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OECD 2012 report on Internet Traffic Exchange Bill Woodcock Dennis Weller


Latest in a Five-Year Periodic Series OECD Directorate for Science, Technology and Industry Committee for Information, Computer and Communications Policy Working Party on Communication Infrastructures and Services Policy Internet Traffic Exchange: Market Developments and Policy Challenges Intended to provide advice on Internet market conditions to telecommunications regulators in market economies.


Main Findings: The Good News Where competition has been allowed in the Internet market, it has produced low prices and high quality of service, while attracting high levels of investment and innovation. The Internet offers higher reliability and performance than the voice network, at a cost five orders of magnitude lower. Uniform market terms have prevailed universally, without regulatory intervention.


Main Findings: The Bad News A significant risk remains that the inefficiencies of the telephone market and regulatory structure will be imposed on the Internet. Approximately half of all countries still rely exclusively on imported Internet bandwidth, with no domestic production facilities. The economic downturn of 2001 brought basic optoelectronic physics research to a halt, starving the pipeline that produces faster network interfaces.


Internet Bandwidth Production Occurs in Internet Exchange Points (IXPs), where the cost is near zero. Bandwidth is transported from IXPs to customers by Internet Service Providers (ISPs) This transport service typically costs between USD 1-100 / mbps / month, depending upon distance from major IXPs.


Today, only 50% of countries have IXPs. The remainder import all of their bandwidth. https://pch.net/ixpdir/summary


The largest net exporters, and largest consumers, of Internet bandwidth are large developed economies. https://pch.net/ixpdir/summary/growth


Global Distribution of IXPs


Uniformity of Interconnection Terms Unlike the 20th century telephone network, the terms of interconnection in the Internet are remarkably uniform. 99.51% of interconnections required no written contract, and 99.73% had symmetric terms. This uniformity is global, and extends equally to non-service-provider networks.


Governing Law of Agreements 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 US

CA

JP

SG

UK

AT

SE

NL

IE

NZ

TR

IT

AU

PH

ID

PL

BG

UA

RO

Probability of selection as a country of governing law, ten most-likely and ten least-likely countries

RU


Degree of Interconnection 1000 Hong Kong MLPA

Warsaw MLPA

Frankfurt MLPA

100

10

1

1

101 100

201 200

301 300

401 400

501 500

601 600

700

Distribution of number of networks (Y axis) with each quantity of interconnection partners (X axis)

Most networks have small numbers of interconnection partners. Of 4,331 networks surveyed, 62% have ten or fewer interconnection agreements, and only twelve of the represented networks have more than 700 interconnection agreements, yet this sparse degree of interconnection yields universal reachability.


Incumbent Monopolies Avoid Interconnection 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1,000 100 10 1

0

100

200

300

400

500

600

Number of advertised IPv4 addresses (Y axis) over number of interconnection partners (X axis) per carrier

700


Prevalence of IPv6 4000

3000

2000

1000

0 2003

2004

2005

2006

2007

2009

2009

2010

Number of autonomous systems advertising IPv6 addresses in the global routing table (Y axis) over time (X axis)


Effect of Research Underinvestment 10,000,000 10 tbps

115% annual growth (exponential)

1 tbps 1,000,000 100,000 100 gbps 10 gbps 10,000 500mbps/month growth (linear)

11,000 gbps 100 mbps 100 10 mbps 10 1 Jan-92 92 Dec-93 93 94 Jan-96 95 96 Dec-97 97 98 Jan-00 99 00 Dec-01 01 02 Jan-04 03 04 Dec-05 05 06 Jan-08 07 08 Dec-09 09 10 Jan-12 11 Optoelectronic interface speeds used in the core of the Internet (Y axis) by year of deployment (X axis)


Inefficiency of Meshed Switches 80 gbps 80 288 ports/switch 325 ISPs

70 gbps 70 60 gbps 60 50 gbps 50 40 gbps 40 30 gbps 30 20 gbps 20

48 ports/switch 25 ISPs

10 gbps 10 00 1

2

3

4

5

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Available bandwidth (Y axis) per number of meshed switches (X axis) for two combinations of switch size and number of participants


Minimization of Average Distance

Progression of largest European exchange toward the center of Europe population density


Absolute Growth in Production 1 Tb 1000000000

100 Gb 100000000

10 Gb 10000000

1 Gb 1000000 DE NL GB US JP RU SE PL HU CZ UA ES FR CN IT CA RO BR SK KR CH AT BE NO FI DK IS GR IN PT

Annualized absolute growth in domestic Internet bandwidth production, top thirty countries, 2005–2010


Percentage Growth in Production 10,000% 10000

1,000% 1000

100% 100

10% 10

1% 1 ZA UG EG CI KE TZ SZ MZ

IN AU BD CN JP KH KR NP NZ

RU PL UA LU DE RO SK CZ IE GR GB HR CH AT IS NL HU BE SE IT NO IL PT FI DK ES SI FR

BR CO AR

CA US

Africa

Asia-Pacific

Europe

Latin America

North America

Annualized percentage growth in domestic Internet bandwidth production, grouped by region, 2005–2010


Average Distance from Production 12,000 km 12000 11,000 km 10,000 km 10000 9,000 km 8,000 km 8000 7,000 km 6,000 km 6000 5,000 km 4,000 km 4000 3,000 km 2,000 km 2000 1,000 km 0 KE AU HK7 ID JP NZ 14 SG Africa Asia-Pacific

42 RU SE SK 49UK CA 56 AT BG21CH CZ DE 28 DK FR IE IT35NL NO PT RO US Europe North America

Average distance of participants from IXPs within each country, grouped by region


Regional Routing Announcements 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1

2

3

4

5

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Degree of overlap in announced prefixes (Y axis) by number of geographically distinct peering sessions (X axis) for five hundred unique AS-pairs


IPv4 Availability as a Limiting Factor 31

15

63

127

255

10

5

0 0

25 41.1 50

75 125 150164.4 175 82.2 100 123.3

216 205.5

246.6

275 287.7

325 379 328.8337 369.9

Distribution of Internet exchange points (Y axis) by number of participants (X axis)

411 411.0


Questions? Bill Woodcock woody@pch.net


Internet Traffic Exchange