RE: Backbone IP network Economics - peering and transit

Peering? Who needs peering if transit can be
had for $20 per megabit per second?

The smaller guys that don't buy transit buy the gigabit.


Then their traffic will not justify 1000s of $$ per month for lines, racks, and NAP connection.

Unless they have cheap access to a free NAP (TorIX, SIX, etc.), transit, even at higher prices, is probably be the best / cheapest way to reach the Internet.

OTOH, for the guys who do buy a lot of traffic, a NAP connection might be worth it. For instance, if you have a node in 151 Front Street, it would be silly not to connect to the TorIX for a one-time fee and send free traffic to a lot of good eyeballs in Canada - not to mention the performance benefits. The same might be true of an PAIX / Equinix location.

Saying "who needs [foo]" is not a good question without supplying the other variables. It all depends on your traffic mix, locations, deals you can make with the NAPs, networks who will peer with you, etc.

> Peering? Who needs peering if transit can be
> had for $20 per megabit per second?

anyone whose applications are too important to risk dependency on OPNs
(other people's networks).

OPNs also carry some of the consumers of your bits and you consume
some of theirs. Unless you're peering with every laptop directly,
somewhere, somehow, you'll be traveling on OPNs, wether it is dark
fiber, a circuit, or a wavelength.

Time to bust out the cardinal vs ordinal optimization argument again.

  option a) getting the best decision for certain (cost $1 million)
  option b) Getting a decision within the top 5% With probability
             = 0.99 (cost $1 million/x), In real life, we often settle
       for such a tradeoff with x=100 to 10,000

Under independent sampling, variance decreases as 1/sqrt(n). Each order
of magnitude increase in certainty requires 2 orders of magnitude
increase in sampling cost. To go from p=0.99 to certainty (p=0.99999)
implies a 1,000,000 fold increase in sampling cost.

So, instead of creating very nice soundbites like OPNs (which I will
be shamelessly appropriating for my own use thank you very much),
I suggest we spend a bit more time actually _analysing_ using
techniques from operations research as to _what_ gives us the
most bang for the buck.

Dan golding has it right re: peering not being a philosophy, but
rather an _engineering_ decision. I touched upon this at the
Great Peering Debate at the NANOG Miami, which was hosted by
Bill Norton.