Nice breakdown and for the most part agree. When I was doing consulting work I had customers who were Tier1, 2 and 3. And out of those customers I seen different approaches to exactly what you outline. The biggest underestimated costs involved are always in “cost of operating the network”.
One comment on the Tier3 (or any Tier really) when you reference “cost of excess un-used commit” .. this should be built-in to your costing formulas as an access network. There is a cost to having multiple providers (assuming multi homed) and ensuring excess capacity is always available should you run into an outage situation with one of the upstreams. IP Transit providers face a similar challenge to always have the capacity available in one regard but from another view, they also quite often bank on the fact that you won’t use all of your pipe. From: Af [mailto:af-boun...@afmug.com] On Behalf Of Faisal Imtiaz Sent: Sunday, July 12, 2015 11:21 PM To: af@afmug.com Subject: Re: [AFMUG] Anyone heard of GTT hmmm, yes and no, sort of... a lot of it depends upon the perspective one is looking at...and of course there are a number of factors that go into the equation.. Let's take a look at a Tier 1 providers, they don't pay anyone for IP Transit, but they sell IP transit.. so how do they price it ? ... Something along the lines of cost of operating the network + ROI + Profit + some fudge factor = pricing for IP transit. Now let's take a look at Tier 2 providers, they are paying someone for IP Transit, and do a lot of peering (hopefully).... In this case ,the are pricing IP Transit competitively lower than Tier 1 folks and then doing a lot of peering to reduce their expense with Tier 1... so their cost of IP transit formula is something along the lines of... cost of operating the network + ROI + Profit + Some fudge factor + cost of IP transit = pricing for IP transit... Now let's take a look at Tier 3 or some of us who are operating Last Mile networks.... We have been conditioned to think of IP always as IP transit.....only recently we started seeing benefits of settlement free peering.... but let's put this aside for a min.... Most of us (access networks) buy an over commit of IP transit ..... so now here is a big question, What is the COST of Excess un-used commit that is not used in that month... ! Just like an empty hotel room, and un-occupied airline seat, etc etc == $0 , because we tend to expense our costs over the existing sources of revenue... When one starts to think of it in this manner, the equation changes...e.g. if we have excess commit, one can actually sell IP transit for lower cost than what they are paying for, and have it drop to the bottom line. And if you want to go a bit deeper into this... sell cheap bandwidth to hosting providers, their ratios are opposite to ours, thus even a greater leverage.... So bringing this back to a full circle.... when we say the race to the bottom, and what is the bottom ? well based on above formulas it will be as follows:= Cost of operating the network + ROI = pricing for IP transit... the other two factors disappear....and now you have pricing based on network operational efficiency... (Even today, in many cases, (e.g data center or POP) the cost of selling, to a customer, 10meg, 100meg or 200meg could be the same...) :) Faisal Imtiaz Snappy Internet & Telecom 7266 SW 48 Street Miami, FL 33155 Tel: 305 663 5518 x 232 Help-desk: (305)663-5518 Option 2 or Email: supp...@snappytelecom.net _____ From: "Chuck McCown" <ch...@wbmfg.com> To: af@afmug.com Sent: Sunday, July 12, 2015 10:07:39 PM Subject: Re: [AFMUG] Anyone heard of GTT On this scale, there is almost no marginal expense involved in giving the customer more bandwidth for the same money or the same bandwidth for less money. It is a race to the bottom, just like it was for the long distance providers. Who has a long distance phone bill these days? Perhaps all the big boys will give you as big of a pipe as you want for free and charge you for usage. UBB. Maybe Doug Clark was right after all... From: Paul Stewart <mailto:p...