International Bandwidth Costs

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Peter_J

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I have been trying to get some kind of handle on the additional cost of bandwidth caused by South Africa's remoteness from the USA ie: the extra cost we would expect to pay on top of network interconnect charges once we are connected to the remote backbones. The only reference I have been able to find ( not being involved in academic institutions ) is this:

http://www.safoundation.org.za/documents/12568Telecomm_web.pdf

If one looks in Box 1 on Page 22 there are some figures mentioned. So here goes with some cigarette-box calculations ( if they still sold Texans in 30 packs, I'd have a real cigarette-box! ). Some assumptions are made.

Cost of the cables = US$650,000,000

Capacity COULD be increased :

"Given current technology, and the appropriate switching infrastructure, it is possible to increase system capacity on SAT-3/WASC to 120Gbs and on SAFE to 130Gbs."

Say another US$50,000,000 to do this, and another US$50,000,000 for maintenance, and we get:

Cost of 250 Gbs bandwidth = US$750,000,000

The cable set has a "system design life of 25 years". To be generous, let us write the cables off over 15 years.

Therefore cost of 250 Gbs per annum = US$750m / 15 = US$50,000,000

Divide by 365 to get cost per day = $136,986

Multiply by R6-90 to get SA Ront per day = R945,003

Bandwidth part:

We have 250 Gb/sec

Allow 10% for headers and stuff = 225 Gb/sec

x60, x60 = 810,000 Gb/hour

Divide by 8 to get bytes = 101,250 gigabytes/hr

Times 24 to get a day = 2,430,000 gigabytes/day

Putting it together:

2,430,000 gigabytes costs R945,003 = R0-39c/gigabyte.

This is before markup. Mark up by 100% and fudge, and you get 80c/gig on top of network charges.

I do understand that the assets ( cables ) are not being sweated and are reportedly running at 40Gbs each = 80Gbs total. Take R0-39c, divide by 80, multiply by 250, and you get R1-21c cost/gig.

Add this to what you can buy a gig of traffic for in the USA, and that is what we could be paying.

If elephants could fly, of course.

Looks so far off R75/Gb, that I must have missed something or cocked something up. Any comments?
 
yeah seems about right to me. But hey it is Telscum we talking about here so I wouldn't expect any less. That is a very decent markup if I say so myself *ev0l capitalist grin*
 
Yes, your calculations seems a bit flawed. All you've calculated there is the repayment and maintenance costs. What do you propose that pipe connect to? Telkom presumably purchases bandwidth from whichever ISP they terminate the line with and that needs to be factored into you calculations.
 
I dont think it should make a dent in your calculations as cost per gig, but remeber Telkom dont have access to 100% of either of these cables, only about 20-30% if I remember correctly.
 
SuperAntMD said:
I dont think it should make a dent in your calculations as cost per gig, but remeber Telkom dont have access to 100% of either of these cables, only about 20-30% if I remember correctly.
Click to expand...

Yeah, but that means that they pay 20-30%. Ok maybe a bit more, since we are the furtherest, so make it 40%. Still doesnt get us to the R75/gig figure... They just raping our bank accounts.
 
Welcome Peter J

I actually couldn't give a sh%t whether your calc's a way out or not. Thanks for contributing.
 
Telkom does not buy bandwidth .......

On the local level they build it and it is my understanding that at the Telco level you no longer buy "bandwidth", but rather just peering at the large international Internet hubs in Europe or the States, similar to JINX.

They pay for the size of the connection, not how much is transported over it.

This would apply to first tier ISP's in a deregulated environment as well.

I was in the VAN & ISP industry for quite some time and real ISP's will sell you a combination of local & international bandwidth, which is why I can't understand Telkom or IS's aproach of one size fits all.

i.e. 128 Kb International & 384 Kb local to make up your 512Kb connection.

Ever ordered a 512Kb diginet circuit and 512Kb assorted bandwidth ; never. It should be specified.

Is it somehow a problem for Telkom to differentiate between local and international traffic ?

How difficult could it be ?

The best analogy is that the Internet in spirit should be the same as writing a letter. You pay for your stamp and the receiving provider on the other is obliged to deliver it. They would expect the same when sending mail your way.

It is bound to get messy if one party controls all the peering. This is how they put the squeeze on IS. They also control all the access infrastructure, which is why they have us by the short and curlies.
 
