interconnection costs

Bill Norton at
Tue Dec 22 23:13:13 UTC 2015

Hi Reza - 

When researching the costs of peering you should perhaps categorize into the most popular forms of peering.

Public (many-to-many) peering solutions vs. private (one-to-one)
There are of course many opinions on the merits of public peering vs. private peering, economically, technically, and strategically, but the unit cost per bit varies in both cases based on how much traffic is exchanged. The unit cost is the cost of peering divided by the amount of traffic peered, giving us a measure in $/Mbps. Network operators often compare this against the unit cost of transit, and make their decisions based primarily on cost. Generally I have seen content and cloud companies care more about the end-user experience and less about the cost of delivering the bits. To them peering directly provides better connectivity, so even if it costs more that Internet Transit it is often strategic to do so to improve the end-user experience. We now have data to back this improved end-user experience.

Remote Peering 
And then consider that one can remove the capital costs and reduce the opex for public and private peering through a technique called remote peering (aka ‘tethering’) into the well populated IXPs. 

Here we can remove the cost of the routers (amortized to thousands per month typically), opex for powered colocation (maybe thousands per month) and deployment costs. The transport cost remains. One write up I did in The Internet Peering Playbook showed that remote peering into an IXP can be had for about the cost of the transport alone. I also collected the religious arguments from the field highlighting the arguments for and against remote peering. This can be found in the book as well as in this blog: <>

I hope this helps -


> On Dec 22, 2015, at 11:11 AM, Reza Motamedi <motamedi at> wrote:
> Thanks guys for the replies.
> I wanted to clarify two things in my questions. First by peering I did not
> necessarily mean "settlement free" interconnection. I meant any inter-AS
> connection. My understanding is that in addition to the cost of transit
> that should be paid to the transit provider, there also exists the cost of
> the xconnect that is charged by the colocation provider. Secondly, my
> question was more about the expenses, as opposed to the technical
> costs/benefits. I have browsed through the "Peering Playbook", but I think
> its more about providing a case "settlement free" peering.
> Best Regards
> Reza Motamedi (R.M)
> Graduate Research Fellow
> Oregon Network Research Group
> Computer and Information Science
> University of Oregon
> On Tue, Dec 22, 2015 at 9:33 AM, James Bensley <jwbensley at> wrote:
>> On 22 December 2015 at 16:44, Reza Motamedi <motamedi at>
>> wrote:
>>> I think there is no single answer as different businesses may have
>>> different pricing models. I hope the discussion can help me understand
>> the
>>> whole ecosystem a little bit better.
>> Hi Reza,
>> I have a list of example items that need to be costed in below, it is
>> by no means a definitive list though:
>> Cheers,
>> James.

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