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

2. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

3. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

4. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

5. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

6. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

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

8. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

9. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

10. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

11. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

12. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

13. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

14. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

15. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

16. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

17. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

18. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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)

19. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

20. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

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

22. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

23. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

24. Peering Economics for Content Providers / GPF2.0 / Dani Roisman 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

25. Peering Economics for Content Providers / GPF2.0 / Dani Roisman Thank You droisman@peakwebconsulting.com PEER WITH CONTENT droisman@peakwebconsulting.com