A study conducted by “The Economist” magazine, showed a strong
correlation between the price of a “Big Mac” in a country and it’s cost
of living. The cost of living—rent, consumer goods, food,
entertainment( www.ticketnest.com ) is usually significantly higher in
the US than in the developing world(and so is the price of a “Big
Mac”). However, “Big Mac” index notwithstanding, the price of internet
bandwidth in the third world is off the charts. As a point of
comparison, a 1 Mbit/sec ADSL costs about 20 dollar for a home user in
the US, and about 800 dollars in Pakistan. Needless to say, there is a
strong need for a reduction in cost and improvement of quality of
service.
The issue with the developing countries is the lack of infrastructure.
Our case study of Pakistan showed that all of Pakistan has only one
backbone fiber line, resulting in bottlenecks. The lack of redundancy
has its costs—in July 2005 the fiber wire got severed resulting in
massive outages. The back up satellite connection was hardly a solace
to the burgeoning IT industry of Pakistan.
A significant percentage of traffic in Pakistan is domestic, but it’s
routed through servers in the US and Europe. A trace route from one
Pakistan ISP to another yields a shocking pattern—packets traveling
from Pakistan to UK, US, Singapore and back to Pakistan. The situation
is exacerbated in the case of fiber failures, when the traffic gets
routed over multiple satellite hops. The latency is about 700
milliseconds/hop(or about 1.5 seconds for every transaction). This not
only adds latency, needlessly raising costs but chokes the connection
slowing down genuine Pakistan to international traffic.
Internet Exchange Point is a facility to allow the exchange of traffic
between multiple ISP’s. In general the ISP’s have to pay to the tier-1
providers or the governing body(say Pakistan Telecom Authority) for the
carriage of traffic. Even if the traffic is local, without the Exchange
Point, the traffic is routed over the international internet.
The peering arrangement allows local ISPs to exchange traffic on a
barter basis, rather than on a cash basis—net neutrality being the key.
Such arrangements bypass ITU protocol, regarding revenue sharing and
allow net lower cost to all the ISP participants.
The exchange point essentially allows the ISP’s to segment the traffic,
according to the destination and by pass the tier-1 providers. Results
are dramatically lower cost and lower latency.
The entrenched incumbents in developing countries(such as Pakistan)
have the most to lose from domestic exchange of traffic and are the
biggest impediments to the adoption. The governments of such countries
also have a vested interest in supporting the monopoly of Telecom
companies, given the revenues and taxes received. The larger ISP’s also
have a vested interest in using high cost of connectivity to hasten the
exit of smaller or less capitalized players through attrition.
In conclusion, to reap advantage of internet exchange points, the
telecom companies have to overcome their monopolistic ways and there
has to be an effort to make a neutral body responsible for the traffic
sharing facilities. The lower cost of internet will actually foster
overall growth in overall traffic, which will compensate the
monopolies’ initial loss of international traffic.
For more information about Satellite Internet Exchange visit: http://www.nayasat.com/satellite-internet-exchange.html
correlation between the price of a “Big Mac” in a country and it’s cost
of living. The cost of living—rent, consumer goods, food,
entertainment( www.ticketnest.com ) is usually significantly higher in
the US than in the developing world(and so is the price of a “Big
Mac”). However, “Big Mac” index notwithstanding, the price of internet
bandwidth in the third world is off the charts. As a point of
comparison, a 1 Mbit/sec ADSL costs about 20 dollar for a home user in
the US, and about 800 dollars in Pakistan. Needless to say, there is a
strong need for a reduction in cost and improvement of quality of
service.
The issue with the developing countries is the lack of infrastructure.
Our case study of Pakistan showed that all of Pakistan has only one
backbone fiber line, resulting in bottlenecks. The lack of redundancy
has its costs—in July 2005 the fiber wire got severed resulting in
massive outages. The back up satellite connection was hardly a solace
to the burgeoning IT industry of Pakistan.
A significant percentage of traffic in Pakistan is domestic, but it’s
routed through servers in the US and Europe. A trace route from one
Pakistan ISP to another yields a shocking pattern—packets traveling
from Pakistan to UK, US, Singapore and back to Pakistan. The situation
is exacerbated in the case of fiber failures, when the traffic gets
routed over multiple satellite hops. The latency is about 700
milliseconds/hop(or about 1.5 seconds for every transaction). This not
only adds latency, needlessly raising costs but chokes the connection
slowing down genuine Pakistan to international traffic.
Internet Exchange Point is a facility to allow the exchange of traffic
between multiple ISP’s. In general the ISP’s have to pay to the tier-1
providers or the governing body(say Pakistan Telecom Authority) for the
carriage of traffic. Even if the traffic is local, without the Exchange
Point, the traffic is routed over the international internet.
The peering arrangement allows local ISPs to exchange traffic on a
barter basis, rather than on a cash basis—net neutrality being the key.
Such arrangements bypass ITU protocol, regarding revenue sharing and
allow net lower cost to all the ISP participants.
The exchange point essentially allows the ISP’s to segment the traffic,
according to the destination and by pass the tier-1 providers. Results
are dramatically lower cost and lower latency.
The entrenched incumbents in developing countries(such as Pakistan)
have the most to lose from domestic exchange of traffic and are the
biggest impediments to the adoption. The governments of such countries
also have a vested interest in supporting the monopoly of Telecom
companies, given the revenues and taxes received. The larger ISP’s also
have a vested interest in using high cost of connectivity to hasten the
exit of smaller or less capitalized players through attrition.
In conclusion, to reap advantage of internet exchange points, the
telecom companies have to overcome their monopolistic ways and there
has to be an effort to make a neutral body responsible for the traffic
sharing facilities. The lower cost of internet will actually foster
overall growth in overall traffic, which will compensate the
monopolies’ initial loss of international traffic.
For more information about Satellite Internet Exchange visit: http://www.nayasat.com/satellite-internet-exchange.html
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