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DevelopingThe Case for NRENs
(A BIT MORE)revised 08-October-2008
TF-MSP / TF-PRZürich 30 September 2008
John DYER
TERENA
Slide 2
Where did we get up tosince 18 May 2008?
› DRAFT for DISCUSSION version 1› www.terena.org/activities/tf-msp/documents/nren-case-v1.pdf
› Suggestions at last meeting› Presentations in TNC 2008› Discussions at the GA› Emails on the TF-MSP list› Compendium data and trends› Discussions with CEO of REANNZ
Major Suggestions from May TF-MSP/PR meeting
› Different NRENs have different situations› Create a number of scenarios
› What-if: Issues with Regulator
Commercial / Competition issuesDissatisfaction from the user/bill-payerLack of Political Support
› There are potential dangers in the environment in which we operate
› Keep aware of regulatory, political & commercial impact of our portfolios may have
Slide 3
Presentations during TNC 2008
› some serious questions about the future of research networks.
› Do NRENs need to develop more functionality? › Should NRENs think about a new business
model? › Should NRENs remain separate from other
(public) services? › If NRENs do, will they die, be superseded by
the more rapidly developing commercial sector, or continue alongside as a niche market?
› have to offer what people want, not necessarily the technology that is best
Slide 4
TERENA GA DiscussionsMay 2008
› “FREE” services - being used by NREN some customers› Are they really FREE? What are the costs, implications?› NRENs should make use of their position and explore new
opportunities
› Increasing NREN collaboration on Cross-Border-Fibres› Relies less on centralised international connectivity model› Requires common agreements on SLA, CP, AUP, Security
› Connections becoming available at prices below those currently being paid in the NREN community
› Procurement by NREN at national level is cost effective
› NRENs are able to provide services tailored to the community› Users value the services › End-to-End community can sort out issues (PERT)
Slide 5
Email Discussions
› We are here only to foster tele-informatic services in higher education and research
› We found building a community is useful› Whenever services become mainstream pull-out
› NRENs should be better and cheaper than the market?or
› As the gap between ISP offering and NREN services closes in terms of price and capability NRENs should: a) compete on equal terms ?
b) disappear ?c) re-think their role ?
Compendium 2008 findings
› NREN Traffic › The NREN approach to QoS› Where is the traffic going› IPv6 rollout
› Funding› Economic Models
› Agency/Principal v Transaction Costs› Free market
› Leading to the conclusion that› Competition is better than Cooperation ?
› Hybrid Solution ?
Slide 7
NREN Traffic to External Networks
%T3 and %T4 in 2008, EU/EFTA
0%
5%
10%
15%
20%
25%
Mol
dova
Irela
nd
Slo
vaki
a
Uni
ted
Kin
gdom
Net
herla
nds
Isra
el
Sw
eden
Aus
tria
Hun
gary
Den
mar
k
Cze
ch R
epub
lic
Bel
gium
Finl
and
Luxe
mbo
urg
Bul
garia
Sw
itzer
land
Icel
and
Latv
ia
Bela
rus
Rus
sia
Cro
atia
Pola
nd
Mal
ta
Ger
man
y
Italy
Mor
occo
Spa
in
%T3 %T4
› Seven large net importers of data in EU/ETFA region
› In Europe most outbound traffic amounts to no more than ~10% of available link capacity
› How does this compare with the Internet generally ?
% E
xte
rnal
Lin
k U
tilisa
tio
n
Utilization
› The backbones of the Internet are run at 10% to 15% of their capacity
› Private line networks are utilized 3% to 5%. › low utilization of data networks is not a symptom of
waste.› Low utilization rates lead to great opportunities for
higher quality or less expensive service from aggregation of traffic.
SOURCE: Andrew Odlyzko, University of Minnesota
Data networks are lightly utilized, and will stay that wayReview of Network Economics, 2 (no. 3), September 2003, pp. 210-237http://www.dtc.umn.edu/~odlyzko/doc/networks.html
Compendium Survey on QoS
› Does the NREN offer the same levels of QoS on the network as those offered by GÉANT2?
› IP Best Efforts› IP Less than Best Efforts› Premium
YES 24% NO 76%
7% NREN hardware is not capable 21% NREN sees no demand for these services4% Not physically possible unless all domains in path participate4% Not economically viable57% Prefer to over-engineer the network12% Other reason
n=37
Slide 10
Why low utilization is necessary
› Low utilization comes from different patterns of use, lumpy capacity of transmission facilities, and the high growth rate of the industry
› Users value the ability to send data in high speed bursts, and that should guide us in the design and operation of networks
› Also need to address end-to-end performanceThe last mile – application tuning… etc,
Lightly loaded Saturated
NREN Traffic to and from Commercial Internet 2007
0
10
20
30
40
50
60
70
80
90
100
T3
T4
% o
f T3
,T4
tra
ffic
to
/fr
om
C
om
merc
ial
Inte
rnet
Sit
es
Traffic Sources and Destinations
› Traffic to/from global Internet is legitimate› NRENs may allow content providers to locate servers on their
network to improve access to content
› Aggregation of Global Internet traffic and procurement of peering makes economic sense.
