Paying Too Much for Network Bandwidth? Why You Should Choose Burst Over Flat Rate Circuits
Hi. I'm Max Clark. I'm going through some q and a. The question is related to flat rate circuits versus burst and why I push people away from flat rate circuits. Okay.
Speaker 1:We should talk about bursting first and different options for burst. Some carriers will give you dynamic capacity. I'm going to go back in time here. Let's say you ordered 100 meg circuit. They deliver you a 1000 meg port cap you at a 100 meg via rate limiting mechanism.
Speaker 1:And then you could call in. You could get done dynamic capacity and bursting up to 3 x your your circuit speed. So you could go from a 100 meg to 300 meg and then back down to a 100 meg after some amount of time. By the way, you paid a mighty premium for that circuit for that burst. I don't like that burst.
Speaker 1:You know, that kind of product in a telecom, it's almost completely died out. There's a reason why it's almost completely died out. It's not a great product. I'm talking about nth percentile billing. So most commonly, it's 95th percentile billing.
Speaker 1:Some carriers will do 90th percentile billing. The way a 90 5th percentile billing works is support gets delivered to you. This is very common in the data center world. If you're in a carrier neutral data center facility, if you're in a data center, if you're building on a pop and you're taking some kind of high capacity circuit, you know, in a wholesale carrier space or way, you're gonna get a purchasing circuit 95th percentile. And you've got really 4 things of that circuit.
Speaker 1:Right? You've got the port speed of that circuit with the port capacity is 1 gig, 10 gig, 100 gig. I mean, technically, you do 40 gig, but who just 40 gig? So 100 gig, 400 gig. You've got the committed information rate CIR.
Speaker 1:Some people say committed data rate, CDR, but let's just say CIR. So if you take a 10 gig circuit, your CIR, your minimum CIR on that circuit would be 1 gig, 10%. Some carriers will force you into 20%. 10% is pretty standard, especially for common circuits. Like, today's world, 10 gig, you just get a 1 gig CIR.
Speaker 1:If you're a 100 gig, maybe you see some carriers that wanna push you into a 20 gig CIR. Just know you can usually get 10 gig for that. So that CIR is the minimum amount that you're gonna pay every month. So that's your fixed committed. You're gonna pay this bill.
Speaker 1:So you've got your port speed, you've got your CIR, you've got your price for your CIR, and then you've got your bursting rate. 20 years ago, your bursting rate was gonna be a multiple of a premium on top of your CIR rate. 300%, 100, 200%, 100 and 50% good days of bandwidth. Maybe you're paying $5 per meg on your CIR and you're paying 7.50 a meg on your burst. So there was an incentive for you to optimize your commit rate versus your burst because of the billing structure.
Speaker 1:Nowadays in today's world, it's the norm to see your bursting rate the same as your commit rate. So your commit rate will decrease and your burst rate will be fixed with whatever your commit rate is. So if you're committing to 1 gig, there's a better rate if you commit to 2 gig or 5 gig, but you're not paying an additional premium on that burst. So the last part of this is the actual billing engine. And there's a lot of subtleties with this one and you have to read the fine print.
Speaker 1:So what's supposed to happen is every 5 minutes the carrier's billing system is going to sample the speeds. They use s and m p they interrogate the switch of the router and they pull stats off the port and that port that's that counter that comes back shows you reports a counter and it just says you know okay at this reading the counters is number and it shows you an in number and out number and so gets recorded into the billing system. At the end of the month, 95th percentile is a statistical representation. So you take all of the numbers that have been received and you order them from highest to lowest. And when you say you, this is what the software is doing.
Speaker 1:It gets ordered from highest to lowest and the top x percent. So the top 5% of samples are ignored. And then the next sample is what becomes the actual build sample is. And when I say there's some subtleties and there's some things you have to read the fine print on. For the most part, your traffic pattern is going to be consistent on a month over month basis.
Speaker 1:You're gonna have heavy ingress so if you have a lot of eyeballs you're gonna be pulling traffic into your eyeballs so if you're in an office you're pulling traffic in if you're a residential ISP you're pulling traffic in if you're serving content you're pushing traffic out if you're in some sort of p2p or blockchain application you're probably equalized you're seeing the same traffic in and out you know it's equal but the reason I point this out is the billing system will it will take an order can either take an order all of the ingress and all the ingress, drop the 5th percent, and then look at what's higher ingress or egress or can do it on a sample by sample basis. So with each entry, each 5 minutes, say ingress was higher, egress was higher, ingress was higher, egress or higher. And depending which one they're doing, you end up with different rates and that rate could be higher or lower for you it's not a huge deal but it is something just to be aware of and understand how that billing system actually a billing engine actually works the trick and the secret with 95th percentile billing is you will never run I mean exception of P2P and block blockchain, you will never run your circuit at full tilt.
