Subject: Report on Peering and Transit Economics (etc)

From: Gordon Cook <[email-masked]>
Date: Sun, 29 Sep 2002 12:46:25 -0400

I have published an extremely detailed report on the economics, 
technology, and politics of peering and transit.  At 
http://cookreport.com/11.08-09.shtml you will find the complete 
introductory article, contents and  list of 25 contributors to the 
effort.  The report centers on interviews with Bill Woodcock, an 
essay / critique by Farooq Hussain and an edited version of the 6 
weeks of discussion by the 25 contributors.

I  include here the executive summary from the report.  This summary 
is not on my web site and I am not posting it elsewhere.

Executive Summary

Whither the Policy, Technology, and Economics of the Interconnection 
of the Internet?

The collapse of the industry and of the price of bandwidth is 
bringing significant changes into the ways in which ISPs and the 
remnants of the Old Guard of Tier 1 backbones interconnect.

Some people who are affected have made some significant steps in 
using NetFlow data in developing tools that are being refined into 
what can function as bandwidth cost management systems.  We identify 
several explorations being taken in this direction and explore what 
looks to be the most refined developed by Bill Woodcock with the 
assistance of Alex Tudor at Agilent Labs.

Bill has developed a philosophy of interconnection that appears to 
have a sound  business model behind it.  Bill's approach was 
developed from the point of view of a small ISP that needs to 
understand with as much precision as possible what it does cost to 
get its bandwidth delivered.  His model says that ISPs that are 
multi-homed and have their own leased line customers need to peer as 
much and as cheaply as possible.  They also need to have two reliable 
transit providers in case one fails.  As long as their peering can 
cut over to transit if it fails, he points out that economics would 
seem to demand delivery of as much bandwidth by cheap peering as 
possible to cut down on the requirement for expensive transit 
bandwidth.

ISPs need to avoid local loop charges from their LECs and acquire 
their own back haul to an exchange for inexpensive peering and if 
possible a different exchange or exchanges for more reliable transit. 
In order to figure how to most cost effectively architect their 
networks they need to take and manipulate NetFlow samples of their 
traffic in order to identify potential new peers via a study of the 
traffic being delivered by their transit providers.  If they have 
automated tools to take samples from appropriate points, they can 
over time get clear pictures of how their traffic is evolving through 
actual NetFlow path analysis.

But Woodcock's colleagues seem to agree that he has done something 
unique.  He explains it in writing for the first time in this issue 
of the COOK Report.  Namely he does what he calls synthetic path 
analysis by tacking his actual path data and doing a series of "what 
if" transformations on that data.  With the help of Alex Tudor from 
Agilent labs he explains using actual data from January 31 2002 how 
this synthetic analysis can be applied so that for the first time an 
ISP, by plugging circuit cost data into its modeling software, can 
know how much it really does cost to deliver its bits.

These ideas are new. While our experts agreed that perhaps 100 ISPs 
may be doing some form of actual NetFlow data analysis, virtually no 
one except Woodcock had done the synthetic path analysis.  Avi 
Freedman in his position as Chief Network Scientist at Akamai has had 
ample occasion to use network routing and DNS to figure out data 
flows.  After studying Bill Woodcock's explanation found that he had 
evidence from his own related experience that indicated Bill's 
approach seemed valid. He points out that since 1999 he has been 
doing a "what if" analysis on "Akamai flows" similar to Woodcock's 
synthetic path analysis on router flows.

Our 50,000 word eight week long discussion involving 25 different 
people contains a quite interesting dialog between the Avi and Bill 
as they compare their approaches to the problem and conclude that the 
ideas appear to be valid. However, we must also point out that Bill's 
synthetic path analysis is not meant to be  the sole criterion on 
which to base peering and transit decisions.  Once they have 
identified potentially good peers, ISPs will find that factors of 
geography and costs of interconnection at various exchanges may 
become decisive factors in making their final decisions.

Although the largest carriers generally prohibit their technical 
people from participating in this kind of discussion, we were 
fortunate to get participation from large representatives of both the 
cable modem and DLS worlds (namely Adelphia and SBC).  At the most 
general level these larger players seem to acknowledge the validity 
of Woodcock's ideas.  However, one things get specific, they maintain 
that differences in the sizes of their networks prevent them from 
placing too much faith in low cost cooperative peering.  They seem 
intent on joining and perhaps replacing the seven Tier 1 backbones.

As prices for transit bandwidth have crashed in about two years from 
as much as $800 per megabit-per-second per month to in some cases 
less than $100, the assumption that one should save transit costs by 
peering as much as possible has become muddied.  Our contributors had 
a great deal to say about both the costs of transit bandwidth and 
city-to-city OC pipes of various sizes. Carriers are extraordinarily 
hungry for new lambda sales.

