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The Internet Interconnection Ecosystem July 28, 2014
Internet Interconnection Basic methods in which Internet interconnection is achieved:
• Peering • Internet Connectivity • •
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Transit On-net Only
Internet Interconnection: Peering Peering An arrangement where two networks (autonomous systems) voluntarily interconnect to exchange traffic between their customers. Commercially negotiated barter transaction – parties’ perceived value of arrangement is equal • Without exchange of payment – not free • Usually includes criteria to ensure arrangement is equitable, which may include: •
– – – –
• •
Interconnection locations, quantity and bandwidth Comparable geographic scope of network Traffic volume Traffic balance
Hot potato routing is the default Traffic is limited to that exchanged between each party’s customers – “Customer” is broadly defined and includes: • • •
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Consumer broadband Internet access service subscribers Business broadband Internet access service subscribers: small and large business Purchasers of Transit: ISPs, content providers, Content Delivery Networks, Businesses (Enterprise)
Internet Interconnection: Peering Traffic from Network A’s customers in Sacramento destined for Network B’s customers in Houston is handed off to Network B at the peering point closest to traffic origination, which is in San Jose.
Illustrative Example of Hot Potato Routing
Traffic from Network B’s customers in Houston destined for Network A’s customers in Sacramento is handed off to Network A at the peering point closest to traffic origination, which is in Dallas.
San Jose Peering Arrangement
Networkk N A
Networkk N B
Peering locations 4
Dallas Peering Arrangement
Networkk N A
Networkk N B
Internet Interconnection: Transit Transit Transit is a service whereby a network provides access to the entire Internet. Offered by backbone networks and ISPs with extensive connectivity with other networks • Commercially negotiated • Market-based rates •
–
• • •
Can interconnect in as little as one location Many more interconnection location options than peering Purchasers include: – – – –
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Various pricing models
ISPs Content providers Content Delivery Networks Businesses (Enterprise)
Internet Interconnection: On-net Only On-net Only On-net Only connectivity is an optional service whereby a network provides access to only its customers. • • •
Offered by networks of various sizes and scope Commercially negotiated Market-based rates –
• •
More interconnection location options than peering Purchasers include content-heavy entities: – –
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Various pricing models
Content Delivery Networks Content providers
Internet Interconnection: Peering Peering is an arrangement where two networks voluntarily interconnect to exchange traffic between their customers.
Customers
Customers DSL, FTTx Cable BB, Wireless BB
Small or Large Business
Consumer Business
Small or Large Business
CDN
Serves OTT video, gaming, application providers
ISP
Regional ISP to Consumer and Business
Network A
Internet Access Service Transit Service 7
Peering
Network B
Business
Serves OTT video, gaming, application providers OTT video, gaming, applications etc. Regional ISP to Consumer and Business
CDN Content Provider ISP
Internet Interconnection: Peering Multiple Peering Arrangements Customers Business
Network C
Content Provider CDN ISP
Customers
Customers
Consumer Business
CDN
Business
Network A
Peering
Network B
Customers Consumer
Transit Service 8
Content Provider ISP
ISP
Internet Access Service
CDN
Network D
Business Content Provider ISP
Internet Interconnection: Peering Peering Arrangements Enable Connectivity Options There is no terminating monopoly since there are multiple paths to reach Network A’s customers and Network A cannot impose a government authorized tariff.
Network B Network F Network C
Customers Consumer Business
CDN ISP
Network A
Network G
Peering
CDN
Content Provider
Network D Network H Network E
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1. Network A’s peering arrangements provide content providers multiple networks to choose from to reach network A’s customers. Content providers can purchase transit from any network peered with Network A or CDN services from a CDN which purchases transit from any network peered with Network A.
2. In addition, content providers can purchase transit from Network A , on-net only connectivity or CDN services.
Internet Interconnection: Peering Peering arrangements are not limited to large networks. Customers Business
Network C
Content Provider CDN ISP
Customers
Customers
Consumer Business
CDN
Business
Network A
Peering
Network B
Customers Consumer
Transit Service 10
Content Provider ISP
ISP
Internet Access Service
CDN
Network D
Business Content Provider ISP
Internet Interconnection: Transit Transit is a service whereby a network provides access to the entire Internet.
The Internet
Networks offering transit service provide access to the entire Internet via their extensive number of global peering arrangements….
Network F Network B
Network G
Peering Network A
Network K
Network C
Network L Network H
Network D
… and may purchase transit service in locations where they are not peers.