@paulstewart.org> Sent: Sunday, July 12, 2015 2:22 PM To: af@afmug.com <mailto:af@afmug.com> Subject: Re: [AFMUG] Anyone heard of GTT Maybe .. but (just my opinion) where is rock bottom? Out with the old and in with the new … the old was cheaper to run but you need the new for capacity. It’s a never ending circle as we know but the raw cost to push the bits doesn’t really come down that much so how can it go much lower – all from the perspective of an IP Transit provider. I’ve seen several transit providers actually raise their prices in the last couple of years a small amount as they realized that “holy crap, we need to start making money at this”. One company I worked with not too long ago told me that when they sell a 10G port (with 10G commit) that they bank on their customers not using more than 30% of the actual pipe – if all their customers utilize 70% of the pipe during peak times then they lose money for the first 2 years of a 3 year contract. That’s not an ideal business model .. BTW, their average peak usage on that product in all markets was 68% I was told. From: Af [mailto:af-boun...@afmug.com] On Behalf Of Mike Hammett Sent: Sunday, July 12, 2015 10:48 AM To: af@afmug.com Subject: Re: [AFMUG] Anyone heard of GTT It'll go down. It always goes down. With 40GigE and 100GigE being available at the cost of 10GigE 10 - 15 years ago, it won't be long before 40 and 100 are commoditized. There's bigger and bigger channels on the way. ----- Mike Hammett Intelligent Computing Solutions http://www.ics-il.com _____ From: "Paul Stewart" <p...@paulstewart.org <mailto:p...@paulstewart.org> > To: af@afmug.com <mailto:af@afmug.com> Sent: Sunday, July 12, 2015 9:42:55 AM Subject: Re: [AFMUG] Anyone heard of GTT Yup …. The market is hitting pretty much as low as it can go in my opinion …. There’s still room for a bit of movement but in major core centers I can’t see where IP Transit providers can afford to go much lower. There are already providers on the market that are running at very very thin returns – should be interesting to see how that “pans out” over the next few years. I think things are going to land at $0.35-$1.00 for low end to top end depending on providers… at least that’s what I’m seeing from our experience pretty much From: Af [mailto:af-boun...@afmug.com] On Behalf Of Faisal Imtiaz Sent: Saturday, July 11, 2015 9:09 PM To: af@afmug.com <mailto:af@afmug.com> Subject: Re: [AFMUG] Anyone heard of GTT FYI, based on our experience.... at 100G Levels most IP Transit providers are @ very similar Monthly MRC. And yes, due to limitations of 100g ports on a line card and expensive optics, in many cases 10g LAG Groups are less expensive to implement. Faisal Imtiaz Snappy Internet & Telecom 7266 SW 48 Street Miami, FL 33155 Tel: 305 663 5518 <callto:305%20663%205518> x 232 Help-desk: (305)663-5518 <callto:(305)663-5518> Option 2 or Email: supp...@snappytelecom.net <mailto:supp...@snappytelecom.net> _____ From: "Paul Stewart" <p...@paulstewart.org <mailto:p...@paulstewart.org> > To: af@afmug.com <mailto:af@afmug.com> Sent: Saturday, July 11, 2015 5:04:19 PM Subject: Re: [AFMUG] Anyone heard of GTT True… and it’s a one time cost … Obviously depends on the provider for that monthly pricing – that’s pretty low MRC except for HE crap…. When the market is used to minimal setup fees for ports though, the 100G stuff still stands out… the linecard(s) are one thing to recover but the price of the optics is still stupidly expensive too .. The biggest attraction for me has been in “higher traffic” networks when you run into limitations on how many members can be in a LAG … so you go from 10G LAG’s to 100G LAG’s a From: Af [mailto:af-boun...@afmug.com] On Behalf Of Faisal Imtiaz Sent: Saturday, July 11, 2015 3:58 PM To: af@afmug.com <mailto:af@afmug.com> Subject: Re: [AFMUG] Anyone heard of GTT Hmmmm, considering a full 100g port of service would be priced at $35,000 to $45,000 / Month, it needs a $150,000 to $500,000 Router to handle, a one time charge of $30,000 to $100,000 is negotiable and rather an irrelevant figure in that picture a Faisal Imtiaz Snappy Internet & Telecom 7266 SW 48 Street Miami, FL 33155 Tel: 305 663 5518 <callto:305%20663%205518> x 232 Help-desk: (305)663-5518 <callto:(305)663-5518> Option 2 or Email: <mailto:supp...@snappytelecom.net> supp...@snappytelecom.net _____ From: "Paul Stewart" < <mailto:p...