What is 95th Percentile billing & how it offers burstable bandwidth rates

95th Percentile is a method used by ISP’s and Data Centers to provide a burstable and flexible bandwidth (Internet) access to companies over and above their contracted bandwidth rates for 5% of the time, without increasing the price. Let us learn more about 95th Percentile billing method in this article and see why you might want to push your ISP to offer this plan.

How does your ISP bill you currently for Internet access?

There are two popular ways in which an Internet Service Provider (ISP) might bill your company,

i. The bandwidth rate is decided during the beginning of the contract (For example 2 Mbps, 5 Mbps) and the ISP allows you to access Unlimited Internet while not allowing you (at any point of time) to exceed the bandwidth rate decided during the beginning of the contract.

ii. The ISP bills you based on the data transfer capacity utilized for a certain fixed duration of time (For example 32 GB for 1 month). Basically, there is a rental package where you get certain data transfer capacity free upfront for a certain period (16 Gb for 1 month, for example) and any bandwidth  (data transfer) utilized over that value incurs additional charges.

What is the problem with the current method of billing for bandwidth by the ISP?

i. In the first method where the maximum rate of bandwidth access is fixed (4 Mbps, for example), even though you get unlimited Internet access the service might fall short of user/application requirements at certain times (Like Monday mornings, Month end evenings, Sudden website traffic splurge, etc).

ii. In the second method where the billing is on the total data transfer, users are charged a premium once they exceed the free data transfer capacity. For example, every GB of data transfer over the free limit of 16 GB would be billed at higher rates. So, if you don’t determine the exact bandwidth usage, available bandwidth might either go under-utilized (or) you might be paying higher for over utilization.

What is the 95th Percentile billing method?

95th Percentile billing method allows for burstable bandwidth access for 5% of the time. So, if you are on an Internet plan offering 5 Mbps Internet connectivity, you can avail higher bandwidth rates (selectively, when the demand goes up due to certain factors), for up to 36 hours every month (5% of 30 days).

Bandwidth utilization readings (In Mbps) are noted for every five minutes and these values are tabulated for the entire month. The bandwidth utilization readings for each 5 minute interval are calculated by dividing the total data transfer for that five minute interval by the time (300 seconds). So, for every five minutes, we get the average bandwidth utilization rate.

In a month, around 8500 – 9000 such readings are taken and the top 5% of those readings are discarded (not utilized for billing). The ISP uses the highest bandwidth rate value (after discarding 5% of the readings) to bill your Internet Service. So, if the highest value comes at 2.5 Mbps after discarding the higher 5% values, the Internet connection is billed for 2.5 Mbps for that month.

What’s the catch in 95th Percentile method?

As you can see, 95th percentile method can be beneficial to customers as long as their peak bandwidth usage is limited to less than 5% of the time every month, ie. for around 36 hours and for the remaining time their Internet usage is low/normal. For example, if the users are utilizing more bandwidth during monday mornings, month ends or sudden increase in website utilization for a short time 95th Percentile billing method is useful.

But, if the employees are going to utilize higher bandwidth for longer times, or if the sudden splurge in website traffic is going to persist, this method might not be very useful.

So, if you have an Internet connection plan for 4 Mbps, and use 8 Mbps for a maximum of 36 hours every month, you will still be billed only for 4 Mbps Internet usage in this method. But, if you use 8 Mbps for more than 36 hours every month, then you will be billed for 8 Mbps for the whole month.

How to get around this disadvantage in 95th Percentile billing?

One way to get around this disadvantage of 95th percentile billing, is to accurately predict if the bandwidth utilization peaks would be limited to less than 5% of the time. But since this is not always possible, its better if the ISP can offer to cap the bandwidth at your contracted rate once the 5% limit is reached. So, you get to utilize higher bandwidth on demand (for a short time), and still don’t have to pay extra for that utilization.

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