Wednesday, June 24. 2009Have We Paid Far Too Much For Bandwidth?John Linton We have, with only a few minor glitches, now completed the cut over of our NSW IP bandwidth from SX via Verizon to SX via Optus. As far as I'm aware there were no negative issues noticeable by any customer and the engineers responsible for the smooth transition are to be congratulated on doing an excellent job - every time the network gets 'touched' I fear for the worst so this is one time when my forbodings were not realised. I was interested to see, while we had both the old' and the 'new' bandwidth on line simultaneously, just how much bandwidth our customers would utilise while there was so much available - depending how much was actually 'switched on' at any particular time there was a theoretical resource of well over 6 gbps at different times. There was no clear answer and in any event the whole 6+ gbps couldn't have been used as we don't have that much 'customer side' connectivity. However I was interested to see that our customers seemed able to use as much bandwidth as we provided on various occasions while there was almost two gigs or so more bandwidth than we would usually make available in the off peak times. So now we have cut off the Verizon feeds the net upgrade of 'pure' IP across the network is moving over the last week from just over 2.5 gbps to just under 3.5 gbps which is easily the largest single upgrade we have ever put in place. On top of that there is another 1+ gbps of cached 'bandwidth giving a peak usage availability of around 4.5 gbps - quite a long way away from the 10 mbps we started with in February 2004. I have mentioned before that Exetel's broadband users have accelerated their increase in bandwidth usage quite considerably over the past 12 to 18 months and this exercise has served to underline that the increase may well be gaining more momentum. So I was a little puzzled when I was sent this yesterday: http://www.itwire.com/content/view/25717/127/ Vocus was one of the IP bandwidth providers we seriously considered and went very close to selecting so we understand a reasonable amount about what they offer and we certainly know the pricing they offered us - which was very, very good. What puzzled me was (knowing the pricing offered to Exetel but not assuming that TransACT bought at it - they may well have obtained much better pricing than we negotiated) a $A500,000 per year doesn't buy you very much pure IP bandwidth - even assuming that TransACT have negotiated much better pricing than we were able to do. So it was this comment, which up to reading this I would have believed was true: "It’s very satisfying that a company with the size and reputation of TransACT now sees Vocus as mature enough to be a selected as a major provider.” I know nothing about TransACT's reputation (I assume it is highly reputable) but if the clear implication in this press release is that a $A500,000 pa spend on IP is a major part of TransACT's IP provisioning then they can't have many IP/data users - which doesn't make any sense. So what is a 'sizable' communications company in terms of customers? I am assuming that an ACT user has similar downloads as other users in NSW (as opposed to Victoria where average usage is much higher). Not that it matters in any way other than I was surprised at what it seemed to indicate about a company that is quite prominent in the 'media' and has, apparently, invested what appears to be a great deal of money in its own infrastructure and bid for the Labor NBN1 and is, apparently, lobbying for a chunk of Labor's NBN2. I do believe that TransACT is much larger than that IP spend would indicate......unless...... .....unless TransACT is buying the IP bandwidth from Vocus at a much, much lower price than we were able to get it appears to me that TransACT wouldn't have more than 10,000 or so users which is a fraction of the number I have always assumed they had and therefore I can't believe its a sensible estimate. So the, pretty clear, implication behind the press release for me has to be that we must have bought IP bandwidth at a much higher price than TransACT has negotiated and that, presumably given the ownership structure of Vocus, much higher than the ISPs who are going to get IP bandwidth from Pipe are going to achieve later this year. It now deeply concerns me because over the IP transition we've just gone through we had been looking so closely at what sort of bandwidth is going to be required over the coming months and the just completed upgrade coincided with the release of the new ADSL1 plans (yesterday) and the new ADSL2 plans (later today) on which we have calculated the new lower plan prices based on likely usage indications and cost assumptions we are now contracted for. Have we (I suppose I should more correctly use 'I') got the buy pricing, and therefore the sell pricing, completely wrong? It is a little unnerving to read an apparently innocuous press release and then feel a 'cold shiver' go down your spine as your sub-conscious starts to tell you that you need to re-look at what you casually read and then dismissed because maybe it means something entirely different. I can't go back and renegotiate the IP pricing now nor can I change the residential broadband parts of our FY 2010 business plan (which is only a handful of days away). So what the problem for Exetel might now be is that other ISPs are going to be buying IP bandwidth at substantially lower prices than we can buy at and therefore significantly impact our ability to remain competitive as the next few months deliver those possible cost savings to our competitors. I badly need a holiday, but if it is the case that we have bought badly then I may not be getting one for a very long time. Trackbacks
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Perhaps they have multiple suppliers? You seem to be reading too much into it.
