Ratios & peering [was: Level 3 Communications Issues Statement Concerning Comcast's Actions]

Patrick W. Gilmore patrick at ianai.net
Mon Nov 29 22:47:10 CST 2010

On Nov 29, 2010, at 6:34 PM, Seth Mattinen wrote:

> My take on this is that settlement free peering only remains free as
> long as it is beneficial to both sides, i.e. equal amounts of traffic
> exchanged. If it becomes wildly lopsided in one direction, then it
> becomes more like paying for transit.

Ratios were an excuse used by GTEi to try and force Exodus, Above.Net, and Global Center to pay for peering back in 1998.  It had a valid, technical reason behind it - the cost of bit-miles.[*]  Unfortunately, most people have forgotten this and simply claim one side is more 'valuable' than the other.  In reality, the "value" of a relationship is NOT related to the number of bits flowing in either direction.

More importantly, today large content providers & CDNs either carry the traffic longer, or deliver it close to the user, so the bit-mile argument is invalid.  (For smaller providers, especially single-location hosting providers, the argument still holds.)  But people do not actually care why ratios were originally brought up, ratios are simply used as a reason to bludgeon other providers into paying.

Not that it ever mattered.  Business relationships are not predicated on equal value.  You do not refuse to buy copier paper unless the paper provider proves that he is not making more money off selling you paper than you are making off using the paper.  You may go to the next provider who sells paper, but if they all make more than you do, you don't decide to go without.  You buy paper and run your business.

Peering is a business relationship.  If your company can make more or spend less by peering with another company, you should do it.  If you do not consummate that relationship, you are hurting your business.  This should be the only reason to peer or not peer.

Of course, some people will tell you there is an opportunity cost.  Perhaps other networks would have bought from you for far more than you will save by peering this one network, and if you do peer those networks will expect it for free.  This may a valid point, for a very limited set of providers negotiating with a very limited set of customers.  The vast majority of the time, it is complete BS.  Mostly that is just someone's ego talking, not a true business decision.

Unfortunately, too many business decisions (not just on the Internet) are made for reasons more to do with ego than dollars.  Which is a shame.  The Internet is a business, and we would all do better to treat it as such.


[*] 10 second explanation for those who do not understand: I hand you a small HTTP GET request, you carry it across the country.  You had me a 1500 byte web page, I carry it across the country.  My costs are much higher than yours, you need to compensate me for the additional costs.

BTW: The attempt failed.  Dave @ Above got Exodus & Global Center to agree to pull a Cogent if GTEi pulled a Level 3.  GTEi blinked, and the rest is history.

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