T1+T2T3+T4
NREN sites
Trafficto/fromOtherGlobal
Internet
Externalcommunity
Total IP traffic g rowth on GÉ ANT2004‐2008
0
2000
4000
6000
8000
10000
12000
14000
F eb‐04
Apr‐04
J un‐04
Aug‐04
Oct‐04
Dec ‐04
F eb‐05
Apr‐05
J un‐05
Aug‐05
Oct‐05
Dec ‐05
F eb‐06
Apr‐06
J un‐06
Aug‐06
Oct‐06
Dec ‐06
F eb‐07
Apr‐07
J un‐07
Aug‐07
Oct‐07
Dec ‐07
F eb‐08
Apr‐08
Tbyte per m
onth
total IP
E xpon. (total
Total IP traffic growth on GÉANT2004-2008
Total IPv6 traffic growth on GÉANT2004-2008
IP v6 g rowth on GÉ ANT2004‐2008
0
20
40
60
80
100
120
140
F eb‐04
Apr‐04
J un‐04
Aug‐04
Oct‐04
Dec ‐04
F eb‐05
Apr‐05
J un‐05
Aug‐05
Oct‐05
Dec ‐05
F eb‐06
Apr‐06
Jun‐06
Aug‐06
Oct‐06
Dec ‐06
F eb‐07
Apr‐07
J un‐07
Aug‐07
Oct‐07
Dec ‐07
F eb‐08
Apr‐08
Tbyte per m
onth
IP v6
Total IP and IPv6 traffic growth on GÉANT2004-2008
Total IP & IP v6 g rowth on GÉ ANT2004‐2008
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
11000
12000
13000
F eb‐04 May‐04 Aug‐04 Nov‐04 F eb‐05 May‐05 Aug‐05 Nov‐05 F eb‐06 May‐06 Aug‐06 Nov‐06 F eb‐07 May‐07 Aug‐07 Nov‐07 F eb‐08 May‐08
Tbyte per m
onth
IPv6 as a percentage of all IP traffic
GÉANT: Percentage IPv6 traffic
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%M
ar-0
4
May
-04
Jul-0
4
Sep
-04
Nov
-04
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep
-05
Nov
-05
Jan-
06
Mar
-06
May
-06
Jul-0
6
Sep
-06
Nov
-06
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep
-07
Nov
-07
Jan-
08
Mar
-08
May
-08
IPv6
/(IP
v4 +
IPv6
) per
cent
EU/EFTA NREN Funding Sources
User/ClientFunding
SHORT TERMhorizon
Non-User/Client Funding
LONGTERMhorizon
Elements of NREN Activity
ProductionNREN Commodity Services
Innovative Development
DIRECT VALUE
SPILLOVERVALUE
INDIRECT VALUE
TOTAL NREN COSTS
NREN Users/Clients see VALUE
User funding appropriate
PUBLIC VALUE
Central fundingappropriate
Acknowledgements to: Donald Clark, REANNZ
Relating Reality to Economic Theory
100% Central Funding
Percentage User Charging0% 100%
Perc
en
tag
e U
ser
Ch
arg
ing
100% User Funding
optimaloutcomes
sub-optimaloutcomes
Optimal ratio ?
Simplified Principal-Agency Theory Transaction-Costs Economics1
2007 EU/EFTA NREN Funding Sources
1) Acknowledgements to: Donald Clarke, REANNZ
Scenarios
› Regulatory
› Commercial / Competition issues
› User/bill-payer funding issues
› Lack of Political Support
Slide 21
Regulatory
Slide 22
› Cooperative relationship› Example: FUNET
› Converse› Example: SURFnet
› Issues:› Requirements for data collection/retention
and providing taps for agencies
› NRENs are not public networks› Closed user groups with limited scope› Need the Freedom to Innovate successfully
Commercial / Competition Issues
› No serious incidence of problems to date
› NREN Position:› NRENs are not open public networks› Closed user groups with limited scope (R&E)› Occupy a niche not served commercially
› Innovation for tomorrows Internet› Experts at integration of existing products
into new and innovative pilot services› Cooperative with Industry for mutual benefit
›Testbeds, equipment testing› Trickle down to commercial world and
e-community
Slide 23
Users/Bill Payer Issues
SERENATE1 and EARNEST2 Studies found that a hybrid funding model predominates and is found to function well
Slide 241) SERENATE Summary Report, Dec 20032) EARNEST Summary Report, April 2008
ProductionNREN Commodity Services
Innovative Development
DIRECT VALUE
SPILLOVERVALUE
INDIRECT VALUE
TOTAL NREN COSTS
NREN Users/Clients see VALUEUser funding appropriate
PUBLIC VALUECentral funding
appropriate
Lack of Political Support
› NRENs are not traditional public networks› Closed user groups with limited scope› Need the Stable Financial and Political basis
to Innovate successfully› NRENs are a National Asset
Slide 25
In Summary
› NRENs have an important job to do› Innovation› Pushing the boundaries› Leading the further development of the
Internet› Enabling research and education to do their
own jobs better› Enabling e-society
› End-users & bill payers must see value in what NRENs offer
› Else . . . .