Peering vs Transit Economics : The Peering Simulation Game

Peering vs Transit Economics : The Peering Simulation Game

11-12 August 2010 11:00-13:00Nairobi, KenyaSarova Panafric Hotel Nairobi

[email protected]

African Peering and Interconnection Forum: Unlocking Africa’s Regional Interconnection

William B. NortonExecutive Director

DrPeering International

This work was sponsored in partby ISOC and DrPeering.net

http://DrPeering.net/wbn

Background

1987 – buildingInternet Ops community

1998 – buildingPeering Intelligence

2008 – consulting,education

DrPeering.net Peering Resources• Internet Service Providers and Peering • A Business Case for Peering• About the White Paper Process• The Art of Peering - The Peering Playbook• The Art of Peering - The IX Playbook• Chief Technical Liaison• Ecosystems: 95th Percentile Measurement for

Internet Transit• Asia Pacific Peering Guidebook• Evolution of the U.S. Peering• Emerging Video Internet Ecosystems• European vs US Internet Exchange Points• Internet DataCenter Build vs Buy Decision• Internet Service Providers and Peering

• Internet Transit Pricing Historical and Projections

• Modeling the value of an Internet Exchange Point

• NANOG History• Peering: Motivations to Peer• A Study of 28 Peering Policies• Peering Simulation Game• Peering: Top 10 Ways to Contact Peering

Coordinators• Peering: Top 10 Reasons NOT to peer• Public vs Private Peering - the Great Debate• The Folly of Peering Ratios• Top 9 IX Selection Criteria• Video Internet - The Next Wave of Massive

Disruption to the U.S. Peering Ecosystem

All freely available

Internet Peering Lexicon

“10 minute Peering Tutorial”And then

Live the Life: Peering Simulation Game

Def: The Internet is a network of networks.

Def: ISP sells access to the Internet, so...An ISP must itself get attached to an ISP already

attached to the Internet.Def: ‘Transit’ is service whereby one ISP sells access to the Internet.

“A port in the wall that says ‘Internet this way’”

BlueISP Transit Service Upstream

ISP

metered95th percentile... 95th

Billing Internet Transit:95th Percentile

95thPercentile measure (aka 95P)

BlueISP Transit Service

1 month of 5 min Samples=vn - vn-1

}~36 hrs/month to burst for free

LowestMonthly Sample

Highest MonthlySample

1Mbps

:

134Mbps:::

:

Dropping transit fees

U.S. Internet Transit Pricing

• 1999 $1200/Mbps• 2004 $120/Mbps• 2008 $12/Mbps• 2010 $5/Mbps

Source: “Transit Pricing Historical and Projected”http://DrPeering.net

So Why Peer?

Bypass metered transit• #1 Lower Transit

Costs.• #2 Lower Latency.• #3 Usage-based traffic

billing.• 4) Marketing Benefits

Source: http://drpeering.net/white-papers/Peering-Motivations-to-Peer.html

100 ISPs surveyed…

Definition of Internet PeeringDef: Peering is the business relationship whereby ISPs reciprocally announce reachability to each others’ transit customers.

Some context : The Internet Peering Ecosystem

• Internet viewed as a Global Internet Peering Ecosystem

JP Internet Region

AU Internet Region

US Internet Region

Global Internet Peering Ecosystem

Tier 1 ISPs

Tier 2 ISPs

Content Providers

Def: Global Internet Peering Ecosystem consists of a set of interconnected internet regions (countries).

Characteristics of theseEcosystem Organisms?

Ecosystem Member: Tier 1 ISP

T T$$ …

P

Tier 1 ISP P

Def: A Tier 1 ISP is an ISP that has access to the

ENTIRE Internet Region Routing Table Solely via Peering Relationships

(Doesn’t buy transit from anyoneto reach any destination in the

Internet Region.)

Motivation: Is NOT motivated toPeer in region to reduce transit fees,

Is NOT motivated to peer with anybody else.

Behavior: “Restrictive” Peering *def: Policy

Ecosystem Member: Tier 2 ISP

T T$$ …

P

P

Def: A Tier 2 ISP is an ISP that has to purchase Transit to access

some part of the Internet Region.

Motivation: Is motivated toPeer in region to reduce transit fees.

Behavior: “Open” Peering or“Selective” Peering PolicyActive in Peering Forums

T T

$$

…

Tier 2 ISP

Content ProvidersDef: A Content Provider focuses on

content development and does notSell access to the Internet.

Motivation: SLAs w/well known ISP

Behavior: “No Peering” Policy

T T$$

…

ContentProvider

Internet Peering Ecosystem

Tier 1 ISPs

Tier 2 ISPs

Content Providers

TT T T

T T TTT

T T T

Traffic and$ flow up

Active Peering GroupsPeering Forums

IX MeetingsTest: Apply defs…

Quiz

Tier 2 ISP B

ContentProvider C

Tier 2 ISP A

T

T

T

P

$ $

$

Tier 1 ISP X Tier 1 ISP Y

2) Definition of Peering:________________

1) Definition of Transit:________________

3) Definition of an “Open” Peering Policy: _____________________

4) Definition of a “Selective” Peering Policy: _____________________

5) Definition of a “Restrictive” Peering Policy: ____________________

Apply Defs: Peering Dynamics & Motivations

T

T

T

P

$ $

$

P?No, like $.

