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    Internet:: Brought to You By Iran, Syria and China | Log in/Create an Account | Top | 16 comments | Search Discussion
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    Re:What is your opinion, on the coming DE-PEERING
    by Anonymous on Thursday October 06 2005, @05:15AM (#16303)
    ISP's are businesses, and let me tell you that peering is no
    exception.  People seem to like to think that "settlement free
    interconnections" are "free", but nothing could be further from the
    truth.  You have to buy routers and the cards that go in them,
    provision transport services to the peering location, and then on
    to the peer.  Provide enough backhaul in your network from where
    your customers are located to where the peers are located.  You
    have to pay lawyers to review contracts, engineers to configure and
    troubleshoot sessions, and managers to negotiate the whole deal.

    The budget for "settlement free interconnections" at a major ISP
    can run into the millions of dollars.  Two major ISP's may have
    8xOC-48 between them.  That's probably $200,000 in router costs
    alone.  Yes, sometimes you can get a $200 cross connect, but sometimes
    you also have to have the $6k/month circuit, for each one, creating
    a $42,000/month cost.  That's a half million dollars a year.

    When you look at the requirements, geographic diversity, volume,
    ratio, number of routes what is really happening is the companies
    are trying to make sure there is some balance of costs.  It doesn't
    have to be a 50/50 split...everyone uses their own assets to reduce
    their costs, but there has to be some equality.  Personally, I'm
    not a fan of the technical requirements to make them equal, but
    rather like to negotiate equality, but everyone has their own
    approach.

    Back to the issue at hand.  What I can tell from this situation is
    that Level 3 thought they were paying a lot of costs for very little
    return on investment.  The idea that Level 3 would take this action
    because Cogent was selling cheaper seems a bit far fetched to me.
    Level 3 knows this is going to hurt their customers as well.  Indeed,
    I'll bet this went all the way to the Level 3 CEO for approval
    first, because they knew their was going to be pain.  This isn't
    some router cowboy going nuts in the middle of the night, this is
    a business backed into a corner.

    Why?  We'll never know the real story.  Maybe L3 is paying for third
    party circuits because cogent doesn't touch their network and it's
    costing them a boatload.  Maybe L3 wanted to move to GigE peering
    for cheap high density ports, and Cogent wouldn't budge from using
    OC-3's because their routers don't have great GigE density.  Maybe
    traffic between the two has dropped to 20 megs, and so L3 doesn't
    think maintaining ports is a justified cost.  Maybe the ratio is
    20:1, and that was finally enough for L3 to feel they were carrying
    too much of the transport cost.  Most likely it's a combination of
    all of these issues.

    Bottom line is some engineer had to dress up and go over to the
    land of suits and explain to them that yes, Level 3 was going to
    totally screw their own customers, but it was also going to save
    $X, where $X is probably fairly large, and so they really had no
    choice.

    Least I seem like I'm on Level 3's side, it may well be that they
    have high costs due to their own stupidity.  Perhaps they cut a
    deal with Equinix for $5,000/month cross connects.  Perhaps they
    pay list price for their routers.  Perhaps they are about to go
    down the tubes.

    As for those who want to re-architect the Internet to "fix" this
    problem, please go away.  It's not a technical problem.  It's a
    business problem.  Two companies, each responsible for their own
    bottom line couldn't find an economically feesable way to interconnect.
    Any attempt to "force" the interconnection (either via regulation,
    transit through third parties, etc) will RAISE prices for all
    involved.  The key here is that the peering was not economically
    viable for some reason.
    [ Reply to This | Parent ]


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