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.

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.

• 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.