Merkato Enables Dynamic, Real-Time Bandwidth Marketplace

Traditionally, bandwidth has been sold as permanent partitions of an Internet pipeline that remained static for the length of a contract, which can often be a year or more but rarely less than a month. Because of this, bandwidth buyers had to purchase enough capacity to handle their peak loads and then pay for that capacity even during offpeak hours when it wasn’t being used. This is a particularly troublesome model for streaming media. "Streaming has very bursty, unpredictable traffic levels, making it very difficult for buyers of bandwidth for streaming media to buy precisely what they need," says Cahill.

Through Merkato, bandwidth buyers are able to purchase as little as a few minutes of bandwidth at a time. "What we’ve done by allowing small buyers to get access to the same capacity as large buyers is that suddenly you don’t have to make a huge commitment to get a true market price," says Semret. "You can buy a tiny amount and still get the best price."

"When a buyer comes into our system they pay a one-time $250 fee to learn the system," says Cahill. "Once you’ve paid your fee to join this market, you can literally buy nothing or set it up to handle events-driven traffic." One customer of InvisibleHand Networks used Merkato for a large, one-shot sporting event to push a gigabit of traffic. "They ended up having a three-hour broadcast," says Nemo. "The only other way to do it traditionally would be to buy that level of bandwidth for at least a month."

Automated, Real-time Allocation
Besides the automated intelligent agents, Merkato relies upon an automated provisioning process for the speedy allocation of bandwidth. "The traditional provisioning process takes 3-4 days," says Semret. "Our software actually goes into the network and tells the seller’s router how much bandwidth is allocated for a buyer," and it does all of this in seconds rather than days.

It’s this automated provisioning that also empowers InvisibleHand to ensure that bandwidth buyers receive the service that they paid for. "Because it’s an allocation-based system and not a usage-based system, the one guarantee that’s always there is that you get what you bought in terms of quality," says Semret. "An important thing is that we’re not selling physical pipes; what the sellers are offering is how much traffic they can take."

Despite all the benefits afforded bandwidth buyers via Merkato, it’s the sellers who may have the most to gain. "Sellers always have a lot more physical capacity at a given location than they need," Semret continues. "By letting sellers offer excess capacity, we’re helping them get more revenue off of the same pipes. So the sellers [on Merkato] are continuously offering everything they can." But even though they’re offering more bandwidth and presumably making more sales, the cost of making those sales drops dramatically "because you’re basically avoiding negotiations altogether," says Semret.

And it’s not just the big ISPs that are selling excess capacity. "Even a smaller streaming media company can become a seller," says Cahill. "A lot of streaming does occur during typical business hours. We’ve been working for some time with StreamGuys.com. They’re a good candidate for monetizing their offpeak hours."