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As our regular readers know, Renesys collects a lot of Internet routing data, using it to create reports and products based on hard facts and objective analysis. Perhaps the only controversial thing we do with our data is to rank all the service providers in the world: globally, by geography, and by market segment. The rankings are a rather crude measure of size, as they are based entirely on the quantity of IP space ultimately transited by each provider. However, it's the ranking trends that are more revealing than any absolute number. Who is adding customers? Who is losing them or just standing still? Changes in IP transit answer these questions and more. Although there are obvious shortcomings in this approach, it is certainly objective and the process is fully automated. All of our rankings are updated daily and available via our Market Intelligence offering. In this posting, we will take a look at the top 13 providers in the world for 2009 and how they have jockeyed for position throughout the year, similar in spirit to our December 2008 blog, which provides more details about our methodology. We will see what a difference a year has made and highlight some of the more interesting changes.

Think you're too busy to blog? Think again. Or just ask your boss. After more than 100,000 miles in coach class this year (so far), my backbone may be aching, but the IP backbone market is as agile and dynamic as ever. Sales opportunities abound, but to take advantage, you'd better be savvy, and just a little cagey.

So, as our gleaming 777 departs Kuala Lumpur, I'll just relax in my fully-reclined, ultra-deluxe coach seat and tell you what this globetrotting sales guy has seen, heard and figured out.

1. Large eyeball networks (5 million+ subscribers) are selling paid peering to the largest content providers.
2. There are big price reductions in IP transit all over eastern Europe - now close to parity with western Europe.

As readers of this blog will know, Renesys collects Internet routing data — a lot of it. We use this data in a variety of ways: in determining the impact of cable breaks, natural disasters and deliberate partitionings; in uncovering the source of hijacks or other questionable activity; in analyzing Internet business relationships; and in exploring "what-if" scenarios.

All of our reports and products are based on hard facts and objective analysis. Perhaps the only controversial thing we do with our data is to rank all the service providers in the world: globally, by geography, and by market segment. The rankings are a rather crude measure of size, as they are based entirely on the quantity of IP space ultimately transited by each provider. Although there are obvious shortcomings in this approach, it is certainly objective and the process is fully automated. It also happens to be derived from data that is readily available for all providers. Routing data, unlike most other metrics we could consider using, is inherently public.

While everyone wants to be #1 (hence the controversy around rankings), changes in rank can be far more revealing than the actual rank itself. In other words, while there are surely big differences between #1 and #50 in our rankings, the differences between #5 and #6 are much less clear given the nature of the metric. What we tend to look for are abrupt changes and long-term trends. Did a provider just jump in the rankings? Maybe they picked up a large customer or a nearby rival lost one? Who was it? Is another provider showing steady gains in the rankings? Maybe they are consistently taking market share with an aggressive, well-executed business plan in a particular part of the world? This is why changes in rankings matter: they capture some of the dynamics of the business of providing Internet service. With this in mind, we will take a look at the top 13 providers in the world for 2008 and how they have jockeyed for position throughout the year. We will also highlight some of the more interesting changes.

The Internet is in for interesting times. Previously, I wrote about the engineering issues and about the policy issues facing us over the next five years. But there is at least one large issue still lurking. Most of you will not be surprised to learn that almost all of these issues are outgrowths of a single factor: money. The core of the Internet still doesn't have a sustainable business model.

Many people are getting rich on the Internet, and almost none of them are spending money to keep the interconnection infrastructure (the "Inter" in "Internet") growing and expanding. Look at it from a massively oversimplified perspective: Google make their money from the advertising they sell to search audiences. Comcast make their money by offering TV and Internet access on their local cable infrastructure. Amazon make money selling books and other stuff (including servers and storage space). Most datacenter companies make their money selling space and power inside of their buildings. Spammers make money filling up your inbox with useless crap. Organized crime makes money by launching attacks against profitable companies if they don't pay extortion. DNS squatters make money registering thousands (or millions) of domain names and sitting on them until someone else is willing to pay. And almost none of this helps the core of the Internet.

Look to the wholesale carriers if you want to see an income statement wasteland. Level 3 lost $1.1b last year. They lost $120m in the most recent quarter alone. Cogent is thrilled because they reported a tiny, tiny positive net income last quarter on top of a yearly loss of $30m in 2007. Global crossing lost $300m in 2007 and $88m in the last quarter they're reporting, which doesn't include much of the recent downturn. Other wholesale networks are in the same boat. Dan Golding suggested that it's more important to look at net cash flows rather tha income, but the result is pretty much the same: almost no one is making any money. The only wholesalers who do make money make it on other service offerings: wireless service, metro Ethernet services, VPNs, local phone service, video services and so on. Are there sustainable Internet backbone business models? Does anyone have one?

An open market for buying and selling IPv4 Addresses is coming. Soon. As I wrote previously, IANA is running out of unallocated IPv4 addresses. Estimates vary, but by 2010 (or 2012 at the latest) the world will be out of unallocated IPv4 addresses.

Sometimes it is hard for the general public to understand what this might mean. Essentially, after 2010 or so, if you want to start a new company and get connected to the Internet or just are growing and have more devices that need to have IP addresses, things won't be the same as they are now. Right now what happens is that you go to ARIN, if you're in North America and document your need for IP addresses, you pay a modest administrative fee, and then they allocate them to you. If you grow and you need more, you document how you've used up the ones that you have, and they give you more of them.

All of this assumes that you want your own IP addresses that are not tied to any particular provider (this is an important point that we'll get back to). But even if you get your IP addresses from some provider, they have to get them from somewhere. If you want to be reachable from the Internet, you need an IP address—an IPv4 IP address in particular. And very shortly those are going to get much harder to get.

So let's talk about what happens after the IPv4 addresses are all "used up."

Atrivo (aka Intercage), a Concord, California-based Internet hosting service, disappeared from the Internet for around two days recently. They didn't go bankrupt or suffer a physical catastrophe. Their providers simply shut them down by refusing their traffic. This might very well be the first time in history that the Internet community, a cooperative association of networks with no governing body, has collectively put someone out of business, if only briefly. The alleged sins of Atrivo have been documented extensively, both in the popular media (e.g., the Washington Post) and in technical forums (e.g., Spamhaus and numerous postings to the NANOG mailing list). It is clear that emotions run high with respect to Atrivo, long accused of benefiting from cyber-crime by hosting purveyors of malware, adware, spam, viruses and other cyber-surges. In this blog, we'll take a quick look at their brief demise and make a few observations.

Ike swept across Texas on Saturday, devastating Galveston and severely damaging Houston and Harris County before plodding intensely north and east through Arkansas, Missouri, Illinois, Indiana and Ohio. While many Texan networks remain unreachable, the recovery is proceeding remarkably quickly. From a peak of around 100 networks suffering outage through Monday, Ohio, still hard hit, is also slowly starting to recover. And Pennsylvania is the latest victim of Ike.

Ike made landfall near Galveston, Texas as a (high-end) category 2 hurricane around 02:00 CDT this morning. Today, we are all watching the destructive land-wake of the storm with our thoughts on those in its path.

The pattern of network outages seems consistent with other historical storms of Ike's ilk. The counties around Galveston and Houston, TX (most notably Harris County) have suffered a slowly climbing number of network outages over the last day. We expect to see this number continue to climb as the secondary effects (e.g. power loss, UPS battery failure, generator fuel unavailability) of the storm hit the region.