Introduction

The Internet is literally a "Network of Networks," where each network can be operated by independent entities, be private or offer services to the public, be large, or small.

All these diverse networks are then united, by co-operative adherence to explicit standards and traditions, which enhances the value of all participating networks to their customers or members.

As in sport, once the rules are decided (co-operation), then the game can commence, (competition). The co-operative component is as, if not more, important than the competitive component.

Competition is critical to weeding out inefficiencies, but care must be taken to ensure it does not introduce insoluble inefficiency for the participants, providers or consumers.

Basic Architecture

Since each network in the "Network of Networks" can be operated by different entities, competitive entities in some cases, the situation will arise where communication is desired between members of different networks.

This capability is the jewel in the crown of the Internet.

There are numerous examples of incompatibility between networks operated by different organisations, particularly where monopolies have faced new entrants, but the Internet has been designed to inter-connect and inter-operate.

The standards setting processes are outside the control of any operator, this is one component of the co-operative basis of the Internet.

Basic Terminology

When a member of one network wants to communicate with a member of another network different mechanisms are required depending on the type of connection between the two networks.

Where the networks share a direct connection, communication takes the path directly between the customers of two networks, a process called peering.

If a third party network (or networks) is required to support the communication, that network is said to provide transit, ie, the communication crosses but does not terminate in the transit network.

Implications

In the case of peering both customers use only networks they have paid for to communicate.

It is thus common for peering to occur for "free," IE there is no payment by the networks to each other, the networks are considered paid by their customers for carrying the information, the payment to each network reflects that networks costs for serving their own customer.

The connection costs between the networks are often shared or paid separately by each network (to an Internet Exchange for example) so there is no basis for further remuneration.

Where the communication requires transit to occur, additional payment by the communicating members is often levied. This levy is paid to the transit network(s) since the transit traffic doesn't serve any of the transit network's customers.

Connotations

There are a number of ideas and meanings that are associated with the term peering which are often included as part of the criteria for peering, but actually are not implicit in the term itself.

William Norton defines peering as, the "free" exchange of traffic, but "free" as in cost is more common convention than part of the definition. Peering is not cost free, but the costs can be minimised and efficiency optimised using the peering method.

Others, particularly large networks with wide geographic reach, like to add the idea of "equals" to the meaning of peering.

Sometimes the issue of how much traffic travels in each direction is considered as part of the definition. It may be an associated idea, but it is not a requisite for peering.

All that is necessary to peer is to exchange traffic as directly and efficiently as possible between the originating and terminating networks' customers.

Internet Exchanges

A "Network of Networks" can be built in a number of ways.

Each network could build or buy a connection to each other network.

Unfortunately, as the number of networks grows larger, and the distances between them increase, this is a very costly approach. This solution is said not to scale up.

There is a rule of thumb in the Internet, "keep local traffic local." This is only sensible, you don't generally communicate via a third party or distant location with your neighbours.

One method of keeping traffic local, and avoiding the need to directly connect to every network in the Internet is to use the services of an Internet Exchange.

Each network (even networks of one) can lease a connection to an Internet Exchange.

The IX is often a single physical location which provides the capacity to switch data traffic between any two connections at the IX. Since switching capability can be distributed in a metropolitan area network, it too can operate as an IX.

In addition to the switching of data traffic, the IX often provides information about which connected networks handle which Internet addresses, this is a Route Service.

Activities at the IX

Some of the networks connected at the IX will provide transit services to other connections, some will peer, many will do both.

Peering at a local IX is clearly the most efficient way to exchange traffic between locally connected networks, and with a variety of transit providers also at the IX, networks can choose how much of each method they wish to use and from whom.

There is NO obligation to peer at the IX, each network may have a different purpose in connecting to the IX. It may be to communicate within a closed group of connections, or the network may simply wish to obtain delivery of transit services.

Further a large network may decide to peer only a limited portion of its entire network at an IX, logically the addresses local (in proximity terms) to the IX.

There are reasons to advertise their entire network at every IX they connect to. By doing so they are able to receive traffic for their customers at the earliest opportunity and have the greatest degree of control over the service their customers receive. Any improvement in performance that results from this approach adds to the quality of their service and the desirability of their service.

Summary

Peering is the exchange of traffic between members of different, directly connected, networks.

Transit is the carriage of traffic by a network(s) on behalf of members of other networks.

In a peering arrangement, both networks are paid by their members and the data exchange is typically "free."

In a transit arrangement, to remunerate the intermediate network(s) who's member don't benefit, a fee is usually charged to the two networks whos' customers are exchanging information.