From: Andy Davidson (no email)
Date: Sun Jan 20 2008 - 18:40:48 EST
Hi,
On 20 Jan 2008, at 16:37, Andrew Odlyzko wrote:
> The more sensible end of town pays about $80 per month for about 40
> Gbytes of quota, give or take, depending on the ISP. After that
> they get shaped to 64 kbps unless they want to pay more for more
> quota.
I replied offlist to Andrew with some ideas, but I have been thinking
more about the econometric model of Australian connectivity, and how
interesting it is.
> When transit is costing $250 per megabit per month, there aren't
> many other options.
[...]
>> On Sun Jan 20, Matthew Moyle-Croft wrote:
> Having a cap and slowing down afterward (64kbps or 128kbps are
> typical) is what worked here in Oz.
The grass is always greener of course, but when I think about why ISPs
in the UK have to cap fairly aggressively (bear in mind I pay the
figure Andrew cited is typical for internet access in AU, and have a
smaller quota !), there are aspects of the Australian problem that I
am envious of.
Australia has a relatively small population (c. 20m) which would act
as a small ceiling for demand, but the vast majority of the population
live in relatively close proximity. Density is highest in coastal
regions which makes it ideal for fiber landing ! I will trust
Andrew's numbers of $80 for a 40GB cap.
The UK has a population of c. 60m, and population density is high (12k
people per square mile in London). I'm more likely to pay less than
$10/Mbit for global transit. The small country and concentration of
POPs in key metropolitan areas makes interconnection cheap. Exchange
membership and participation is hugely popular (>600 networks peer in
London, 415 peer exclusively in the UK). And yet I pay US$70 to my
ISP for residential connectivity and my cap is 30GB. Why is this ?
Thanks to the pricing model imposed on last-mile connectivity imposed
by the incumbent, it costs an ISP US$471/Mbit to send data to my
customer[1]. Maybe the same data that's just come all the way from Oz
through my transit for US$10.
It used to be the case that global transit was very expensive wherever
deployed in the world. As pricing fell, this fueled innovation and
created demand for connectivity at every level - domestic, data
centre, enterprise, carrier ... The price of connectivity to
Australia is likely to fall, because as the opportunity to sell
connectivity increases, so should the number of fibers running to
Australia (if we were all in the same room, this is the point that Rod
would wave his arms, leap out of his seat, and announce that he's
already half the way there and would get there first, so noone else
needs to try :-) ). And as economies way off to the west of the
country grow and stabilise, then the options for sea routes to the
country will grow.
In the mean time, that $250 figure is a market price. Attempt to
modify the market conditions will change the price. But perhaps there
are commercial activities that could stimulate demand for consumer IP
services - here's some ideas for thought
- What's my traffic to south Asia and the other apnic regions ? Can
I save some money buying *partial* routes from a large player in this
region. Or is the problem that actually it's the transport to
*anywhere* out of Australia ?
- Am I peering widely enough ? Should I actually be stuffing a
switch under the floor in my employer's suite and letting my buddies
plug in ? Peeringdb knows about eight exchanges in a developed
economy of 20 million people. We have more than eight in single
cities of Europe.
- So transit pricing sucks. But that's one of my costs as an
operator. What's the pricing of a footprint in carrier hotels ? Are
there enough carrier hotels ? How much am I paying for power ? If
real estate and power is cheap in AU, then shouldn't content network
operators in places where power and space is expensive already be
planning how to pop up in Australia ?
- What about local content ? Why is so much traffic leaving the
country ? Does someone need to be extremely plucky and offer bargain
basement content hosting in the continent ? If AU entrepreneurs are
ignoring the online channel for retail and entertainment, then who
wants to jump on a plane and turn this situation around with me ? :-)
- OK, how about we proxy certain types of content unless our users
opt out. Any cache hits don't contribute to their 40GB monthly
download. If transit is the problem, then offer financial incentives
to your users to help you not pay for it. If you're peering IP, why
not start "peering" your top cache hits between providers too ?
- P2P is probably a problem for AU networks. Contrary to most
policy makers, there are services which use p2p as a transport, that
don't involve the distribution of copyright material without consent.
The next generation services that use p2p as a transport, e.g. Joost,
have said to be trying to build proximity awareness into their p2p
implementation. Peering widely will help here. As for the file
sharers, then (I really, really hate to say it) but can you just make
sure you're picking up the seedier parts of usenet binaries over
peering instead, and hope people use that ? Sad to think in these
terms, but if we're being pragmatic ...
I'd love to hear the opinions of AU operators on these issues, and
think that there's lessons for everyone - if AU operators can show us
how they deploy more cost effective connectivity products, then there
are some regional ISPs in the rest of the world who would also benefit.
Andy
[1] £1,758,693 ($3.5m) PA for a 622Mbit BT Central, (so in bandwidth
terms, equates to $471/Mbit per month - if the central is maxxed out)
- I posted this to Nanog in October.
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