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Internet Policy

Internet Policy. Day 2 - Workshop Session No. 3 Interconnection, IXPs and Voice-over-IP Prepared for CTO by Link Centre, Witwatersrand University, South Africa. Sessions Summary. Day 1 Session 1 History and technical background Session 2 Market structure Day 2

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Internet Policy

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  1. Internet Policy Day 2 - Workshop Session No. 3 Interconnection, IXPs and Voice-over-IP Prepared for CTO by Link Centre, Witwatersrand University, South Africa

  2. Sessions Summary • Day 1 • Session 1 History and technical background • Session 2 Market structure • Day 2 • Session 3 Interconnection, IXPs and voice-over-IP • Session 4 Governance and domain names • Day 3 • Session 5 The impact of telecommunications regulation • Session 6 Internet specific policy issues • Day 4 • Session 7 Content on the Internet • Session 8 E-commerce issues • Day 5 • Session 9 Internet tools for regulators • Session 10 Conclusion, review and evaluation

  3. Interconnectio, IXPs and voice-over-IP • The purpose of this session is: • to understand how Internet interconnection policies and economics have developed • to examine the technical and economic operation of an Internet exchange point (IXP) • to review interconnection issues such as the value of traffic and dominant operators • to look at some examples of voice over the Internet • to review some policy approaches to these issues and look at some likely future trends

  4. Topics of Discussion • History of Internet interconnection • Interconnection terminology • Interconnection agreements • Internet exchange points (IXPs) • Case studies: JINX and KINX • Interconnection issues • Regulatory strategies • Trends • Voice-over-IP

  5. History of Interconnection • Why interconnect? • For routing of traffic (at least one interconnection) • For efficient routing (multiple interconnections) • Co-operative era (ARPAnet/NSFnet period) • NAPs, development of ‘peering’ policies • Restrictions on commercial use • Commercial era • Private exchanges developed in parallel to NAPs • Negotiated bilateral commercial agreement

  6. Interconnection Terminology • ISPs • Reminder: ISPs means IAPs • But what is an Internet access provider • Do Internet Cafés count? • What is a “connection to the Internet”? • From outside the US: international connections • Backbone ISPs • Operate national networks • Often have international interconnection

  7. Interconnection Terminology • Peering • Peer = network of roughly the same ‘size’ • Size might mean: • geographic reach • traffic volumes • customer base • Transit • When there is no direct link between two networks -- traffic transits across other networks • Provided mainly by backbone operators

  8. Interconnection Terminology

  9. Interconnection Terminology • Traffic • Traffic is of increasing importance • Internet Protocol (IP) has no built-in cost accounting • Possible to measure traffic with other protocols • Historically difficult and costly • Becoming easier and cheaper with time • Internet Exchange Points (IXPs) • Centralised exchange facilities • Many ISPs exchange Internet traffic at each IXP

  10. Interconnection Agreements • ISP/customer • Two way flow of traffic • One way flow of money (customer to ISP) • Connection fee • Monthly rates (fixed or traffic based) • Discounts for strategic customers • Customers might also be ISPs

  11. Interconnection Agreements • ISP to ISP • Neither ISP is a customer of the other • Two way flow of traffic • Interconnection costs usually shared • ‘Larger’ ISP may charge smaller ISP a traffic-based fee • Transit agreements are a special case of ISP-to-ISP interconnection agreement

  12. Interconnection Agreements • Multi-ISP exchange • IXP established • Multiple ISPs connect to the IXP • Multi-directional flow of traffic • Each ISP can still chose which of the other ISP networks to interconnect with, and on what terms • Sometimes the IXP operator has some over-riding policies

  13. Internet Exchanges • Technical overview of exchanges • Cabinets housing a number of routers (at least one per ISP) and at least one switch • Connections from each ISP to the IXP • Redundancy is desirable • Pros and cons • Pro: Cost savings (costs can be very low) • Pro: Efficient traffic exchange • Con: Less redundancy than meshed interconnection • Con: Historically, IXPs have been congested

  14. Internet Exchanges

  15. Case study: JINX • JINX • Johannesburg Internet Exchange • Established late-1996 • [stats from early 2000] • Traffic • Peak throughput 34 Mb/s • Cost of extra 34 Mb/s capacity • $360,000/month (SA half-circuit) • $120,000/month (US half-circuit) • Costs • $40,000 initial set-up • $1,000 per month • ‘Savings’ • SA Internet industry: $5.7 million annually • SA foreign exchange: $2.5 million annually

  16. Case study: KIXP • What happened? • Nov 2000: Kenyan IXP goes live, initially connecting four ISPs • Dec 2000: Communications Commission of Kenya (CCK) shuts-down KIXP • Dec 2001: After a year of negotiation, KIXP reopens • Why? • Unlicensed service • Pressure from Telkom Kenya? • Effect of the shut-down on consumers • Delays in e-mail traffic • Slow web access, impaired international connectivity • Continuing failures of ‘national backbone’

  17. Interconnection Issues • Determining value • Interconnection agreements tend to reward the larger of the two interconnecting ISPs • But larger ISPs also ‘use’ the small ISPs network, deriving benefits • There is value to the traffic flowing in each direction • Market forces essentially determine where the value lies in each agreement • Strong incentive for ISPs to reach amicable interconnect agreements: Need each others’ networks

  18. Interconnection Issues • Dominance of backbone providers • Move from zero-charge ‘peering’ towards traffic-based interconnect seem reasonable • But, this has happened at the same time as massive consolidation of the Internet market • Four companies control 85-95% of traffic on the Internet • US industry and government agree: no immediate threat to a competitive industry • Regulators must pay attention to dominant players • Dominant players do not necessarily make good IXP hosts

  19. Interconnection Issues • The US-centric Internet…? • For both historical and economic reasons, the US backbone is also the world’s Internet backbone • Routing between neighbouring countries is often via the US -- this is not very efficient • One view: It isn’t fair that there is a one-way flow of money but a two-way flow of traffic over international connections to the US backbone • Alternative view: The US provides cost-effective transit to hundred of other countries using its national backbone

  20. Interconnection Issues • Local exchange interconnection • End-users connect to ISPs via telephone exchanges • ISPs lease telephone lines from telcos which are connected to banks of access modems (or other equipment) • In some places local exchange carriers (LECs) offer commission to ISPs on call revenue generated by customers connecting to the ISPs’ networks • Economic model behind many ‘free’ ISPs

  21. Interconnection Issues • Cable interconnection • Cable is a good alternative access medium for connecting end-users to the Internet • In the US, there have been concerns that exclusive deals made between cable operators and some ISPs may constitute unfair practice. • Regulatory pressure has sped up the opening up of the cable access market

  22. Regulatory Strategies • Dangers of regulation • Strategies • Domestic competition • Protection from dominant players • Transparency

  23. Trends • Likely future trends • Move from free ‘peering’ to settlement based interconnection • Prices for international Internet interconnection will continue to drop steadily • New protocols and better traffic management will allow ISPs to offer increasingly differentiated services

  24. Voice over the Internet • Voice over the Internet • Sample applications • Internet user <--> Internet user • Internet user <--> telephone users • Bulk shipping of international voice traffic over Internet links • Regulatory responses • Ban/limit -- only partially effective • Promote • Note: Voice-over-the-Internet is not the same as Voice-over-IP. IP can also be used in private networks.

  25. Summary • Interconnection agreements have moved from co-operative to commercial over time • Interconnection happens at all levels • Agreements are based on the perceived value of the connection to each party • Internet exchanges are a technically efficient and cost-effective way to connect multiple networks • Voice over the Internet is eroding traditional telephony pricing models

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