Comment (1)
I allowed for that within the context of the press release wording.
Comments (6)
As you probably know, TransACT provide colocation services as well, so unless their reputation is not well-deserved, they'll be buying transit from multiple providers.
IP pricing is interesting at the moment - I'm getting offers of $200 - $250 / mbps from various decent providers for amounts around 15 mbps, amounts that I'd expect to be paying only at 100 mbps and up quantities a few months ago. Comments (3)
We will be very happy to sell you IP at $150.00 (ex gst)...plus the cost of the interconnect.
Comments (6)
Very serious consideration will be given to that offer of IP. Is that price nation-wide, or Sydney only?
If Exetel were going to make such a thing one of their typical corporate offerings, would you consider putting it on your web site? Comments (3)
It's available wherever you can connect to an Exetel PoP.
Yes, we will put it on the web site in the near future - it's on a very long list of things to do before 1/7/09. Comments (6)
May I suggest adding details about interconnect fees as well?
One of the problems we (and most other companies would have) is the fact that we're not colocated in PowerTel in Melbourne (and not all of of the places we've got gear in are on-net for PowerTel). Interconnect charges have ruled out a few companies in the past for us (and places I've consulted to), mainly due to complexity of pricing and confusion as to what exactly the interconnect provides in terms of redundancy and "raw" bandwidth. Comments (3)
Sure - we aren't co-located in Powertel's facilities in most places.
Interconnect costs are, of course, dependent on the interconnect method and size. Redundancy is a matter of buying two different carrier interconnects (in our case Optus and AAPT - or HSPA if the signal is good enough). Comments (6)
Good you didnt buy from VOCUS as they still route all Asian bound traffic via the states.
Comment (1)
"I am assuming that an ACT user has similar downloads as other users..."
I don't think so John. ACT is largely made up of people working for the government, they wouldn't be downloading illegal movies, would they? These people just use the net for email and the occasional web browsing (and maybe to forward some confidential emails), but all of that doesn't require much bandwidth... Comment (1)
...that would explain it - all the government employees in the ACT don't download anything but web images and email.
That's a relief - perhaps I haven't made a major error after all. Comments (6)
Don't forget manufacturing false Utegate emails for the public's amusement.
Comment (1)
Since you are both on PIPE's peering network in Sydney, go and have a look at the traffic graphs for both of companies and use that as a proxy to gauge the relative difference between you. It isn't 100% scientific but should give a feel for it.
The link is http://mrtg.pipenetworks.com/customers IIRC. Steve should have an account for that site. Comment (1)
checking PIPE graphs can be a good gauge but not always.
Vocus, for example does a lot of it's high volume peering on private interconnects. we of course might be a special case but maybe not the only one Comment (1)
I asked Steve who gave me this reply:
"For NSW peering, we average 370Mbps over the last month, TransACT averaged 30 Mbps. So roughly we take about twelve times as much peering traffic, and if you were to use extrapolation, should use about nine times as much Internet traffic. For comparison, TPG's average is 581Mbps and Dodo's is 245Mbps." So unless TPG has a lot less customers in NSW than seems likely (which I don't accept) then using Pipe peering as a guide isn't going to produce a meaningful comparison. Comments (6)
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