Speaker 1:If you do, let me know. Flame me below in the comments. Fine. But whatever. For the 99.15 nines of the rest of the world, you never run your circuit at full tilt.
Speaker 1:With my network service provider, when we were running this and doing Metro Ethernet circuits for enterprises, it was unusual to see a customer with an nth percentile at 90% help 30% of the circuit capacity. So for our internal network capacity sizing, we were sizing full circuits and understanding what would happen if all of our customers went full tilt. But the expectation with the customer, we're actually doing pricing and selling GigE circuits, for instance. It was very strange to see a customer with a 300 meg 90th percentile. The average office was probably running somewhere in the lines of, like, 3 to 400 person office with a GigE circuit.
Speaker 1:Their 95th percentile is usually like 30 to 40 meg 50 meg. Now bandwidth consumption has gone up to some degree but it's still I mean think about that from a service provider over under. You're buying a giggy circuit and you're using 30 meg because that's by the way how that service provider gets built. A service provider gets charged by the cost of delivering the port to you. So what does that circuit actually cost to get to wherever you are in a data center that's 0 because they're not paying for it.
Speaker 1:You're paying for the cross connect in a metro environment. They're either constructing fiber to you or they're paying somebody else for that fiber. So there's a different cost. Right? So the cost of the actual circuit to you is one half.
Speaker 1:The other half is the actual assumed cost bandwidth. So if they've sold you a Gigi worth of capacity or paying for a Gigi worth of capacity and they're only paying for 30 or 40 meg, it's a phenomenal arbitrage for them. This is where service providers actually make money, especially since their buy rate is much lower than their sell rate. Right? So if you've never done this, it's a little scary because you don't really understand what it's gonna cost you.
Speaker 1:And this is this is why having no premium on your burst rate is great. I mean, so get a 10 gig circuit, sign up 1 gig CIR on that circuit, budget it for the whole 10 gig of consumption. If you really, you know, by the way, doing it that way is not gonna be much more money than just committing the full 10 gig at the 1st place budgeted for 10 gig. And guess what? You're gonna end up with, like, 9 gig worth of budget capacity, probably month over month that's coming back into your budget.
Speaker 1:And it's gonna be wonderful. You can be able to reallocate that money to places. If you have the option to take a 95th percentile, take the 95th percentile. It is almost always going to work out in your favor, especially if you're talking about delivering capacity into a location. So into your office, into your warehouse, into manufacturing facility, whatever it actually is, where you have users sitting.
Speaker 1:If you've got users, if you have eyeballs where you're consuming, you're pulling bandwidth in, you know, 95th percentile is just a phenomenal advantage for you. And then you get all the benefits. Okay. So anyways top top bottom what does that mean average month is 730 hours of traffic you get roughly 30 hours 30.1 hours of free bandwidth every every year if you're doing the math if you're doing a nightly backup when you're putting something off-site to a immutable backup you know some kind of cloud based archival storage. If you've got a 10 gig circuit, you could saturate that 10 gig circuit at 10 gig 1 hour night for the entire month, and it doesn't impact your bandwidth.
Speaker 1:So that, you know, think about your offset replication outside bandwidth costs of how long does it take you to run your incrementals, run your backups, you know, send that data out. And if you're on a 1 gig versus a 10 gig, what would change? Yeah. Go go get a free 10 gig. Get a 10 gig.
Speaker 1:Use it to saturate your back you know, your backups, your off sites, you know, create a return to office benefit for your company and for your employees where, hey, we've got 10 gig. You know, you're probably not 10 gig of the desktop yet. Hopefully, you're in an upgrade cycle about that's gonna start kicking in where you're gonna do 2 and a half gig to the desktop. Maybe you skip 2 and a half gig and you go straight to 10 gigs to the desktop. But, you know, like, slow bandwidth sucks for people.
Speaker 1:Fast bandwidth is great. People should sit down their desk and browse the Internet and be like, wow, this thing is so fast. I don't even know what happened. Anyways, I'm gonna go on a complete tangent. I'm gonna try not to get it together.
Speaker 1:That's why I tell everybody if you can and the service provider supports it, take the option, get a 95th percentile, do the bursting bandwidth. It's fantastic. It's gonna work in your favor. You're gonna get more bandwidth for less money. Let me know if you have any questions, comments, concerns.
Speaker 1:Put them below. We'll get back to you.
