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The Evolving Landscape of Internet Peering: Trends, Challenges, and Opportunities

This paper, presented by Keith Mitchell, Executive Chairman of the London Internet Exchange (LINX), addresses the significant changes in the Internet peering environment as of December 1998. It explores key trends like the consolidation of the ISP market, the growth in Internet Exchange Points (IXPs) and their impact on competition, as well as the dynamics of peering agreements. The insights cover the importance of regulation in fostering fair competition and the role of settlement models in shaping the peering landscape.

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The Evolving Landscape of Internet Peering: Trends, Challenges, and Opportunities

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  1. The ChangingPeering Environment Keith Mitchell keith@linx.net Executive Chairman, London Internet Exchange Internet Peering 3rd December 1998

  2. Overview • Trends • Is the market consolidating ? • Peering & Settlement • Experiences at LINX • Competition

  3. Some Trends • Growth in IXP numbers: • handful in 1993 • over 100 end 1998 • distribution typical (~50% in US) • more “local” exchanges “IXP” = Internet eXchange Point

  4. Growth in ISP Numbers

  5. Growth in ISPMembership of IXPs

  6. Growth in IXP Traffic

  7. Telephony Tariff Trends • Much retail voice telephony traffic is becoming “too cheap to meter” • e.g. • inclusive minutes • Internet telephony • national “L” rate 0845 in UK • free local call regime standing up to Internet dial-up demands in US

  8. Tariff Convergence • Trend is not simply of voice settlement model being adopted by Internet • Evidence that as bandwidth demands increase, it is not always economic or practical to count every last bit

  9. Has the ISP market Consolidated ? • A few very big playersmerging mergingmerging • Medium players getting larger • Total number of ISPs is staying constant • So there must be new entrants

  10. Is the ISP market Consolidating ? • New players are seeing market opportunities: • due to new technologies • in particular market segments • Is this different from other industries ?

  11. Will the ISP market Consolidate ? • Biggest difference from other industries is issue of “capture” • Key emergent resources and technologies need protection from vested interest control • Stifling competition stifles innovation • Key is strong regulation of potential capturing monopolies • e.g. Microsoft, NSI

  12. Settlement & Competition • Non-settlement exchange can inhibit competition by preventing peering where there is no other basis for agreement • Settlement exchange can inhibit competition by encouraging revenue flow from small to large players

  13. IXPs & Competition • Exchange point andco-location facilities promote fair competition: • reduce supplier lock-in • lower barriers to entry • increase transparency

  14. UK State of Play • Most peering via LINX • majority of members do peer (~80%) • disputes unusual • Some smaller players via2 regional exchanges • Limited (<10) private bi-lateral peerings • Lots of settlement-based bi-lateral wholesale/transit

  15. LINX Background • LINX is UK nationalInternet Exchange Point • Represents 60 largest UK++ ISPs • Tries to encourage open peering and competition between ISPs • Promotes self-regulation (e.g IWF), but is not “regulator”

  16. LINX Peering Environment • Published & well-defined membership criteria • Minimum of interference in member peering autonomy • Peering agreements private matter between members • Incentives to peer

  17. LINX Peering Practice (1) • Members must peer with at least: • one other member • LINX routers • In order to: • to acquire voting rights • to remain member after 3 months

  18. LINX Peering Practice (2) • Members must: • publish peering contacts • respond to peering requestswithin 2 days • Peering matrix on web page helps end-users put pressure on • Independent staff can intervene • Template “standard” peering agreement bring worked upon

  19. Good Peering Practice • “Self-regulatory” measures • Peering policies should be: • registered • in public domain • consistently & fairly implemented • stable

  20. Settlement at the LINX • Recently removed restriction on settlement-based peering • Historical rule set by founder members • Was inhibiting some large players from joining • Potential regulatory concern area • Not consistent with principle of non-intervention in peerings

  21. Alternatives to Settlement • Tiered peering used by some and works well: • exchange of subset of customer routes/territory • multiple ASes/routing policies • or bandwidth limited • Fixed fee peering

  22. QoS and Settlement • Quality of service commonly advocated reason for need for settlement-based peering • It is a red herring • Existing complex inter-provider arrangement are at manageability limit already • This will be a minority premium service, not the norm

  23. Quality of Service Issues • Inter-provider routing on Internet is policy based, uses BGP • BGP does not support QoS • QoS routing (e.g. RSVP) cannot do inter-provider policy routing • So only practical inter-provider QoS mechanism is link rate limiting

  24. QoS in Practice • 3 ways to do link rate-limiting: • private point-to-point links • ATM switches • new generation of LAN (ethernet) switches

  25. Where do IXPs fit in ? • Within EU, “national” IXPs should be needed less as telecoms market opens • Small number of pan-European IXPs emerging e.g. AMS-IX, DGIX, DE-CIX, LINX, VIX all have 25-35% non-domestic members

  26. IXP Growth • Many of the new IXPs are local/regional e.g. MaNAP, LoNAP, Scot-IX in UK; many in US • Motivated by strong IXP/co-lo synergy (e.g. PAIX) • Often intent is to stimulate local Internet economy rather than simply efficient traffic exchange

  27. Growth in Co-location • Major boom industry at present • e.g. Telehouse, Compaq, Co-lomotion • TeleCity in UK major venture-capital funded start-up • No less than 8 responders to LNX 2nd site tender less than 10km apart ! • PAIX is research project that makes profit !

  28. Growth in Co-location • Remains much unmet demand forco-lo space outside UK & US • ISPs want quality space • Web hosting ISPs want lots of quality space • Co-lo customers want choice of ISPs & carriers in facilities • Existing facilities filling up

  29. Co-Lo Growth & Peering • Private bi-lateral peering is not simple or cheap across multipleco-lo sites • Cheap dark fibre may be one solution e.g Stockholm, Palo Alto,almost Docklands • Is scaling this future role for IXPs ?

  30. Conclusions • Open peering can promote competition • Closed bi-lateral exchange can inhibit it • Open peering arbiter can facilitate competition: • as L1/L2 exchange • as organisational environment

  31. Summary • Market will determine: • when • whether • where settlement or not is best • There is room for diversity • Attempts to buck market will probably fail

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