Do ATM-based Exchange Points make sense anymore?

Date: Fri, 09 Aug 2002 14:39 -0700 (PDT)
From: Mikael Abrahamsson <>
Organization: People's Front Against WWW
Subject: Re: Do ATM-based Exchange Points make sense anymore?

It appears that for analysis purposes one has to separate access
from switching. How much payload one brings to the exchange depends
on port speed and protocol overhead. In that light, Frame Relay
can bring similar amount of payload as Ethernet (comparable overhead)
and preserve good properties of ATM (traffic flow separation).

What functionality does PVC give you that the ethernet VLAN does not?

I am not sure how this question may help analyzing the problem.
For one thing, one can just pose the question the other way around
(what functionality does VLAN give you that does not exist in
Frame Relay (with closed user groups + LMI; that has been around for
quite some time)).

What is the current max speed of frame relay in any common vendor
implementation (I'm talking routers here).


What is current changes. Same technology can be applied to both
Ethernet and Frame Relay encapsulation. Ability to bring more
traffic to the exchange in itself may not be useful if there is
no ability to switch it.

Mikael Abrahamsson email:


Hi all -

I have walked about 30 people through the "Do ATM-based Internet Exchange Points make sense anymore?" white paper and have received some really good feedback, suggestions and price points to calibrate the Peering Financial Model. I have applied these calibrations and I am ready to release the paper for wider review, but I'd like to share first the assumptions and calibration points for the model along with a few of the more interesting observations.

The Business Case for Peering at an ATM-based Internet Exchange Point Peering looks pretty dismal in todays market. As I mentioned in an earlier message, the dominant issue is that transit and transport have dropped dramatically,while the cost of ATM-based peering has not dropped in kind. In todays market (from quotes shared with me) we see:

Assumptions and Calibration Points

Hi all - Thanks for all the feedback and keep it coming ! I'll summarize the 80 or so responses so far.

As an aside, I especially liked this paper request:
       "I'd like to see a copy of your paper - please fragment it into 48 byte chunks."

A couple points seem to come up from a bunch of folks:

1) Several folks said that they have seen transit prices at sub-$100/Mbps prices, some claiming the transit price quotes group around $75/Mbps.

While the lower transit price points do strengthen the paper's argument, I would point out:
a) there is a qualitative difference between transit providers,
b) from my conversations there were higher and lower quotes than my $125-$100/Mbps,
(A couple of people told me they were paying $350/Mbps, but they were at the tail end of a 3-year old contract that was signed when $350/Mbps was a great deal!)
c) terms vary and location varies (rural guys are out of luck with no price competition, and some markets like Dallas are still high),
d) I want to make sure that the reference transit price points in the Peering Model are representative of what is seen in the field.

The bottom line is that I'm pretty comfortable with these numbers; $125/Mbps seems to be a price point that people can accept as a reference point for the Peering Analysis. And I've included the spreadsheet in the Appendix so you can adjust the transit price points as you see fit.

2) I explicitly mentioned in the paper that I ignored the equipment costs, in particular the OC-x POS and ATM interface cards and the equipment that ISPs would place in the Ethernet-based IX. This was because of the difficulty in determining a reference configuration (Juniper/Cisco, what series, new or used?), the price (people shared that 30% is easy to get) for a reference platform and then the lease term or amortization schedule. Some said depreciate things over 18 months, most said 24-36 months was the norm. In the past I have punted on this equipment question, but enough people mentioned it as a hole in the analysis (and a benefit of the ATM peering model) that if possible I'd like to include it into the analysis.

So I guess I am asking for a base level reference configuration and price point that includes two router configurations for the peering model:
1) entry level router with an OC-3 card and FastE card to peer across an ethernet IX, and
2) next level router with an OC-12 card and GigE card to peer across a gigE IX

I would also need an OC-3 ATM and OC-12 ATM price point.

Round numbers are fine here as I'm looking for some reasonable number to plug in for equipment costs, knowing full well that everyones configuration will be different, and the spreadsheet will allow people to adjust the numbers to their situation.

3) Finally, several have pointed out that the decision about peering at an ATM fabric is not always a financial one. These were most common non-financial motivations I heard were:

-) Performance: "I need to peer with this ISP regardless of the cost of that peering traffic."

-) Contract Term: "We are in the middle of an n-year contract so we are stuck with the economics." (One ISP lost a peering session when the target ISP left, and is now left hanging in the wind with a fraction of their peering traffic to justify their peering. Moral: Before signing up with any IX, Make sure your target peers are not planning on moving out!)

-) Perception: "To be a 'player' you have to be at xxx-IX."

-) Let sleeping dogs lie: "If I ask my peer to change the peering session in any way, I fear they will use the opportunity to force us to re-qualify for peering."

Most common was:
-) Mathematics: "We haven't run the numbers like this yet. Didn't realize the unit costs here."