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## Re: 95th Percentile = Lame

• From: Charles Scott
• Date: Sun Jun 03 16:48:09 2001

```On Sun, 3 Jun 2001, James Thomason wrote:

>
>
> If I am not mistaken, the true "benefit" to 95% billing is that it allows
> the provider to charge for bits they never delivered.  The average will
> skew on a burst of traffic (>5% of the average) and you pay for it as if
> you had averaged that level the entire time.

James:
I think the others have made the point regarding the above
comment. However, let me explain my view of this a bit differently.
As pointed out, the providers have to build to provide a certain quality
of service during peak hours. It's the behavior of their network at those
peak hours that determines what they need to build/buy and therefore their
costs, which then determines what they need to charge their customers.
Personally, I think the 95% billing is a rational simplification of a
more complex problem. If you accept that peak loading occurs for something
around 3-4 hours/day (sounds about right) and that 95% billing ignores the
top 1.2 hours of usage each day, it's kind of like drawing a line
horizontally roughly midway up the usage curve during the few hours of
peak usage. In a way, it's what others have refered to as "average
peak" usage.
If you don't assume that a customer's usage is a smooth curve, but
rather has some random variability during the few hours around peak
loading time, and you assume that you have enough customers with similar
somewhat random variations that those variations average out over the bulk
of all customers to be a somewhat smooth loading, then you can only come
to one conclusion. You can rationally evaluate, provision and bill for,
that "average peak" usage of your network and have some level of
confidence that you're being fair not only to yourself, but also your
customer.
As I see it, the only way to be even more fair, would be to truely
average a customer's peak usage using some kind of "rolling average"
calculation, then take the peak of that rolling average. That would
possibly be more fair to customers who have wierd peak usage curves which
could skew the 95% value to the point where it is NOT a reasonable
estimation of the customer's average peak usage.

Chuck Scott

```