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The Evolution of the U.S. Internet Peering Ecosystem

The Evolution of the U.S. Internet Peering Ecosystem. William B. Norton Co-Founder and Chief Technical Liaison Equinix, Inc. Internet Researcher. 90% with Internet Companies Engineers EQIX: Massive Carrier Neutral Colocation Lots of Blinking lights… Observe: documentation on HW&Protocols

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The Evolution of the U.S. Internet Peering Ecosystem

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  1. The Evolution of the U.S. Internet Peering Ecosystem William B. Norton Co-Founder and Chief Technical Liaison Equinix, Inc.

  2. Internet Researcher • 90% with Internet Companies Engineers • EQIX: Massive Carrier Neutral Colocation • Lots of Blinking lights… • Observe: documentation on HW&Protocols • Lack of Operations documents • Research How does Peering work? White paper process..

  3. Community Operations Research • Ground Truth w/dozens of experts • Write White Paper v0.1 • Walk community through WP for comments • Revise White Paper into new version • Present White Paper at conferences • Solicit comments over lunches and dinners White papers so far…

  4. Internet Operations White Papers • “Interconnection Strategies for ISPs” • “Internet Service Providers and Peering” • “A Business Case for Peering” • “The Art of Peering: The Peering Playbook” • “The Peering Simulation Game” • “Do ATM-based Internet Exchanges Make Sense Anymore?” Freely available. Send e-mail to wbn@equinix.com New white Paper: The Evolution of the U.S. Peering Ecosystem, Agenda…

  5. Agenda • Definitions to level set • Peering, Transit, ISPs • Synch Point here. • Introduction to notion:“Peering Ecosystem” • Internet=Many Internet Regions each with • Tier 1 ISPs, Tier 2 ISPs, Content Providers • Evolution of the U.S. Peering Ecosystem • 3 major evolutions

  6. Def: Internet Service Provider • Def: Internet Service Provider is an entity that sells access to the entire Internet. This service is often called “Internet Transit” • Def: Transit is a business relationship whereby one entity sells access to the entire Internet.

  7. ISP A I N T E R N E T N E T W O R K S Upstream Transit Providers Upstream Transit Provider Upstream Transit Provider Upstream Transit Provider Definition of Transit Def:Transit is the business relationship whereby one ISP announces (sells) reachability to the *entire* Internet to a customer. 2) Reachability Announcement 1) ISP A buys Transit Service 3) Traffic Flows • $$$ ? Typically usage-based • Pricing ’04: $18-$200/Mbps • Volume based on 95th Percentile measure • Transit is Simple, Convenient: • Upstream handles the delivery of packets • to the Internet by some means • Usage: “I’m purchasing transit from Level 3.”

  8. Cost of Transit Traffic Exchange Source: 2004 Survey Avg. Range: $20-$400/Mbps 95th Percentile 2001 Pricing Sampling Range: $100-$1200/Mbps My Financial Models used $388/Mbps 1/15/04 field spot quotes: GX: $65/Mbps, HE: $25/Mbps Cogent $20/Mbps UU: $45/Mbps, etc. varied commits 0-1000Mbps Why Peer?

  9. Scaling at the Edge The Zone: +1M gaming user/mo! Streaming Media Broadcast.com: 100,000 concurrent unicast streams 15 million streaming hrs/mo, 1300 Live events/day U P S T R E A M S Streaming: Broadcast Telephony Video Multimedia Interactive Gaming SPOT Events IG M B $$$ T Content Heavy ISP V $$$ Access Heavy ISP 56k 384k 1.5m Access 1 T1 consumer streaming 24/7 cost $388/mo in transit Tier1 Equipment: $13B/’00 -> $42B/’04 (Source: Infonetics) AOL+ DSL: 1,000/day Roadrunner Cable Modems: 1M subscribers Negotiate Peering with Upstream ISPs Or focus on peering with like-minded ISPs…

  10. Seek transport Interconnection $ x Why Peer? Motivations for Peering • Financial: Reduce load on expensive Transit service • Traffic src/dest • Measure vs Intuit • Usage-based Billing • Engineering: Lower latency • 1st Stage of Peering: • Top 10 destination ISP list Transit $$$ ISP A Transit ISP ISP B Transit $$$ Top 10, Def: Peering…

  11. Sample Top 10 Destination List Def: Peering

  12. Definition of Peering Def:Peering is the business relationship whereby ISPs reciprocally announce reachability to each others’ transit customers. Peering Peering WestNet USNet EastNet Routing Tables Transit • Peering is *not* a transitive relationship • Peering *does not* provide access to the entire Internet Usage: “I buy transit from UUNet and Peer with EastNet, WestNet.” Cost Peering vs. Transit

  13. The Cost of Peering 1) Monthly Circuit Fee into IX 2) Monthly IX Port Fees

  14. When does Peering Make Sense Financially?

  15. Generalization:ISP Peering Breakeven Analysis Graphs $/Mbps Exchanged Breakeven Point (ISPs Indifferent between Peering and Transit traffic exchange) Peering Risk Prefer Peering Cost of Transit Cost of Traffic Exchange in Peering Relationship Number of Mbps exchanged

  16. Synch Point • You should have • a working lexicon at this point • A sense of the motivations for Peering & Transit • Any questions so far?

