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Peering Economics for Content Providers

Learn about the cost-saving benefits of content peering and how it can improve performance and scalability for content networks. Examples of real scenarios demonstrate the potential annual savings.

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Peering Economics for Content Providers

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  1. Peering EconomicsforContent Providers March 29, 2007 Dani Roisman droisman@peakwebconsulting.com Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  2. Introductions – Dani Roisman • First Router: Cisco 2501, c. 1995 • First ISP: PSINet (loved their customer training sessions) • First BGP Session: CerfNet c. 1999 (remember EverQuest?) • First Content Peer: Adelphia, 2003 • Architected and ran SOE’s network from 1997 – 2005 • Here at Peak Web Consulting since December 2005 Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  3. Introductions – Peak Web Consulting • The “Jeffrey Papen” Company I’m at the peak of Mt. McKinley, Alaska: 20,320’ July 11th 2006, 4:35 PM Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  4. Introductions – Peak Web Consulting • Founded 2003 • Outsourced high-end network engineering for design, architecture, and implementation • Focused on ROI to save customers more than Peak costs • Peering, multi-homing, transit negotiations, Colo interconnectivity, national backbone mgmt. • Proprietary network monitoring suite of tools • We’re always hiring  Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  5. Definitions Used • Eyeball Network: • Network that is access-heavy, predominantly residential broadband or college/university end-users, *inbound* traffic (what has been happening with P2P?) • Content Network: • Network that is server-heavy, video, music, games, downloads, e-commerce, CDN, *outbound* traffic, but ratios differ based on content type Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  6. Why am I here? • Promoting Content Peering • Educate Content Providers on savings opportunities • Demonstrate savings are at *every* level • Representing a few content companies: come see me  Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  7. Why do Content Networks Peer? $$$ Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  8. Why do Content Networks Peer? • Reason #1: $$$ Cost savings $$$ • These other reasons sound good too… • Performance benefits: reduce number of “network hops” in effort to minimize latency and maximize throughput • Relationship building: peering provides direct access to NOCs, network information, and visibility that may otherwise only be available to a customer • Scaling: limits dependency on ISP resources Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  9. What is the cost of peering? • It helps if you’re already in the IX for improved ISP options.. otherwise • IX Colo / Power • Layer 2 Transport to IX • Exchange Port and/or x-connect fees • Cap Ex: routers, switches, optics, ports (often shared with the transit gear) • Op Ex: Network Engineers (or Peak) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  10. Example Scenarios • The following will demonstrate examples of peering economics • They are based on real environments, but key details have been changed to protect NDAs • A bit oversimplified – figure the obvious costs first, see if the rest will fit into annual savings Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  11. Example #1 • Year 2003 • Game content company • Single-homed in Los Angeles • Pushes 800Mbps @ $175/Mbps • Peering cost of $5000 MRC • Break even is 28.5 Mbps ($5000 / $175) • 20% peered (160 Mbps) • $23,012 MRS ((160-28.5) * $175) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  12. Example #1 • $276,150 Annual Savings • Year 2003 • Game content company • Single-homed in Los Angeles • Pushes 800Mbps @ $175/Mbps • Peering cost of $5000 MRC • Break even is 28.5 Mbps ($5000 / $175) • 20% peered (160 Mbps) • $23,012 MRS ((160-28.5) * $175) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  13. Example #2 • Year 2005 • Game content company • Los Angeles & Ashburn w/Gig Backbone • Pushes 1.5 Gbps @ $35/Mbps • Peering cost of $10,000 MRC • Break even is 286 Mbps ($10,000 / $35) • 30% peered (500 Mbps) • $7,490 MRS ((500-286) * $35) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  14. Example #2 • $89,880 Annual Savings • Year 2005 • Game content company • Los Angeles & Ashburn w/Gig Backbone • Pushes 1.5 Gbps @ $35/Mbps • Peering cost of $10,000 MRC • Break even is 286 Mbps ($10,000 / $35) • 30% peered (500 Mbps) • $7,490 MRS ((500-286) * $35) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  15. Example #3 • Year 2006 • “Language transcendent” content provider • Single homed in San Jose • Pushes 6 Gbps @ $18/Mbps • Peering cost of $8,000 MRC • Break even is 444 Mbps ($8,000 / $18) • 15% peered (900 Mbps) • $8,208 MRS ((900-444) * $18) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  16. Example #3 • $98,496 Annual Savings • Year 2006 • “Language transcendent” content provider • Single homed in San Jose • Pushes 6 Gbps @ $18/Mbps • Peering cost of $8,000 MRC • Break even is 444 Mbps ($8,000 / $18) • 15% peered (900 Mbps) • $8,208 MRS ((900-444) * $18) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  17. Example #4 • Year 2007 • Typical Web content company • Single-homed in Los Angeles (small IX) • Pushes 500 Mbps @ $33 / Mbps • Peering cost of $1,500 MRC • Break even is 45 Mbps ($1,500 / $33) • 10% peered traffic (50Mbit/s) • $165 MRS ((50-5) * $33) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  18. Example #4 • Savings small, but able to peer at low vol. • Year 2007 • Typical Web content company • Single-homed in Los Angeles (small IX) • Pushes 500 Mbps @ $33 / Mbps • Peering cost of $1,500 MRC • Break even is 45 Mbps ($1,500 / $33) • 10% peered traffic (50Mbit/s) • $165 MRS ((50-5) * $33) Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  19. Example #5 • Year 2007 • Large Content website • Pushes 65 Gigs • Public Peering cost of $17.77/Mbps • Private Peering cost of $1.33/Mbps • Peering Blended is $3.83/Mbps Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  20. Example #5 • Annual Savings @ 15% peered • Transit @ $10 /Mbps: $721,890 • Transit @ $15/Mbps: $1,306,890 • Transit @ $20/Mbps: $1,891,890 • Year 2007 • Large Content website • Pushes 65 Gigs • Public Peering cost of $17.77/Mbps • Private Peering cost of $1.33/Mbps • Peering Blended is $3.83/Mbps Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  21. Example #5 w/ Backbone • Improve peering negotiation position by adding a National 10Gig backbone across 4 PoPs • Backbone Costs $45,000 MRC Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  22. Example #5 w/ Backbone • Annual savings @ 40% peered • Transit @ $10/Mbps: $1,385,040 • Transit @ $15/Mbps: $2,945,040 • Transit @ $20/Mbps: $4,505,040 • Improve peering negotiation position by adding a National 10Gig backbone across 4 PoPs • Backbone Costs $45,000 MRC Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  23. Downside to content peering • Reduced negotiating powers with ISP • Operational complexity • more moving parts • Requirement for Peering expertise • Concerns about security / stability, introducing additional BGP speakers • Reference Vijay Gill, GPF1.5 Oct 2006: ISP count reduction • No SLA (even with BLPA!), scares some enterprise folks Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  24. What’s the point? • Savings can be realized for any moderately-sized network • While peering costs have not dropped at the same rate as transit costs, there is still a justification for content peering • This is especially true for the large bandwidth players • Challenges for content peering as the eyeball networks are acquired by large ISPs Peering Economics for Content Providers / GPF2.0 / Dani Roisman

  25. Thank Youdroisman@peakwebconsulting.comPEER WITH CONTENT Peering Economics for Content Providers / GPF2.0 / Dani Roisman

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