer 1).. TDM (OC3/OCX) ? SONET ? or Ethernet ? Is this connectivity flat rate ? or distance sensitive ? Keep in mind that the Cost Efficiency in conjunction with Increase in Traffic is/has been only for Ethernet Transport.... not in the TDM or SONET....
when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
While the question may be simple, the answer is more of a What if type.... When you move from 1gbps Ethernet Switches, to 10gbps Ethernet Switches you can easily spend between $5,000 to $25,000 for each Ethernet Switch. So, if you have only 2gbps of traffic, i.e. 1gpbs infrastructure is out of capacity, you have the spend the money for 10gpbs switches, and the cost of the upgrade has to be justified via the increase in traffic of only 1gbs. I think you should be making the case of total Revenues generated due to increase in traffic to the same location, thus the justification of the need to reduce the per 100meg rate. I highly doubt if anyone here can give you any reasonable number on what is the cost of per 1G connection when using 10G infrastructure..simply because "10G infrastructure" has different meaning (cost wise) to different folks. I don't doubt for a moment that you can get consensus that 10gb infrastructure can move 10gbs of traffic at a lower per unit cost, but how much lower will be a very subjective number. Regards. Faisal Imtiaz Snappy Internet & Telecom 7266 SW 48 Street Miami, FL 33155 Tel: 305 663 5518 x 232 Help-desk: (305)663-5518 Option 2 or Email: Support@Snappytelecom.net ----- Original Message -----
From: "Jean-Francois Mezei" <jfmezei_nanog@vaxination.ca> To: Nanog@nanog.org Sent: Wednesday, May 27, 2015 7:54:57 PM Subject: Re: Capacity/transit costs vs growth
On 15-05-27 19:20, Faisal Imtiaz wrote:
The above hypothesis why imply that the 20% linear increase is not fair, vs directly making the case that the base rate, set in some point in the past is not fair/appropriate anymore ?
These rates cover aggregation between an end user's CO and a central CO where an ISP connects. For instance, a Toronto based ISP can serve all of Bell Canada's DSL footprint by connecting to the Adelaide Street CO in Toronto. BUT, Bell charges $1016 per 100mbps to carry traffic between that point and the CO serving an end user. (for Cable, I am not 100% sure if it include the fibre to the node, or just aggregation to the CMTS).
there is a separate fixed fee for the "last mile" infrastructure.
The point i am trying to make that that during the period where usage increase, the cost per gbps decreases, so it shgould not be a 1:1 relationship over time. Currently, the CRTC sets 1:1 relationship over 10 years.
So having *rough* idea of decreases in per gbps of capacity over the years would help me make the point that the current rate structure is flawed. (I don't need precise at this point, just rough ideas).
Different slant to question:
when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
On Thu, May 28, 2015 at 03:07:45AM +0000, Faisal Imtiaz wrote:
Telco's cost structure model is very different from Cable Co's. Additionally the way they are regulated is also very different.
Based on the additional details you have shared, you are saying that Bell charges $1016/100meg of Colo to Colo Transport ? Now you also need to add a bit more info, like. What type of transport is this ? (Layer 1).. TDM (OC3/OCX) ? SONET ? or Ethernet ? Is this connectivity flat rate ? or distance sensitive ?
Keep in mind that the Cost Efficiency in conjunction with Increase in Traffic is/has been only for Ethernet Transport.... not in the TDM or SONET....
I would add here, some people face no incentive to modernize this equipment, and in fact they may lack an incentive at all due to the fact they are only 3 years into a 15 year capital plan, despite the fact that we're not still using a 7500 with your vip2-40 to operate a backbone these days, or even a GSR. There may be some accountant though who sees that unused asset and gives you a run for your money though.
when you move from 1gbps to 10gbps to 40gbps links, what sort of price/gnps reduction do you get ? 20% ? 30% ?
While the question may be simple, the answer is more of a What if type....
When you move from 1gbps Ethernet Switches, to 10gbps Ethernet Switches you can easily spend between $5,000 to $25,000 for each Ethernet Switch. So, if you have only 2gbps of traffic, i.e. 1gpbs infrastructure is out of capacity, you have the spend the money for 10gpbs switches, and the cost of the upgrade has to be justified via the increase in traffic of only 1gbs.
