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Peering vs Transit Economics : The Peering Simulation Game
11-12 August 2010 11:00-13:00Nairobi, KenyaSarova Panafric Hotel Nairobi
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
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Background
1987 – buildingInternet Ops community
1998 – buildingPeering Intelligence
2008 – consulting,education
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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
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Internet Peering Lexicon
“10 minute Peering Tutorial”And then
Live the Life: Peering Simulation Game
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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 UpstreamISP
metered95th percentile...
95th
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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
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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
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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…
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Definition of Internet PeeringDef: Peering is the business relationship whereby ISPs reciprocally announce reachability to each others’ transit customers.
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Some context : The Internet Peering Ecosystem
• Internet viewed as a Global Internet Peering Ecosystem
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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?
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Ecosystem Member: Tier 1 ISP
T T
$$ …
P
Tier 1 ISP P
Def: A Tier 1 ISP is an ISP that has access to the
ENTIRE Internet Region Routing Table Solely via Peering Relationships
(Doesn’t buy transit from anyoneto reach any destination in the
Internet Region.)
Motivation: Is NOT motivated toPeer in region to reduce transit fees,
Is NOT motivated to peer with anybody else.
Behavior: “Restrictive” Peering *def: Policy
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Ecosystem Member: Tier 2 ISP
T T
$$ …
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
$$
…
Tier 2 ISP
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Content Providers
Def: A Content Provider focuses oncontent development and does not
Sell access to the Internet.
Motivation: SLAs w/well known ISP
Behavior: “No Peering” Policy
T T$$
…
ContentProvider
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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…
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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: ____________________
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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
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The Peering Simulation Game
Let’s exercise these definitions
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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
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3 Helpers
• Transit Provider X: • Transit Provider Y: • Exchange Point Operator:
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A
C
B
D
Transit Provider X
Transit Provider Y
IXW IXE
IXN
IXS
Y Y
XX
The Peering Game
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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…
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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
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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
B
B
B
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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,Can get to IXE
Pays Transit on others squares (8*$1000) Receives revenue on 4 squares (4*$2000)
$8,000 - $8,000 = $0
B
B
B
C rolls 6,Can get to IXW, likes IXS
Receives revenue on 7 squares (7*$2000)Pays Transit on others squares (11*$1000)
$14,000 - $11,000 = $3,000
C
C
C
C C
C
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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,Can get to IXE
Pays Transit on others squares (8*$1000) Receives revenue on 4 squares (4*$2000)
$8,000 - $8,000 = $0
B
B
B
C rolls 6,Can get to IXW, IXS
Pays Transit on others squares (11*$1000) Receives revenue on 4 squares (7*$2000)
$14,000 - $11,000 = $3,000
C
C
C
C C
C
D rolls 1,Late entrant heading to IXE
Receives revenue on 2 squares (2*$2000)Pays Transit on others squares (17*$1000)
$4,000 - $17,000 = -$13,000
D
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Scoreboard after Round 1
• ISP A: $9,000• ISP B: $0• ISPC: $3,000• ISPD: -$13,000
• On to Round 2
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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,Can get to IXE
Pays Transit on others squares (8*$1000) Receives revenue on 4 squares (4*$2000)
$8,000 - $8,000 = $0
B
B
B
C rolls 6,Can get to IXW, IXS
Pays Transit on others squares (11*$1000) Receives revenue on 4 squares (7*$2000)
$14,000 - $11,000 = $3,000
C
C
C
C C C
D rolls 1,Late entrant heading to IXE
Pays Transit on others squares (17*$1000) Receives revenue on 4 squares (2*$2000)
$2,000 - $17,000 = -$15,000
D
A rolls 3,Attaches to IXW
Receives revenue on 9 squares (9*$2000)Pays Transit on others squares (13*$1000)
$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
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A
C
B
D
Transit Provider X
Transit Provider Y
IXW IXE
IXN
IXS
YC Y
XBXA
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,Can get to IXE
Pays Transit on others squares (8*$1000) Receives revenue on 4 squares (4*$2000)
$8,000 - $8,000 = $0
B
B
B
C rolls 6,Can get to IXW, IXS
Pays Transit on others squares (11*$1000) Receives revenue on 4 squares (7*$2000)
$14,000 - $11,000 = $3,000
C
C
C
C C C
D rolls 1,Late entrant heading to IXE
Pays Transit on others squares (17*$1000) Receives revenue on 4 squares (2*$2000)
$2,000 - $17,000 = -$15,000
D
A rolls 2,Attaches to IXW
Pays Transit on others squares (13*$1000) Receives revenue on 8 squares (8*$2000)
$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
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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..
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Play the Peering Simulation Game…
Worksheet
Worksheet