Tag Archives: data-capacity

What question do you like most from a prospect customer?

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The question I like most is – “so how much money do you save me?” That’s usually a sign that we have shifted gears from pre-sales to negotiations. Even better, negotiations now start from the value we bring rather than the cost we incur.

Wholesale data capacity is quasi-commoditized (see Capacity Magazine), so market prices are known by the parties. Therefore it seems simple to calculate the value in replacing physical capacity with virtual capacity. Let’s consider an ISP with 3Gbps, paying $50/Mbps/month. By using DiViCloud, the ISP can now add 1Gbps of virtual capacity over the existing 3Gbps link. Seems simple – we provide a value of 50 x 1,000 = $50,000/month or $600,000/year.

It doesn’t end there. To add 1Gbps of traffic the ISP would typically take additional 1.2Gbps capacity, to avoid congestion. DiViCloud, on the other hand, generates virtual capacity, so there is no need to take spares; the traffic simply does not load the network. The alternative cost of 1.2Gbps physical capacity is $60,000/month or $720,000/year.

Moreover, DiViCloud’s capacity is charged by consumption, based on 95/5 model (see Dr. Peering). Physical capacity’s fees are usually for committed bandwidth, whether used or not. To compare apples to apples the ISP should consider the alternative price of burst-capacity rather than committed. Naturally this figure is higher. For example $65/Mbps/month, rendering DiViCloud’s value as $78,000/month or $936,000/year.

95/5 pricing model; Dr. Peering (http://drpeering.net/core/ch2-Transit.html)

The typical question at this stage is – “Yes, but all you are doing is deferring costs and not replacing them. As demand increases we will eventually have to purchase additional physical capacity”. Well, if this were the case, then once the physical capacity is in place the ISP could turn off DiViCloud.

Physical capacity & virtual capacity mix

Physical capacity & virtual capacity mix

Virtual capacity is equivalent to adding an upstream pipe; it provides perpetual benefit regardless of the basic physical capacity. Actually, the ISP should always plan to take about 70% of its capacity from physical upstream providers, while 30% will be provided as virtual capacity at Half Price.

Relevant Posts:

How can the IP price gap be bridged? Hint: Beam me up Scotty

Is IP Transit a commodity?

Demand for International data capacity grows 50% and more annually

Can Broadband Access Heal The World Economy? (To be discussed at G20)

 

 

How big is the developmental impact of broadband?

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Broadband Internet access and economic prosperity go hand in hand. Since many of our ISP customers are in emerging markets we were wondering as to the correlation between the two.

We used SpeedTest‘s household download speed, Wiki‘s Internet penetration and the World Bank‘s GDP per capita.

Correlating the connected-household speed with the GDP (top graph below) you find that every 1Mbps correlates to $1,000 GDP per capita. When taking the Internet penetration into consideration, i.e. the average speed (bottom graph below), every 1Mbps correlates to $7,000 GDP per capita.

GDP_vs_ConnectedDownloadSpeedGDP_vs_AvgDownloadSpeedThe demand on the international links is linear to the average household download speed. The higher the penetration and the wider the access network are, the larger the load is on the international links feeding the country’s demand for capacity.

Assuming bandwidth and GDP are not only correlated, but also causal – economies can grow by finding affordable means to expand their international capacity.

We are happy to offer international capacity at half the market price and take part in accelerating economies growth.

How did we get access to data flows of 100 ISPs worldwide?

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Our Global Data Flow Report became very popular, with hundreds of downloads and shares. We received many questions about the report and its observations. The #1 question had to do with the way we gained access to the data.

Our DiViCloud network serves ISPs worldwide with virtual capacity. DiViCloud comprises of PoPs (points of presence) located at major Internet junctions.

Close to 100 ISPs are served by the DiViCloud network. 100% of the international downstream traffic to the served ISPs passes through these PoPs. As traffic passes through the PoPs, the software in the PoPs collects traffic statistics. These statistics serve as the raw data for the current report.

The information gathered includes: Originating AS (autonomous system), Destination AS, Traffic volume and Bit-stream repetition. We analyzed this raw information to obtain the analyses in the report, such as the one below.

Please share you observations or questions about the Global Data Flow Report.

CDN Contribution to Int’l Traffic in Different Regions

Slowdown in global Internet growth – trend or hiccup?