AFAIK, Telkom have already made ROI i.e. in excess of cost on the SAT-3 cable .. i.e. they've already made it back and more. Also, SAT-3 is not running anywhere near capacity yet - it's mostly lying dark, there is no need to upgrade until probably at least 2010. Hence the only "cost" now is peering, isn't it? I.e. how much they pay to the upstream providers. That's the 'secret figure' you want. Someone recently posted a link to a nice map of SAIX international peering (without prices though of course :/), but I can't seem to find it now. (Here's a different one but not the one I was looking for: http://www.ispmap.org.za/topmap.html)
 
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Well,

FWIW a gentleman I met in germany told me that peering costs in germany are around R 8000 per 100 Megabit of bandwidth. That is per month. Traffic is not metered.

How much is a 100Mbit Diginet Line in South Africa?

greets

Tim
 
Turtle said:
AFAIK, Telkom have already made ROI i.e. in excess of cost on the SAT-3 cable .. i.e. they've already made it back and more. Also, SAT-3 is not running anywhere near capacity yet - it's mostly lying dark, there is no need to upgrade until probably at least 2010. Hence the only "cost" now is peering, isn't it? I.e. how much they pay to the upstream providers. That's the 'secret figure' you want. Someone recently posted a link to a nice map of SAIX international peering (without prices though of course :/), but I can't seem to find it now. (Here's a different one but not the one I was looking for: http://www.ispmap.org.za/topmap.html)
Click to expand...

Check out the Telkom presentation from the MyADSL conference.
 
Thanks for the feedback on this. I have been trying to search for peering or transit prices in the USA and have found a few, but prices are things corporates like to hide for obvious reasons.

MyDraadloos is right - it appears to be charged by line speed not by traffic. I have found figures from US$20 up to over US$120 per gigabit/s. I am sure big users like Telkom would get the low end or less than that. I have found mention of contention ratios of 1 to 5 too, so taking a stab at it, the dollar cost per user of a 1Mbs line would be between US$4 and US$24 per month.

In my calculations at the start of this thread I did not take into account potential underutilisation of the lines. Being MOST GENEROUS, allowing for only 25% utilisation, you get to roughly R1-21c x 4 = R4-84c/gig.

Now, say Telkom allowed you 30Gb per month on your 1Mbs link, that would be at cost to them R145-20 plus say US$10 = R69 giving a total cost of R214 ( just over R7/gig ). Looking at what they want to charge for this - 30Gb at R75 = R2250.

Personally I believe that my calculations err wildly on the expensive side, and my ample gut says Telkom's cost would be less than half the R214.

[ I have heard though, on the grapevine, that one non-Telkom ISP ( no names no pack drill for fear of spoiling the party ) has a cost of about R250 on an uncapped 512k link. So maybe I am not too far off. It is this per-gig nonsense that throws everything, because the rest of the world seems to work by line speed charges, not traffic charges. ]

This is pure profiteering even if my calcs are in the ball park.

Any corrections or comments?
 
Having read all of this - and I am sure that our understanding of how much bandwidth really cost is not far off - makes me wonder why we pay an ISP fee in this country.

OK - I understand why - due to the local loop not being unbundled. But come to think of it, like Telkom do with international peering we also rent a "pipe" and for this we pay line rental to telkom. This should be all we have to pay, as the volume I can send / receive through the pipe is determined by the pipe size, and that is what I pay line rental for - the pipe size.

Having to pay R477 for a 512k pipe sounds reasonable, although more expensive than international norms, but still, affordable (like R270 for a 192 pipe). How much volume I put through this pipe is then my business.

Problem is, this concept will not work until the local loop is unbundled and ISP's have access to it - and telkom be stopped to charge double for two 0.5mm copper wires to my house
 
"Also, Telkom plans on increasing the cost per gigabyte it charges ISPs from R6,33 to R59."

Die Ma Se..................................
 
Spamtheman said:
Yes, your calculations seems a bit flawed. All you've calculated there is the repayment and maintenance costs. What do you propose that pipe connect to? Telkom presumably purchases bandwidth from whichever ISP they terminate the line with and that needs to be factored into you calculations.
Click to expand...

Yeah, when will those networks pay us to have access to our networks? :D
BTW he mentioned it ;0
 
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