RE: Current street prices for US Internet Transit

Mailman List Mirror (Read Only)
1

First - As for whether the US Transit market is healthy or unhealthy... I am not privy to the ISP calculations that demonstrate financial viability at these prices, so I can only go on the sentiments expressed by folks that have done the analysis for their companies and have shared their views with me or my colleagues.

Having said that...It certainly appears that the majors can't make money in this transit market, and they would probably say that the bottom feeders are greasing the skids to financial ruin for this industry.

The really interesting question IMHO is this: does said content company
also peers, or just buys transit? I read in Bill Norton's papers that a
content company is a good candidate to peer with large tier-2s.

Well, it is the *large* network-savvy Content Guys that I see peering quite a bit of their traffic. For these guys the motivation seems to be the performance benefits (it is all about pages coming up fast, end user behavior stuff), but the financial savings isn't far behind. FOr these guys the savings are still in the millions per annum. And these are the guys that do enough volume to negotiate transit prices in the teens.

> The Cost of Internet Transit in..
> Commit AU SG JP HK USA
> 1 Mbps $720 $625 $490 $185 $125
> 10 Mbps $410 $350 $150 $100 $80
> 100 Mbps $325 $210 $110 $80 $45
> 1000 Mbps $305 $115 $50 $50 $30

Someone mentioned that this was comparing apples to oranges. Indeed it
is, <stuff deleted>

I would disagree that these are apples and oranges comparisons - these are real prices (normalized to USD) for transit that someone in the country would pay to access the big 'I' Internet. The Peering Coordinators I spoke with that have expanded into these markets did point out that each Peering Ecosystem differs - I think I documented about 10 differences in the Asia Pacific Peering Guidebook - but, ultimately, they will need to buy transit in that market. So these numbers are useful for budgeting for network expansion into Asia.

I would also share that the local loop prices in these other markets vary widely ; an OC-3 local loop in Singapore may be twice the cost of a distance insensitive OC-3 local loop in Hong Kong. To that end, the business cases for peering will be quite different.

Bill

2

> The Cost of Internet Transit in..
> Commit AU SG JP HK USA
> 1 Mbps $720 $625 $490 $185 $125
> 10 Mbps $410 $350 $150 $100 $80
> 100 Mbps $325 $210 $110 $80 $45
> 1000 Mbps $305 $115 $50 $50 $30

Someone mentioned that this was comparing apples to oranges. Indeed it
is, <stuff deleted>

I would disagree that these are apples and oranges comparisons - these are real prices (normalized to USD) for transit that someone in the country would pay to access the big 'I' Internet. The Peering Coordinators I spoke with that have expanded into these markets did point out that each Peering Ecosystem differs - I think I documented about 10 differences in the Asia Pacific Peering Guidebook - but, ultimately, they will need to buy transit in that market. So these numbers are useful for budgeting for network expansion into Asia.

Bill, as the person who said you were comparing apples & oranges, I'm not sure I understand your disagreement.

Are you saying that if something costs more in Singapore or Australia than the US, then the companies selling that product here in the US for less must be selling below cost?

Things are not the same everywhere. Politics, infrastructure, labor, taxes, and a myriad of other factors make it not very useful to say "US is $30, AU is $300" and expect to draw any meaningful conclusion by the comparison - except, of course, that AU transit is more expensive than US transit.

I would also share that the local loop prices in these other markets vary widely ; an OC-3 local loop in Singapore may be twice the cost of a distance insensitive OC-3 local loop in Hong Kong. To that end, the business cases for peering will be quite different.

Well, then I would submit, by your logic above, that the people in HK are selling OC3s at an "unhealthy" price, and they are "greasing the skids to financial ruin for this industry". How else could those in HK sell for 1/2 the price of those in SK?

Apples-to-apples....

3

I don't know, the Economist has been making allegedly useful comments about the relative prices of the Big Mac in different economies for a long time.

http://www.economist.com/markets/Bigmac/Index.cfm

I suppose a more direct analogy to the Big Mac Index would be to take some usefully-accurate measure of transit costs in each country, and use that to weight a comparison between other related commodities (cell phone calls? televisions? computers?)

Of course, I am not an economist, and people who are tend to scare me.

Joe

4

I suppose a more direct analogy to the Big Mac Index would be to take
some usefully-accurate measure of transit costs in each country

*real* transit costs are not discussed on nanog or other public
fora. compendia of such data are worth the cost of every pixel
on which they're printed.

5

Are you saying that if something costs more in Singapore or Australia than the US, then the companies selling that product here in the US for less must be selling below cost?

Things are not the same everywhere. Politics, infrastructure, labor, taxes, and a myriad of other factors make it not very useful to say "US is $30, AU is $300" and expect to draw any meaningful conclusion by the comparison - except, of course, that AU transit is more expensive than US transit.

You can peg a 100Mb/s FTTH line (which costs about $65 USD/month on a 1 year contract) from Chunghwa Telecom in Taipei 24/7, as long as the majority of your traffic stays on the island of Taiwan... If you start doing tons of P2P to Japan, Korea or the Chinese mainland their AUP department will crack down rather quickly. Geographical considerations like the cost of subsea cables certainly affect this a lot.

I know of a Fijiian ISP paying $40,000/month for a DS3 on Southern Cross.

============snip=================

http://www.taiwanheadlines.gov.tw/20040630/20040630b4.html

"We will be offering services of 10 megabits, 20 megabits and 100 megabits by mid-July. The cost of the service will be lower than both Japan's 100-megabit service and Korea's 13-megabit service," Chunghwa Telecom Chairman Hochen Tan said in a statement.

According to information the company provided, network access for a 100 megabit FTTH service is available for the equivalent of NT$2,370 (US$70) per month in Japan. In South Korea, a 13 megabit service currently costs the equivalent of NT$1,796 per month.

"Our network-access fees will be around NT$1,796 for the 10-megabit service, NT$2,000 for the 20-megabit service, and just over NT$2,300 for 100-megabit service," Hochen told CNA on Tuesday.

==========snip==================

-Eric