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According to Telegeography’s Alan Mauldin, Global Internet capacity reaches 77Tbps, yet the growth is in decline due to a proliferation of CDNs and Cache.

The observation is indeed true, but it should be noted that the entry of a CDN or local Caching has merely a one time impact on growth ratios.

The analysis below simulates a single network operator, with some basic growth assumptions. Once the CDN and/or Caching solution is introduced into the network, a singular deceleration of international traffic is witnessed. In the following year demand reverts back to the organic pace – which is the product of broadband penetration and broadband speed.

The deceleration observed by Telegeography is a result of gradual introduction of CDN and/or Caching solutions . As such, systems will cover the market growth and return to its organic pace.

Want to learn more about Global Traffic? Follow our LinkedIn for or you can go here and fill out a form to be notified when the Global Data Flow report is available.

How can the IP price gap be bridged? Hint: Beam me up Scotty

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In my recent post I highlighted the differences in IP transit cost between locations. At the low end of transit costs are those locations where content is generated – major cities in which the major content server farms are located (typically in the US and in W. Europe major cities). Baseline prices of $0.5-1 per Mbps per month are the actual cost for placing it on the web. From there on, prices start to rise as the factor of transport costs go up and as the distance grows from the content source creation to the content consumption destination.

The further away the eyeballs are, the smaller the market is. The fewer the transport alternatives are, the longer the transport chain is – and the price of transport (obviously) increases.

Actually this model is no different than shipping any other goods. An orange in California costs $0.5 per kg in wholesale prices. In Vancouver, wholesalers charge $3 since they have to pay the $0.5 and an additional $2 transport fee, plus they want to make a profit. The supermarket owner in  the remote Whitehorse, Yukon, pays $12 for the oranges. What starts off at $3 in Vancouver, plus a cascade of transporters all the way to Whitehorse inevitably drives up the cost to sell those oranges. No one is ripping anyone else off in this process. But is there a way to provide affordable oranges to Whitehorse?

What if you could just teleport the oranges from California to Whitehorse? What if this teleportation could be achieved at fractions of the transport cost, and without involving any middlemen?

That’s exactly what we do at DiViNetworks; for bits, not oranges. We are able to teleport 30-50% of the content from its source to any destination worldwide, without loading any transport, and over any combination of transport networks. No data is lost along the way. That’s what we term VIRTUAL CAPACITY.

We share the price gap between our cost and the market IP price with our customers, guaranteeing that our customer ISPs pay HALF PRICE for the additional bandwidth.

Beam me up Scotty for a Free 14 Day DiViCloud Trial

Follow our LinkedIn for more information and statistics on International Bandwidth.

Demand for International data capacity grows 50% and more annually

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For 15 years I’ve been hearing the same argument against innovative ways to provide data capacity: “Demand for capacity will not grow forever”. Time and time again skeptics are proven wrong. Not only does demand continue to grow, but its pace far surpasses expectations.

Telegeography reveals that data bandwidth increases 50-100% year-over-year in various regions, as viewed below.

Europe, Asia, Oceania, Middle East, Latin America, Africa, US & Canada

Regional International Bandwidth Growth 2007-2011

The demand for doubling capacity in the Middle East and the high growth in Asia, Africa and LATAM can be accounted for the increasing penetration of fixed and mobile broadband in those regions.

Yet at the low-end of the spectrum, developed countries demonstrate 50% annual growth, surpassing Cisco’s VNI growth forecast and at the time dismissed saying “Cisco publishes fantastic forecasts to steer the market.” This growth is not fueled by increasing broadband population, but rather by increase in media, bit-rate and more time spent online.

Taking into consideration that the deployment of CDNs offset much of the growth, the actual demand may be significantly higher.

So after all, international bandwidth requirements continue to boom. Innovative affordable ways to scale international data transport are a must, and will continue to be so in the foreseeable future.

Euro 2012 – A view from the content side

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In yesterday’s post I decrowned the Internet as the medium for watching planned live event. A comment from Svetoslav Hristov of Evolink revealed a different picture. Evolink put Euro 2012 online for the Bulgarian national TV. See figure below.

Evolink CDN traffic during Euro 2012 semi-finals and final

As opposed to the decline in traffic viewed at Internet Exchanges (IX) during matches, Evolink’s traffic increased from around 5Gbps to over 17Gbps during the final. That’s a very high impact compared to around 60Gbps total Bulgarian IX traffic.