Network M Network I
Network E
Network N Network J
Internet Access Service 11
Transit Service
Competition is Driving Lower Transit Prices Internet Transit Prices ($/Mbps) $1,400
$1,200
$1,200
Internet Transit Prices ($/Mbps) $14
$1,000
$12 $800
$12
$10
$800
$9
$8
$675
$6
$600
$5
$4 $400
$400
$3.25 $2.34
$2
$1.57
$0.94 $0.63
$0
$200
$200 $120 $90
$0
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Source: drpeering.net
$75
$50
$25
$12
$9
$5
$3.25 $2.34 $1.57 $0.94 $0.63
Internet Interconnection: On-net Only On-net Only connectivity is an optional service whereby a network provides access to only its customers. Broadband and Transit Customers Consumer
On-net Only Customers
DSL, FTTx, Cable BB, Wireless BB
Network Business
ISP
Serves OTT video, gaming, application providers
CDN
Small or Large Business
Regional ISP to Consumer and Business
OTT video, gaming, applications etc.
Content Provider
On-net Only arrangements are typically provided to content-rich entities.
Internet Access Service
Transit Service On-net Only 13
Internet Interconnection: Putting It All Together The global Internet is comprised of a variety of interconnection options.
The Internet Networkk F N Network k B
Networkk N G
Peering Networkk N A
Network K
Network C
Networkk N L Networkk H
N Network k D
Network M Network I
Internet Access Service
Transit Service On-net Only Connectivity 14
Networkk E
Networkk N N Network J
Carriage of Traffic is Not Without Cost Illustrative Example: Hot Potato Routing 2. After transporting the request from its peering point in Dallas to its video provider customer in San Jose, Network A delivers the video stream to Network B at the peering point closest to the video provider, which is in San Jose (hot potato).
Network B’s Metro Network
3. Network B transports the video stream from the peering point in San Jose across its backbone and metro network to its customer in Kansas City.
(Does not include last mile)
1. Network B’s customer in Kansas City sends a request to its over-the-top video provider, a transit customer of Network A, to stream a movie. Network B delivers the request to Network A at the closest peering point (hot potato), which is in Dallas.
San Jose Peering Arrangement
Networkk N A
Networkk N B
Peering locations 15
Dallas Peering Arrangement
Networkk N A
Networkk N B
Carriage of Traffic is Not Without Cost Illustrative Example: Cold Potato Routing
Network B’s Metro Network (Does not include last mile)
3. Network B transports the video stream from the peering point in Dallas across its backbone and metro network to its customer in Kansas City.
1. Network B’s customer in Kansas City sends a request to its over-the-top video provider, a transit customer of Network A, to stream a movie. Network B delivers the request to Network A at the closest peering point (hot potato), which is in Dallas.
2. After transporting the request from its peering point in Dallas to its video provider customer in San Jose, Network A delivers the video stream to Network B at the peering point closest to Kansas City, which is in Dallas (cold potato).
Peering locations 16
Dallas Peering Arrangement
Networkk N A
Networkk N B
Cost Implications of Carrying Additional Traffic Illustrative Example: Hot Potato Routing 2. Network B’s backbone 1. Network B’s peering infrastructure links and routers/ports – needs to be augmented (in all peering locations across the country).
network infrastructure – routers and transport – needs to be augmented nationwide.
Network B’s Metro Network (Does not include last mile)
3. Network B’s metro network infrastructure will have to be augmented (in all areas it serves across the country).
San Jose Peering Arrangement
Networkk N A
Networkk N B
Peering locations 17
Cost Implications of Carrying Additional Traffic Illustrative Example: Cold Potato Routing Network B’s Metro Network (Does not include last mile)
2. Network B’s backbone network infrastructure – routers and transport – needs to be augmented nationwide.
1. Network B’s peering infrastructure - links and routers/ports – needs to be augmented (in all peering locations across the county).
3. Network B’s metro network infrastructure will have to be augmented (in all areas it serves across the country).
Dallas Peering Arrangement
Peering locations 18
Networkk N A
Networkk N B
Internet Interconnection: Key Takeaways • The Internet interconnection ecosystem is competitive. • Networks have options for interconnection: the ecosystem is flexible in accommodating various business models.
• Internet interconnection is fundamentally different from PSTN interconnection: there is no terminating monopoly. • Internet interconnection is global and isn’t limited by state or national boundaries.
• Internet interconnection imposes substantial costs on network providers that involve far more than the simple meet-point between networks, that are unrelated to “last mile” Internet access costs, and that are not end user specific.
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