Q: DrPeering -

I am currently doing some research on the Internet market structure. The

historical and projection of IP transit prices (on page 47 of your book)

are very helpful. I am wondering if you have similar figures for CDN

prices. They don't have to be very accurate and official, just want to

get some idea/feeling about the CDN prices.

Mal Reynolds

A:

Mal -

The short answer is that I haven’t been tracking the price of CDN services.

However, my recollection is that CDN distribution of web objects was initially about 30% or so higher during the early days of CDNs (2000-2001 era). And why not - it was a better service than transit since it provided performance acceleration by locating the objects closer to the eyeballs.

Customers started comparing the costs of transit and CDN services, but there was a challenge: CDNs charged on GB downloaded - $0.12/GB downloaded for example back in the day. But transit was charged on a Mbps basis - $10/Mbps for example, and comparing volume downloaded vs. meter at 95th percentile was difficult. So CDNs started offering 95th percentile billing.

Competition creeped in, and emerging CDNs started undercutting Akamai, charging only maybe a 20% premium above the cost of transit, and then 10% above transit.

Around 2008 I seem to remember the price of transit and the price of CDN converged to became about the same and have remained so since.

You will find some more aggressive CDNs offering lower prices than the market price for transit but they are pretty close. If the price is the same, CDNs provide a very compelling value proposition as compared with transit.

Q: DrPeering -

Our Internet traffic volume has grown 4000% in the last year. We are trying to build out a network team now and look into peering. What resources are available?

Astrid Levenson

A:

Astrid -

I would suggest that you peruse the DrPeering.net web site and perhaps buy the Internet Peering Playbook. I say that not just because I wrote it, but because it provides a convenience form factor for all of the material you will need right now.

Some suggestions...

As you think through the budget for your team, make sure to include a healthy travel budget and send a designated peering coordinator to the Internet operations meetings in the regions where you intend to build out.

Have conversations with the leading colocation vendors in the markets you are considering - see how much free help you can get from them. They have an incentive to prove the value of their colocation space to you, so they should be willing to help you make the business case for peering there.

If you haven’t already done so, start the traffic analysis now. Identify the top traffic destinations and sources. This will help you identify the locations for peering and the selection of transit providers as you build out a hybrid peering and transit solution.

If you need some interim help as you build out your permanent team, send me a note. I know a few networking guys that can help you spin up and do so on a consulting basis until you have your staff in place.

This should help get you started.

DrPeering@DrPeering.net