This page contains the answers to the exercises and some supplemental material from The Internet Peering Playbook available in June.
With 1500Mbps * $2/Mbps=$3000/month + $5000/month = $8000/month. The peered traffic is free.
In the first case we will pay 5000Mbps * $2/Mbps = $10,000 per month without the commit. If we peer away 2000Mbps, we pay 3000Mbps * $2/Mbps=$6000/month plus the cost of peering of $7000 per month=$13,000 per month. Peering does not make financial sense here.
In the first case, 6000Mbps * $2/Mbps = $12,000 per month. In the second case we pay 4000Mbps * $2/Mbps=$8000 per month plus $2000 per month for peering = $10,000 per month. Peering makes financial sense given the assumptions above.
The Effective Peering Range is the range where peering makes sense financially, from the peeringbreak even point to the effective peering bandwidth. The Peering Break Even Point = Monthly Cost of Peering / Unit Price of Transit = $5000 / $2/Mbps=2500Mbps=2.5Gbps. Since we know that the effective peeringrange is 70% of the capacity of the pipe, the Effective Peering Range is 2.5Gbps to 7Gbps. If you can peer between 2.5Gbps and 7Gbps over this infrastructure, peering provably makes financial sense.