P?No, like $,

& I Like customer

B

No, I already hear your routes

for FREE!

Synch Point: You have all the defs needed to predict behavior in the Peering Ecosystem.

You should be able to answer the question at hand.

Tier 1 ISP X Tier 1 ISP Y

P?

Internet Peering Ecosystem

Tier 2 ISPBTier 2 ISP

A

ContentProvider

The Peering Simulation Game

Let’s exercise these definitions

The Players• Internet Service Provider A

– Peering Coordinator • Internet Service Provider B

– Peering Coordinator• Internet Service Provider C

– Peering Coordinator • Internet Service Provider D

– Peering Coordinator

3 Helpers

• Transit Provider X: • Transit Provider Y: • Exchange Point Operator:

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

The Peering Game

3 Rules 1. Goal: Maximize bank holdings. Make money by

acquiring customers and reduce transit costs by peering2. Play: Roll the dice and expand your network by

selecting that many adjacent “squares” of customersGain transit revenue of $2000 for each customer square

you ownPay transit fees of $1000 for each square of traffic that

other ISPs own3. If at Exchange Point, two ISPs can negotiate peering:

– $2000 recurring cost and loss of 2 turns, ISPs negotiates who covers the costs of peering

– Peering ISPs do not have to pay transit for each others squares starting the next turn

Quick round…

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

A A A A

A

A rolls 5, Wants to peer w/B – moves to IXNReceives revenue on 6 squares (6*$2000)Pays Transit on others squares (3*$1000)

$12,000 - $3,000 = $9,000

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

A A A A

A

A rolls 5, Pays Transit on others squares (3*$1000) Receives revenue on 6 squares (6*$2000)

$12,000 - $3,000 = $9,000

B rolls 3,Going to IXE

Receives revenue on 4 squares (4*$2000)Pays Transit on others squares (8*$1000)

$8,000 - $8,000 = $0

BBB

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

A A A A

A


$12,000 - $3,000 = $9,000

B rolls 3,Can get to IXE

Pays Transit on others squares (8*$1000) Receives revenue on 4 squares (4*$2000)

$8,000 - $8,000 = $0

BBB

C rolls 6,Can get to IXW, likes IXS


$14,000 - $11,000 = $3,000

CC

C

C C

C

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

A A A A

A


$12,000 - $3,000 = $9,000



$8,000 - $8,000 = $0

BBB

C rolls 6,Can get to IXW, IXS


$14,000 - $11,000 = $3,000

CC

C

C C

C

D rolls 1,Late entrant heading to IXE


$4,000 - $17,000 = -$13,000

D

Scoreboard after Round 1

• ISP A: $9,000• ISP B: $0• ISPC: $3,000• ISPD: -$13,000

• On to Round 2

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

Y Y

XX

A A A A

A


$12,000 - $3,000 = $9,000



$8,000 - $8,000 = $0

BBB



$14,000 - $11,000 = $3,000

CC

C

C C C



$2,000 - $17,000 = -$15,000

D

A rolls 3,Attaches to IXW


$18,000 - $13,000 = $5,000

Wants to peer with C – split costs?YES: -$1,000 + both lose a turn

Neither has to pay transit to each other!

A

AA

C

A

C

B

D

Transit Provider X

Transit Provider Y

IXW IXE

IXN

IXS

YC Y

XBXA

A A A A

A


$12,000 - $3,000 = $9,000



$8,000 - $8,000 = $0

BBB



$14,000 - $11,000 = $3,000

CC

C

C C C



$2,000 - $17,000 = -$15,000

D

A rolls 2,Attaches to IXW


$16,000 - $13,000 = $3,000Wants to peer with C – split costs?

YES: -$1,000 both lose a turnNeither has to pay transit to each other

A

AB rolls 6,

Attaches to IXE*IXNReceives revenue on 10 squares (10*$2000)Pays Transit on others squares (21*$1000)

$20,000 - $21,000 = -$1,000

Wants to peer with A – split costs?NO: You pissed me off,

Yes: if $0 & B lose both turnsBoth walk away

BBBBBA Position

9 Revenue squares1 lost turn

Peering w/C reduced cost $8000/turn

Let’s play!WELCOME TO BILLAND

4 ISPs that have never played before

Open Board$35,000 VC FundingWe want to hear your thought process and peering

negotiationsWinner - prize

$25,000 VC Funding 1¥ = $1000

WINNER: At 5:25?PM we will stop andassume that every roll was a “3”from that point on out to 12 rounds..

Play the Peering Simulation Game…

Worksheet

Worksheet

Peering vs Transit Economics : The Peering Simulation Game

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