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Why ISPs must peer

An AMS-IX Story

Tatiana Cury

Tatiana Cury

Product Marketing Manager

Why ISPs must peer?

Peering can offer interesting benefits for Internet Service Providers, such as lower costs, better performance and lower latency. In this blog post we explain what ISP peering is, why ISPs must peer and what you need for ISP peering.

What is peering?

When you send data over the internet, you send a message from one device to another. This message is divided into multiple data packets, which are sent over the internet separately and put together by the receiving party to reconstruct the message. These data packets can travel over multiple networks, some owned by others. Members of an internet exchange can let each other's workloads pass freely on their networks without cost. This is also called peering.

What is ISP peering?

Peering is available in multiple forms. One of these forms is ISP peering, in which ISP’s give each other’s customers access to their networks. In practice this means workloads related to these customers can travel over their network, and therefore find an optimal route to their destination. ISP peering is settlement-free peering, which means neither party pays for access.

This however doesn't mean ISP peering is free. There are costs associated with the resources needed to implement ISP peering, such as routers, switches and private co-location space.

ISP peering is possible via a public or private facility. Public peering usually occurs through an Internet Exchange Point (IXP). At this location one network peers with multiple other networks through a single connection. The IXP delivers the hardware and infrastructure needed to connect multiple networks and exchange traffic. To participate in public peering a network provider needs a publicly routed autonomous system number (ASN) and a block of public IP addresses in combination with a network edge router capable of running Border Gateway Protocol (BGP).

Private peering is a form of peering in which two or more networks exchange traffic through a private facility, such as a datacenter or colocation facility. To make this possible a direct physical connection between two networks is necessary. Organizations such as large ISPs or content providers that work with high-volume or sensitive traffic often prefer private peering.

What are the benefits of ISP peering?

  • Lower costs: With peering you no longer need to pay transit fees to third-party ISPs for allowing your traffic. This reduces operational expenses, increasing profit margins.
  • More control: Peering gives network operators more control over traffic flows. This enables them to optimize network performance by avoiding bottlenecks.
  • Fast connections: Peering ensures traffic flows across the internet efficiently. In practice peering means less hops and lower latency, which results in faster and more reliable connections.

What is the difference with IP transit?

ISP peering and IP transit have distinct differences. Peering provides a direct connection between two networks. In contrast, IP transit is a commercial service that connects the ISP's network to the internet through multiple networks. Peering requires mutual agreement between two network operators and reduces transit costs, but does not always offer global reach. IP transit often offers broader network costs, but can also lead to higher transit costs with lower performance.

What do I need for ISP peering?

  • Peering location: What is a suitable location for physically connecting your network equipment to your potential peer? You can opt for an IXP or a private peering facility, but also for a direct connection.
  • Peering policy: What are the terms and conditions of the peering arrangement with your potential peering partner? This can include technical requirements such as routing protocols and minimum bandwidth, but also business aspects such as peering fees and termination clauses.
  • Peering agreement: When you have decided who your peering partner will be, you need to formalize this peering relationship with a contract. In this contract you specify the details of the peering policy and state the obligations of both parties involved.

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