Farooq Hussain offers an essay that explains the international mess 
that he believes peering and transit has become due to the Tier 1 
oligopoly.  Although the view one gets of traffic depends on the 
places within the network where one measures, from some viewpoints 
according to Adlex and other tools it would seem that while UUNET, 
ATT, Level 3 and Sprint are holding firm in Tier 1, Genuity Qwest and 
Cable and Wireless may be slipping seriously in overall traffic 
rankings.

We reprint Bill Norton's comments on the death of ATM exchanges from 
NANOG.  Our contributors explain why the price differentials aren't 
quite as crisp as Equinix would make them out to be.

Googin Interview on .13 Micron

We publish a mid May interview with Roxane Googin in which she 
explains why the market arrival of .13 micron technology will bring 
PC economics and costs to switches.  Nortel and Lucent look unlikely 
to rise and the LECs switching base will belong on the junk pile 
sooner than anticipated.  The Googinization of the LECs continues - 
http://www.sbc.com/press_room/1,5932,31,00.html?query=20257.  The 
LECs of course are intent to keep the secret bottled up and whine for 
regulatory relief that if delivered would only prolong the crash.

ICANN's Pathology

We summarize ICANN's latest egregious behavior from Vint Cerf's 
trying to spin the loss in the Auerbach lawsuit to Joe Sim's temper 
tantrum against Michael Froomkin.  Froomkin has an outstanding new 
law review article called Form and Substance and written in no small 
part to lay bare Sim's obfuscations.  From the predetermined award of 
.org to ISOC - sorry Carl Malamud, you don't count in this new 
commercial internet - to the regional routing registries public 
rebuke of Cerf and Lynn ICANN's  misbehavior marches on.  The DoC 
renewed its MoU this time for a single year.  Bret Fausetts blog 
grows better and Milton Mueller author of a new dispassionate study 
of ICANN and the root finally throws up his hands in disgust on BWG. 
One of the most amazing things about the ICANN pathology is how, in 
the midst of the barrage of news about corporate malfeasance in 
Enron, WorldCom, Qwest, Tyco and others, the collection of 
figureheads who have agreed to serve as board members can continue 
to go on on a daily basis in blissful assumed ignorance that they 
have any responsibilities under California law.

We can only hope that Karl Auerbach who HAS taken his duties 
seriously while his fellow Board members have shirked theirs, will 
give some meaningful completion to his law suit by making it very 
public and very clear how this group of people who have assumed they 
are accountable to no one has in reality behaved.

RIAA goes Beserk

-- 
========================================================
The COOK Report on Internet, 431 Greenway Ave, Ewing, NJ 08618 USA (609)
882-2572 (phone & fax) [email-masked]  Subscription info & 
prices at   http://cookreport.com/subscriptions.shtml    Summary of 
content for 10 years at http://cookreport.com/past_issues.shtml  Info 
on Economics of Peering, Transit & IXs
November - December 118 pages available at http://cookreport.com/11.08-09.shtml
========================================================

---

From: "Bill Strahm" <[email-masked]>
Date: Mon, 30 Sep 2002 14:25:53 -0700

All I have to say is "WOW" A three page executive summary.  I am afraid
to read the rest... Guess I will have to see what is going on especially
when they start talking about ICANN (At the VERY bottom) I'd love to
know how that fits into Peering and Transit economics

Bill

-----Original Message-----
From: [email-masked] [mailto:[email-masked]] On Behalf Of
Gordon Cook
Sent: Sunday, September 29, 2002 9:46 AM
To: [email-masked]
Subject: Report on Peering and Transit Economics (etc)

Executive Summary

ICANN's Pathology

RIAA goes Beserk

-- 
========================================================
The COOK Report on Internet, 431 Greenway Ave, Ewing, NJ 08618 USA (609)
882-2572 (phone & fax) [email-masked]  Subscription info & 
prices at   http://cookreport.com/subscriptions.shtml    Summary of 
content for 10 years at http://cookreport.com/past_issues.shtml  Info 
on Economics of Peering, Transit & IXs
November - December 118 pages available at
http://cookreport.com/11.08-09.shtml
========================================================

---

From: "Bill Strahm" <[email-masked]>
Date: Mon, 30 Sep 2002 14:25:53 -0700

Bill

-----Original Message-----

Executive Summary

ICANN's Pathology

RIAA goes Beserk

---

From: "Bill Strahm" <[email-masked]>
Date: Mon, 30 Sep 2002 14:25:53 -0700

Bill

-----Original Message-----

Executive Summary

ICANN's Pathology

RIAA goes Beserk