May 30, 2002 -- What is peering? And why is it important to Internet service providers (ISPs)?
These basic questions are often not clearly understood, according to William Norton, co-founder and chief technical liaison at Equinix Inc., who recently completed a survey of ISPs on peering issues.
"When I spoke with people, there was so much misuse of common terms that it created confusion," said Norton, who provided a "Peering 101" presentation at last week's Service Networks conference in Baltimore.
Peering is best defined as a business relationship in which two ISPs exchange customer traffic directly. It's one of two ways that an ISP's customers can access web sites. Understanding the difference is key to realizing the benefits of peering.
An ISP's primary connectivity is through Transit, in which one network hookup provides access to the entire Internet. Transit can be paid for through a flat fee, but is generally metered and billed based upon usage.
As an ISP grows, its transit costs grow as well. In analyzing its traffic, the provider may find that its customers are making heavy use of web sites housed at a particular ISP.
"The first time Victoria's Secret broadcast its Internet fashion show, it brought several networks to their knees," said Tim Guarnieri, general manager of PAIX.net. "Those folks were scrambling trying to figure out where all this traffic was coming from."
In addition to creating network logjams, those volume surges raise transit charges. Understanding the traffic flow from your ISP to other providers can identify ways to reduce transit costs.
"You try to figure out who's going where, and whether you can get to them cheaper," said Guarnieri. "One of the financial goals is to keep traffic off the expensive transit line as much as I can."
That's where peering enters the picture. Peering allows two providers exchanging large volumes of traffic to save money by connecting directly, rather than routing traffic through their paid transit lines. Peering does not provide access to the entire Internet, only the other ISP's customers.
Peering arrangements are often "settlement free," but not always, according to Guarnieri.
"There are now some providers who are charging for peering," he said. "Typically, it's because the value proposition is unbalanced in some way."
If both providers find that peering is in their interest, there is the question of how to connect, and how much it will cost.
One method is to run a physical connection between the two ISPs - a "circuit-based" connection - but that can be expensive.
The other option is to find a point where their networks run through the same data center or carrier hotel. This "exchange-based" interconnection can take place in one of several kinds of facilities - an interconnection area operated by the building owner known as a "meet-me room," or through an exchange point operator like Equinix, PAIX.net or Telehouse.
In either case, there would be costs for renting the space and equipment needed to connect the two networks. For peering to make economic sense, it must generate enough savings on transit to cover the cost of the interconnection.
Peering agreements generally include service-level agreements (SLAs), documents which stipulate minimum standards of network availability. Guarnieri said that SLAs for settlement-free peering relationships will rarely be as strong as those for paid transit contracts.
"If a backbone cuts a fiber line, a provider will get their transit customers back up before their peers, because that's how they pay their bills," said Guarnieri.