As mentioned above, there are some points where the scale and per unit costs make more sense. I'm not familar with the model in Canada but cost models SHOULD be revisited less than 10 years apart from each other. Most people are not going to sign a 10 year deal for IP transit, and if you still want to pay 1000/Mbit please contact me, I'll setup a LLC and resell you something quickly in the US. Most 1G hardware is inexpensive these days and you can find 'cheap' 10G hardware out there as well depending on what your use case is. Real routers tend to cost real money and can even cost more to power over the lifecycle than to purchase (depending on how long you are looking at). If everyone is picking up service from Bell at Front st in Toronto, you may be able to make the case that going from Windsor to Toronto doesn't make a lot of sense and you should be able to purchase/lease your own 10 or 100G backhaul between those areas to offset cost, either with a bell provided service or by rolling your own.
I highly doubt if anyone here can give you any reasonable number on what is the cost of per 1G connection when using 10G infrastructure..simply because "10G infrastructure" has different meaning (cost wise) to different folks.
These usually take off when the 10G costs less than 10*1G. There should be some regular open bidding that occurs as part of the CRTC model allowing for resetting the regulated rate. It's way cheaper to reach the stadium from Front st than reaching Alert, NU.
I don't doubt for a moment that you can get consensus that 10gb infrastructure can move 10gbs of traffic at a lower per unit cost, but how much lower will be a very subjective number.
This is important, unless there is an incentive for people to compete in the market, you see odd things occur. I live in an AT&T territory and their fiber goes within 1200 feet of my house but there are no services available. I could pay a local provider $50k to build fiber to me, but it's much cheaper to do something else (yay WISP). Unless there is some risk of business loss due to having a rate, there is no incentive for change. I await someone willing to issue a press release so Comcast or AT&T will take these territories without basic broadband and announce fiber services in Michigan. - jared -- Jared Mauch | pgp key available via finger from jared@puck.nether.net clue++; | http://puck.nether.net/~jared/ My statements are only mine.
What I am looking for is the networking equivalent to Moore's law: "on average, every year, cost of 1gbps capacity goes down by x%" The immediate goal is to show that rates that are fixed for 10 years are not "just and reasonable" (text from the canadian Telecom Act) and need a review. In the case of Bell Canada, it carries PPPoE traffic from CO to the BRAS location on ethernet, and from the BRAS to the aggregation point for each ISP over L2TP (aka: IP based intranet). So the core is assume to be modern ethernet traveling on fibre. bell recently upgraded its BRAS from ERX 310s to ERX 320s (but claimed to the CRTC the 320s were only capable of 1gbps capacity, on which they were challenged as this inflated cost per gbps by a factor of roughly 80). For cablecos, it is MPLS from the CMTS to an aggregation point. Another aspect to demostrate is that with growing capacity purchases, the cost per gbps should go down.
On 28 May 2015 at 05:19, Jean-Francois Mezei <jfmezei_nanog@vaxination.ca> wrote:
What I am looking for is the networking equivalent to Moore's law:
"on average, every year, cost of 1gbps capacity goes down by x%"
This sort of information is out there for things like transit prices, since they are more common shared in public... http://drpeering.net/white-papers/Internet-Transit-Pricing-Historical-And-Pr... If you can just aggregate some historical pricing data for private interconnects and wholesale services you should be easily able to show this (famous last words!). James.
On 15-05-28 16:02, James Bensley wrote:
This sort of information is out there for things like transit prices, since they are more common shared in public...
http://drpeering.net/white-papers/Internet-Transit-Pricing-Historical-And-Pr...
Mamny thanks. Sorry for delay, was busy writing submission along with other real work. Managed to turn the graphs on that page into convincing arguments that the CRTC rate structures are wrong. (famous last words , of course)
On Wed, 27 May 2015 17:36:23 -0400, Jean-Francois Mezei said:
For instance, say end user average capcity usage increases 50% over 3 years, would the ISP's costs also increase by 50% ?
Depends. If the current gear had enough capacity to absorb the additional 50%, the ISP's costs didn't change. You were blowing 6Gbits/sec down a 10G pipe, and now you're pushing 9, you don't care. On the other hand, if you were pushing 8 and now need to push 12, you may have just bought a very expensive forklift upgrade to 40G. Drastically oversimplified, of course.
participants (7)
-
Faisal Imtiaz -
James Bensley -
Jared Mauch -
Jean-Francois Mezei -
Mark Tinka -
Rafael Possamai -
Valdis.Kletnieks＠vt.edu