The decline in IX traffic as observed by RIPE is due to people being busy with watching the match on TV or Internet. It would have been much deeper if live traffic was omitted.

Euro 2012 – TV is still king (but watch the throne)

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In the aftermath of Euro 2012 (and no, I’m not trying to replace Prandelli’s…) we learn one clear lesson – TV still dominates live video consumption.

The figure below (source: RIPE’s study) shows traffic in DE-CIX Munich Internet Exchange during the Germany-Greece match (22 June), compared to traffic same time in previous weeks.  As people get ready for the match – driving to friends, catching a nap, cooling the beers – Internet traffic declines. During the break they turn to check out what others say on the net.

Traffic seen at DECIX Munich during Germany v Greece match on 22 June 2012

Yesterday’s final was no different. Check out TOP-IX - Torino’s Exchange point – traffic stats.

Traffic seen at TOPIX Torino during Spain v. Italy match on 1 July 2012

So TV is still holding the throne for planned live events. Yet, we are keeping a close look on two trends:

Near-live traffic is booming. Missed the goal? Want to hear the Spanish Goooooal? Wish to poke your Italian friends? Go to the web.

Many events are not freely accessible on TV. Some events are premium, whereas others are just not broadcasted at all places. DiViNetworks serves many territories where people turn to the Internet to take part of such mainstream events. One example is presented in the graph below, demonstrating traffic growth during  a soccer match, as well as DiViLive‘s capability to flatten live traffic. The red marks the traffic actually passing on the link, and the green marks the virtual capacity generated by DiViLive (operating on live and near-live data). The traffic added due to the live event is shrunk to 10% of its original size.

Traffic during a soccer match flattened with DiViLive

Can Broadband Access Heal The World Economy? (To be discussed at G20)

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In an open letter the ITU (International Telecom Union) urges G20 leaders, meeting in Mexico next week, to define targets making broadband affordable in all countries. ITU claims that Broadband (BB) is the remedy to recession and recommends top-priority targets:

  1. Universal BB policy – all countries should have BB plan
  2. Affordable BB – by regulation and/or market forces
  3. Connecting homes to BB – 40% of homes in developing countries
  4. Getting people online – 50% of population in developing countries should be Internet-literate

Providing affordable BB in developing countries is not a simple task. Take a look at the table below depicting two cases, serving a territory with population of 500,000 in developing vs. developed country.

Apparently, the transport cost, just to ensure reasonable ROI, is highly sensitive to physical distance and link utilization, rendering transport to developing countries extremely expensive. Carriers are therefore reluctant to invest in such links, making international data transport a monopoly exactly in those cases in need.

Regulation can only press vendors’ profit margins. Market forces are totally irrelevant in the developing world. Connecting developing countries to the world is therefore up to pseudo-philanthropy (a la World Bank), or to technological solutions changing the table above. And guess what – such are DiViCloud and DiViLive.

What’s Common to Helena, Montana and Cochabamba, Bolivia? (hint: data capacity cost)

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We’ve often been asked if virtual capacity is relevant only for developing countries, or are data-optimization-services required in USA and Europe too. So we hit the road, met a bunch of ISPs in rural USA, participated in a WISPA event, and started working with distribution channels.

The traffic mix in rural USA is not significantly different from other places, and thus DiViNetworks’ guaranteed 30-50% capacity expansion can be reached. Calix did a great job, and analyzed 45 rural ISPs (here).

Traffic mix in rural USA ISPs

You can also learn that even a small ISP with 1,000 subscriber will need about 500Mbps Internet capacity (36.7GB per sub per month, assuming 6 hours effective per day).

In most cases only one carrier is laying fiber to rural towns (a.k.a. middle-mile), spending $25-60K per mile, and expecting reasonable ROI. Wholesale prices range between $20/Mbps/month and $200/Mbps/month. That’s without counting the backhaul often required. In that sense Helena, Montana is no different from Cochabamba, Bolivia.

Simple calculation shows that even a small ISP will have to spend $20K per month (500×40), making Internet connectivity a huge obstacle to profitability.

The thousands of rural ISPs, and tens of thousands of rural campuses, for which DiViCloud can virtually expand capacity by 30-50% make an interesting opportunity. With our US PoPs at major Internet junctions, this will soon become a reality.