@paulstewart.org> p...@paulstewart.org> To: <mailto:af@afmug.com> af@afmug.com Sent: Saturday, July 11, 2015 2:09:24 PM Subject: Re: [AFMUG] Anyone heard of GTT Well there is no question that 10G ports and LAG’s of 10G are more popular but the number of 100G ports being sold for IP Transit is definitely picking up quite noticeably :) The biggest challenge that I have run across is pure economics – the cost of the ports makes it hard for them to sell them to customers at much discount. The quotes on 100G transit that I have seen typically have a $60k-$100k per port setup fee to try and recover a portion of costs up front. The attraction is higher in markets where x-connect monthly fees are quite high. From: Af [mailto:af-boun...@afmug.com] On Behalf Of Mike Hammett Sent: Friday, July 10, 2015 8:13 AM To: af@afmug.com <mailto:af@afmug.com> Subject: Re: [AFMUG] Anyone heard of GTT <http://www.telecomramblings.com/2015/07/thursday-bytes-gtt-telepacific-vxchnge-netrality-faction/> http://www.telecomramblings.com/2015/07/thursday-bytes-gtt-telepacific-vxchnge-netrality-faction/ 100G ports to customers still isn't common. It happens, but isn't common. It's mostly for internal connections. ----- Mike Hammett Intelligent Computing Solutions <http://www.ics-il.com> http://www.ics-il.com _____ From: "Paul Stewart" < <mailto:p...@paulstewart.org> p...@paulstewart.org> To: <mailto:af@afmug.com> af@afmug.com Sent: Friday, July 10, 2015 5:26:55 AM Subject: Re: [AFMUG] Anyone heard of GTT Actually to be specific, GTT is a “Tier1” provider since they acquired TiNet. So usually a “blend of several networks” refers to a Tier2 provider .. GTT has *many* direct peers of significant size :) Long time customer of the various companies that came part of the GTT “umbrella” – overall pretty happy although I’ve heard second hand about lots of “reorganization” problems .. haven’t seen much of it first hand though. 100 Gig very common now in most areas.. maybe there were the first to deploy in Saudi or something… From: Af [mailto:af-boun...@afmug.com] On Behalf Of Justin Wilson - MTIN Sent: Thursday, July 9, 2015 9:16 PM To: af@afmug.com <mailto:af@afmug.com> Subject: Re: [AFMUG] Anyone heard of GTT We use them in Chicago. They provide a BGP blend of several networks. They are an international provider. One of their direct peers is China Telecom. I saw a press release they are doing 100 Gig in Saudi Arabia. If you want to know about our experiences with them (pretty good for the most part) hit me offlist. Justin --- Justin Wilson <j...@mtin.net <mailto:j...@mtin.net> > http://www.mtin.net <http://t.signauxdeux.com/e1t/c/5/f18dQhb0SmZ58dDMPbW2n0x6l2B9nMJW7sM9dn7dK_MMdBzM2-04?si=5679648505069568&pi=5135D234-DD8D-4602-8F2A-9491AF24D5F7&t=http%3A%2F%2Fwww%2Emtin%2Enet> Managed Services – xISP Solutions – Data Centers http://www.thebrotherswisp.com <http://t.signauxdeux.com/e1t/c/5/f18dQhb0SmZ58dDMPbW2n0x6l2B9nMJW7sM9dn7dK_MMdBzM2-04?si=5679648505069568&pi=5135D234-DD8D-4602-8F2A-9491AF24D5F7&t=http%3A%2F%2Fwww%2Ethebrotherswisp%2Ecom> Podcast about xISP topics http://www.midwest-ix.com <http://t.signauxdeux.com/e1t/c/5/f18dQhb0SmZ58dDMPbW2n0x6l2B9nMJW7sM9dn7dK_MMdBzM2-04?si=5679648505069568&pi=5135D234-DD8D-4602-8F2A-9491AF24D5F7&t=http%3A%2F%2Fwww%2Emidwest%2Dix%2Ecom> Peering – Transit – Internet Exchange On Jul 8, 2015, at 2:07 PM, Paul Stewart <p...@paulstewart.org <mailto:p...@paulstewart.org> > wrote: As in GTT – IP Transit provider? From: Af [mailto:af-boun...@afmug.com] On Behalf Of Rory Conaway Sent: Wednesday, July 8, 2015 1:47 PM To: af@afmug.com <mailto:af@afmug.com> Subject: [AFMUG] Anyone heard of GTT I was told they are pulling out of Tucson. Rory Conaway • Triad Wireless • CEO 4226 S. 37th Street • Phoenix • AZ 85040 602-426-0542 <callto:602-426-0542> <mailto:r...@triadwireless.net> r...@triadwireless.net <http://t.signauxdeux.com/e1t/c/5/f18dQhb0SmZ58dDMPbW2n0x6l2B9nMJW7sM9dn7dK_MMdBzM2-04?si=5679648505069568&pi=5135D234-DD8D-4602-8F2A-9491AF24D5F7&t=http%3A%2F%2Fwww%2Etriadwireless%2Enet%2F> www.triadwireless.net “Nothing can bring you peace but yourself. Nothing can bring you peace but the triumph of principles.” – Ralph Waldo Emerson
