Backbone IP network Economics - peering and transit

Fri Apr 23 03:09:52 UTC 2004

On Apr 22, 2004, at 9:29 PM, Michel Py wrote:

>> Deepak Jain wrote:
>> But that structure doesn't vary vastly if you'd traffic out
>> that gig via transit vs direct connect. It does vary (and
>> add lots of infrastructure) if you don't aggregate your
>> traffic at IXes and instead use loops to bring transit to
>> you instead of going to it. (say a few 100Mb/s or OC3s in
>> a few places instead of a GigE at an IX).
>
> Indeed.
>
>> Perhaps we should (for technical reasons) describe
>> peering as "direct connecting".
>
> This makes a lot of sense to me (although I would suggest a different
> name later). Since the beginning I have been trying to make the point
> that "direct connecting" was typically a no-brainer in terms of money.
> Peering when you have to buy the local loop is not such a slam dunk.
>
>> Business reasons aside, technically the difference is
>> that with transit you are expecting access via indirect
>> connections to networks.
>
> I'm not so sure about this. There are lots of people that buy transit
> and are directly connected to their provider in an IX for example.
>
>> With peering you expect direct connections into a network.
>
> If "direct connecting" != peering then definitely.
>
> Maybe we need to say differentiate between:
> - Connected transit
> - Remote transit
> - Connected peering
> - Remote peering
>
> And agree that, by default,
> transit ~= remote transit
> peering ~= direct peering
>
> Michel.

The kind of relative cost dynamics described in this thread leave a 
measurable geographic imprint on the Internet. Big network operators 
make deployment decisions explicitly to optimize capex/opex over a 
relatively short horizon, with proximate peering opportunities often 
justifying higher upfront costs. Conversely, there are plenty of places 
where lack of public IX facilities, and/or exploitive metro/regional 
infrastructure costs make remote interconnection 
not-economically-viable -- so very little peering or multihoming in 
general. Regions or countries fitting the latter description typically 
have very few autonomous networks, because there's really very little 
be gained from running your own network. Infrastructure (layer2, "basic 
telecom," etc.) was once highly regulated everywhere, and 
didn't/doesn't really become affordable anywhere unless/until someone 
in authority compels sharing or underwrites the development of 
competing infrastructures. I don't think it was just a coincidence that 
EGP was developed during the same period that Ma Bell was being broken 
up into regional and national "independent operating entities"...

Voila: The origin and evolving structure of IDR is a product of layer 
8/9.

There's a time dimension to this dynamic as well, as infrastructure 
savings belatedly give rise to reduced transit costs; once and future 
operators jump into and out of the game at different points in the 
cycle. Anyone else notice how many "content providers" are now suddenly 
looking for peering coordinators? It's not because they expect other 
operators to come to their isolated data center(s)...they are building 
out, because that's what makes sense for them at this point in the 
cycle.

Now I will go back to hunkering down until SF.

Tom