Why ISPs must peer

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.

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.

• 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.