peering, derivatives, and big brother

George Bonser gbonser at
Sun Dec 12 21:36:06 CST 2010

> -----Original Message-----
> From: Jeff Wheeler 
> Sent: Sunday, December 12, 2010 10:36 AM
> To: nanog at
> Subject: peering, derivatives, and big brother
> A read through this New York Times article on derivatives clearing,
> and the exclusivity that big banks seek to maintain, would look very
> much like an article on large-scale peering, to someone who is not
> expert in both topics.  The transit-free club and the "derivatives
> dealers club" may have other similarities in the future, and it's
> worth watching how further government regulation develops in this
> area.  It may lead to insight into how government might eventually
> regulate ISPs seeking to become settlement-free.

I don't see how this can happen with the number of wide open exchanges
that exist these days.  Take the several Equinix IX exchange points as
an example.  They aren't controlled by any cartel of participants who
dictate who can and who cannot play.  Each network sets their own
peering policy.  As most of the traffic is from content heavy networks
to eyeball heavy networks, direct peering between them makes sense.  

The financial derivatives market isn't, in my opinion, a good analogy of
the peering market.  A data packet is "perishable" and must be moved
quickly.  The destination network wants the packet in order to keep
their customer happy and the originating network wants to get it to that
customer as quickly and cheaply as possible.  The proliferation of these
peering points means that today there is more traffic going directly
from content network to eyeball network.  To use a different analogy, it
is almost like the market is going to a series of farmer's markets
rather than supermarkets in the distribution channel.  Sure, there are
still the "supermarkets" out there, but increasingly they are selling
their "store brand" by becoming content hosting networks themselves.  

I would expect with the current direction of interconnectivity, third
party transit traffic would become a decreasing percentage of the
aggregate total bandwidth a network moves.  Or at least the third party
transit traffic becomes smaller amounts of traffic from a larger number
of sources with the big sources of traffic connecting to the big sinks
of traffic directly and third party transit collecting the crumbs
(albeit probably a large amount of crumbs).

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