  17. The Internet Peering Ecosystem Pre-Crash : circa 2000

  18. Peering Ecosystem • System of interconnected (Peering and Transit) players • Each group with homogenous peering motivations and observed behaviors • Tier 1 ISPs • Tier 2 ISPs • Content Providers

  19. Def: Tier 1 ISP • Definition: A Tier 1 ISP is an ISP that has access to the entire Internet Region solely through peering relationships. (i.e. doesn’t buy transit from anyone to see regional routes) • Motivation: Doesn’t need to peer with anyone else, so • Peering only with other Tier 1 ISPs

  20. Def: Tier 2 ISP • Definition: A Tier 2 ISPs is any ISP that has to purchase transit to reach destinations in an Internet Region • Motivation: Peer to decrease costs, improve performance • Peering: with Tier 1’s is preferable but hard to get, peering with Tier 2’s as appropriate • Must purchase Transit

  21. Def: Content Providers • Def: A Content Provider is an entity that produces content for delivery over the Internet but does not sell transit. • Motivation: Best Customer Experience (engineered performance) • Peering: Not typically done, prefer SLAs. • Transit from ISPs

  22. 1998-2000 Tier 1 ISPs $ Transit Tier 2 ISPs Thickness represents In-Group Peering Content

  23. The Evolution of the U.S. Peering Ecosystem Act II: 2000-2003

  24. Evolution of the U.S. Peering Ecosystem Four key events leading to drastic disruption in the Peering Ecosystem: • The 1999/2000 Telecom Collapse • The growth of the Used Equipment Market • The Upstream Provider for the Cable Companies (@Home) went bankrupt • Peer-to-Peer file sharing systems (like Kazaa) grow in popularity, traffic grows exponentially between Access Providers (1.5MB MP3  700MB AVI files) • Transit Prices Drop, Transport Prices Drop Leads to 3 Major Evolutions

  25. Evolution #1 – Cable Companies are Peering • 40% of traffic Kazaa • 3-5 Gbps of transit traffic-> Gbps of peering potential ! Significant because • Volume • Open Peering • Kazaa Effect

  26. U.S. Cable Companies Eyeballs

  27. AOL

  28. 1998-2000 Tier 1 ISPs $ Transit Tier 2 ISPs Thickness represents In-Group Peering Content

  29. 2000-2003 Evolution #1 – Cable Companies Peering Tier 1 ISPs CableCos Peering Tier 2 ISPs Content

  30. Evolution #2 – Network Savvy Large Scale Content Companies get into Peering • To reduce transit costs • To improve the end user experience • They need to move out of bankrupt colo anyway Significant because • Volume of traffic is huge • Content Providers have Open Peering • Leading players pave the way

  31. 1998-2000 Tier 1 ISPs $ Transit Tier 2 ISPs Thickness represents In-Group Peering Content

  32. 2000-2003 Evolution #2 – Large Scale Network Savvy Content Peers Tier 1 ISPs Tier 2 ISPs LSNSC Content

  33. Other Broadband Players • Significant, but… • Not Open Peers so disincentive to peer • So less volume and less disruptive

  34. Evolution #3 – Cable Companies Freely Peer with Content Companies • Content literally on the Cable Company Network • Lowest possible latency from content to eyeballs • Internet Gaming, Broadband Streaming, etc.

  35. 1998-2000 Tier 1 ISPs $ Transit Tier 2 ISPs Thickness represents In-Group Peering Content

  36. 2000-2003 Evolution #1 – Cable Companies Peering Tier 1 ISPs CableCos Tier 2 ISPs Content

  37. 2000-2003 Evolution #2 – Large Scale Network Savvy Content Peers Tier 1 ISPs Tier 2 ISPs LSNSC Content

  38. 2000-2003 Evolution #3 – Cable Peers with Large Scale Network Savvy Content Tier 1 ISPs CableCos Tier 2 ISPs LSNSC Content

  39. International Dynamics – Separate White Paper JP U.S. U.S. Tier 1 ISPs are Tier 2 ISPs in Japan Internet Region Japan Tier 1 ISPs are Tier 2 ISPs in the U.S. Internet Region

  40. Q&A

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