Cost analysis of oversubscription

In the last newsletter, we considered a theoretical network in which there was a need to connect six sites to a central location using six permanent virtual circuits (PVC), each with 64K bit/sec committed information rates (CIR). The 64K bit/sec CIR requirement was to ensure network performance when applications were live, and there was a low probability that the central site would need to communicate simultaneously with all six locations for an extended period.

We proposed that if this were the case, there could be significant cost savings, because a single 64K bit/sec port and access line could serve all six PVCs. But how much is really saved?

Using frame relay service from AT&T or MCI WorldCom, the six bidirectional PVCs cost just over $100 per month each, so monthly PVC charges are about $600. But the difference in the port charges is quite significant. The 384K bit/sec port from AT&T costs $1,005 and the 64K bit/sec port costs $295 - a $710 difference. The 384K bit/sec port from MCI WorldCom costs $877 and the 64K bit/sec port costs $268 - a $609 difference.

Even if you assume no oversubscription at the six remote sites (that is, the network is configured as a star and each remote site has a 64K bit/sec port to match its 64K bit/sec CIR), the overall savings using the list prices from AT&T and MCI WorldCom are around 25%. The total price for AT&T is $2,701 per month vs. $3,411; for MCI WorldCom, the list price is $2,548 vs. $3,157. And these prices don't even include any of the savings you would receive from not having to use a full T-1 access line to support the 384K bit/sec port. Instead, a 56/64K bit/sec access service can be used.

If you're not comfortable with drastic oversubscription, the savings can still be significant. Suppose you decide it would be safer to support the above network with a 128K bit/sec port at the central site. You would still save $485 per month with AT&T (just over 14%) and $395 per month (about 12.5%) with MCI WorldCom, compared with the 384K bit/sec port alternative.

The pricing used in these calculations is from our Broadband Packet Registry at www.webtorials.com. If you want to check out some other scenarios on your own, you'll find prices for additional speeds and carriers at the site.

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Steven Taylor, consultant and broadband packet evangelist, and Joanie Wexler, an independent networking technology editor and writer, team up to bring you this analysis and commentary. Taylor specializes in education and market analysis, and Wexler adds incisive reporting and research. For more detailed information on most of the topics discussed in this newsletter, connect to www.webtorials.com, the first Web site dedicated exclusively to market studies and technology tutorials in the Broadband Packet areas of Frame Relay, ATM, and IP. Feedback and additional topic ideas are welcome. Please contact taylor@webtorials.com or joanie_wexler@mindspring.com>

Frame relay at the crossroads
Network World, 05/31/99

Suppressing silence saves money
Network World, 02/01/99

Port Mirroring: The duplex paradox
Network World, 10/07/98

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