Developing The Case for NRENs. (A BIT MORE) revised 08-October-2008

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1 TF-MSP / TF-PR Zürich 30 September 2008 John DYER TERENA John.Dyer@terena.org Developing The Case for NRENs (A BIT MORE) revised 08-October-2008

2 Where did we get up to since 18 May 2008? DRAFT for DISCUSSION version 1 Suggestions at last meeting Presentations in TNC 2008 Discussions at the GA s on the TF-MSP list Compendium data and trends Discussions with CEO of REANNZ Slide 2

3 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 issues Dissatisfaction from the user/bill-payer Lack 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

4 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 If NRENs do, will they die, be superseded by the more rapidly developing commercial sector, or continue alongside as a niche market?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

5 TERENA GA Discussions May 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

6 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?

7 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

8 NREN Traffic to External Networks %T3 and %T4 in 2008, EU/EFTA 25% 20% 15% 10% 5% 0% %T3 %T4 % External Link Utilisation Moldova Ireland Slovakia United Kingdom Netherlands Israel Sweden Austria Hungary Denmark Czech Republic Belgium Finland Luxembourg Bulgaria Switzerland Iceland Latvia Belarus Russia Croatia Poland Malta Germany Italy Morocco Spain 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?

9 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 way Review of Network Economics, 2 (no. 3), September 2003, pp

10 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 services 4% Not physically possible unless all domains in path participate 4% Not economically viable 57% Prefer to over-engineer the network 12% Other reason n=37 Slide 10

11 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 Lightly loaded Saturated 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 performance The last mile application tuning etc,

12 NREN Traffic to and from Commercial Internet 2007 T3 T4 % of T3,T4 traffic to/from Commercial Internet Sites

13 Traffic Sources and Destinations NREN sites External community T1+T2 T3+T4 Traffic to/from Other Global Internet 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.

14 Total IP traffic growth on GÉANT Total IP traffic growth on GÉANT Tbyte per month total IP Expon. (total Feb 04 Apr 04 Jun 04 Aug 04 Oct 04 Dec 04 Feb 05 Apr 05 Jun 05 Aug 05 Oct 05 Dec 05 Feb 06 Apr 06 Jun 06 Aug 06 Oct 06 Dec 06 Feb 07 Apr 07 Jun 07 Aug 07 Oct 07 Dec 07 Feb 08 Apr 08

15 Total IPv6 traffic growth on GÉANT IPv6 growth on GÉANT Tbyte per month IP v Feb 04 Apr 04 Jun 04 Aug 04 Oct 04 Dec 04 Feb 05 Apr 05 Jun 05 Aug 05 Oct 05 Dec 05 Feb 06 Apr 06 Jun 06 Aug 06 Oct 06 Dec 06 Feb 07 Apr 07 Jun 07 Aug 07 Oct 07 Dec 07 Feb 08 Apr 08

16 Total IP and IPv6 traffic growth on GÉANT Total IP & IPv6 growth on GÉANT Tbyte per month Feb 04 May 04 Aug 04 Nov 04 Feb 05 May 05 Aug 05 Nov 05 F eb 06 May 06 Aug 06 Nov 06 Feb 07 May 07 Aug 07 Nov 07 Feb 08 May 08

17 IPv6 as a percentage of all IP traffic GÉANT: Percentage IPv6 traffic 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 IPv6/(IPv4 + IPv6) percent Mar-08 May-08

18 EU/EFTA NREN Funding Sources Non-User/Client Funding LONG TERM horizon User/Client Funding SHORT TERM horizon

19 Elements of NREN Activity Production NREN Commodity Services Innovative Development DIRECT VALUE INDIRECT VALUE SPILLOVER VALUE TOTAL NREN COSTS NREN Users/Clients see VALUE PUBLIC VALUE User funding appropriate Central funding appropriate Acknowledgements to: Donald Clark, REANNZ

20 Relating Reality to Economic Theory 2007 EU/EFTA NREN Funding Sources Simplified Principal-Agency Theory Transaction-Costs Economics 1 Percentage User Charging 100% Central Funding 100% User Funding Percentage User Charging 0% 100% optimal outcomes sub-optimal outcomes Optimal ratio? 1) Acknowledgements to: Donald Clarke, REANNZ

21 Scenarios Regulatory Commercial / Competition issues User/bill-payer funding issues Lack of Political Support Slide 21

22 Regulatory 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 Slide 22

23 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

24 Users/Bill Payer Issues Production NREN Commodity Services Innovative Development DIRECT VALUE INDIRECT VALUE SPILLOVER VALUE TOTAL NREN COSTS NREN Users/Clients see VALUE User funding appropriate PUBLIC VALUE Central funding appropriate SERENATE 1 and EARNEST 2 Studies found that a hybrid funding model predominates and is found to function well Slide 24 1) SERENATE Summary Report, Dec ) EARNEST Summary Report, April 2008

25 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

26 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....

27 THE END

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