ISP Service Pricing

Prices for services can differ dramatically between ISPs, even for the same services and within the same service areas. The price is usually determined by the provider's relative strength and level of investment in a particular area. A provider, for example, that has an established frame relay service will probably give you a much better price for that service than a provider just setting up frame relay. The following price ranges, based on 1996 data, should give you a rough idea of what to expect:

•  56 Kbps—First time setup fee is $1,000 on the average. Monthly fees range between $300 to $1,300, with an average of $1,000/month.

•  T1—First time setup fee is $1,000 on the average. Monthly fees average $3,000/ month.

•  T3—Prices for T3s vary widely; companies usually strike deals with providers and negotiate the price. The average monthly fee for a T3 link could go as high as $50,000 per month. Customers usually deploy fractional T3 because it is considerably less expensive.

•  Dialup Asynchronous Service—Prices for dialup connections are becoming very inexpensive; prices could range from $10 to $29 per month per user. There is usually a small startup fee and a preset hour limit such as 30 or 60 hours. A small charge is added for additional hours. In some cases, major telephone carriers who are getting into the Internet business are offering free access to their customers, which is driving competitors' prices even lower.

•  ISDN—Pricing is usually provided either as a flat rate between $300 and $500 per month, or based on an hourly rate of about $30 for 30 to 35 hours plus $1.50 to $2 for each additional hour.

The prices just described do not include the cost of access lines because access lines are provided by carriers such as phone companies. Thus, most ISPs do not include the price of the physical link in their quotes. Customers must negotiate prices of the access lines directly with the carriers, although ISPs usually help to get the ball rolling.

Getting the same price from different providers does not mean that you are getting the same service. Some providers include the Customer Premises Equipment (CPE), such as the router and CSU/DSU (Channel Service Unit/Data Service Unit), as part of the deal. Others charge you extra for the CPE, which could make the bottom line substantially different. You might save a lot of money if you provide your own CPEs and maintain them yourself or pay the provider to do the maintenance.

Large companies usually like to buy their national and international Internet services from the same provider. This means better control and better coordination of services between the different regions of the same network. Some providers offer consolidated billing for all their services, national and international. This means one bill and one check, which is considered a plus by many companies. If the convenience of consolidated billing or common services is not an important issue, companies might find better deals for national and international service, respectively, from different ISPs.

ISP Backbone Selection Criteria

An ISP's backbone encompasses many important technical characteristics. These include physical network topology—connections, network bottlenecks, level of redundancy, distance from destination networks—and traffic exchange agreements. This section is aimed at both customers and designers of ISPs. Customers should certainly evaluate these characteristics in choosing a provider; they are far more important than prices in predicting service quality. Designers should consider the potential benefits and pitfalls associated with these characteristics when setting up or expanding their networks.

Physical Connections

Customers should investigate the provider's physical connections, and the provider should be able to show a decent map of the network, with every connection indicated. With respect to connections, a healthy physical topology is one that can provide consistent, adequate bandwidth for the whole traffic trajectory. The existence of high-speed links such as T3 and OC3/12 does not by itself guarantee overall high-speed access for the customer. Your traffic might flow on the provider's network over some backdoor T1 or frame relay clouds that might slow down the overall access.

Potential ISP Bottlenecks

The provider's network is only as strong as its weakest link. A provider should not oversubscribe its connections. ISPs that save money by overloading their routers or their connections will end up losing customers and credibility in the long run.

Oversubscribing happens when the cumulative traffic of multiple links exceeds the bandwidth of the pipe used to carry the traffic to the rest of the Internet. A provider selling 20 T1s at the POP (Point Of Presence) and connecting to the NAP via a T1 link will experience a bottleneck at the NAP connection. As illustrated in figure 2-1, a rule of thumb is a 5 to 1 ratio: there should be no more than five T1 links for each T1 pipe. Even this ratio might not be accurate if most of the T1s get heavily loaded all at the same time. For ISP network designers, a better approach is to monitor the pipe and to start adding bandwidth whenever line utilization starts exceeding 50 percent of the pipe's capacity.

Figure 2-1  An ISP's weakest link limits performance.

Another example of a bottleneck is high-speed sites trying to access information from low-speed sites. A Web server located at a site connected to the Internet via a 56 Kbps link can only be accessed at a maximum speed of 56 Kbps, even if you have a faster connection to the Internet. Figure 2-2 illustrates a client llustrates a client with T3 access to the Internet that will be limited to 56 Kbps access to its WWW server.

Figure 2-2  Access speed is limited by the smallest bandwidth.

If you are a provider, you had better watch the weak links for overutilization, and if you are a customer, understand what you are buying before you commit.