In a recent article titled “The White Lies ISPs Tell about Broadband Speeds,” we discussed some of the methods ISPs use when overselling their bandwidth in order to put on their best face for their customers. To recap a bit, oversold bandwidth is a condition that occurs when an ISP promises more bandwidth to its users than it can actually deliver. Since the act of “overselling” is a relative term, with some ISPs pushing the limit to greater extremes than others, we thought it a good idea to do a quick follow-up and define some parameters for measuring the oversold condition.
So what is an acceptable contention ratio?
From a business standpoint, it is whatever a customer will put up with and pay for without canceling their service. This definition may seem ethically suspect, but whether in the bygone days of telecommunications phone service or contemporary Internet bandwidth business, there are long-standing precedents for overselling. What do you think a circuit busy signal is caused by? Or a dropped cell phone call? It’s best to leave the moral debate to a university assignment or a Sunday sermon.
The numbers above are a good, rough starting point, but things are not as simple as they look. There is a statistical twist as bandwidth amounts get higher.
Contention ratios can actually increase as the overall Internet trunk size gets larger. For example, if 50 people can share one megabit without mutiny, it should follow that 100 people can share two megabits without mutiny as the ratio has not changed. It is still 50 to 1.
However, from observations of hundreds of ISPs, we can easily conclude that perhaps 110 people can share two megabits with the same tolerance as 50 people sharing one megabit. What this means is that the larger the ISP, the more bandwidth at a fixed cost per megabit, and thus the larger the contention ratios you can get away with.
Is this really true? And if so, what are its implications for your business?
This is simply an empirical observation, backed up by talking to literally thousands of ISPs over the course of four years and noticing how their oversubscription ratios increase with the size of their trunk.
A conservative estimate is that, starting with the baseline ratio listed above, you can safely add 10 percent more subscribers above and beyond the original contention ratio for each megabit of trunk they share.
Thus, to provide an illustration, 50 people sharing one megabit can safely be increased to 110 people sharing two megabits, and at four megabits you can easily handle 280 customers. With this understanding, getting more from your bandwidth becomes that much easier.
NetEqualizer News Blog 
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