a question about the economics of peering

Today, I was approached by *unnamed-ethernet-extension-company*. They
extend ethernets between several US and UK peering exchanges.

While speaking with them today, thier engineer and I got into a little bit
of a disagreement as to why people peer with each other at public exchange
points. My belief is that generally speaking, networks meet at public
exchange points (such as MAE-*, LINX, AMSIX, AADS, etc) is to exchange
traffic with each other more economically (read: save money).

His belief is that people will pay a premium to get to an exchange point,
because it's worth paying a premium to have 'less hops' between two
networks.

Essentially, he said that paying more for peering that for transit is
typical, and to be expected, and most people accept this.

Whats the common opinion on this?

#include <standard.disclaimer.h>

Today, I was approached by *unnamed-ethernet-extension-company*. They
extend ethernets between several US and UK peering exchanges.

While speaking with them today, thier engineer and I got into a little bit
of a disagreement as to why people peer with each other at public exchange
points. My belief is that generally speaking, networks meet at public
exchange points (such as MAE-*, LINX, AMSIX, AADS, etc) is to exchange
traffic with each other more economically (read: save money).

  This is/was the case for some of my previous employers. We
operated regional networks and persued regional peering @ AADS
amongst other places to reduce the cost of upstream connectivity.. primarily
to interconnect with a number of the .edus and "easy-to-peer-with" people
because we could save costs. We typically figured out/guessed at the
bandwidth usage/savings with flow stats or other means and were
generally correct.

His belief is that people will pay a premium to get to an exchange point,
because it's worth paying a premium to have 'less hops' between two
networks.

  I wouldn't say a premium, but it's generally speaking nicer to
have a more direct connection. I persued ethernet handoffs in various
regional CLEC spaces with some of the other local ISPS at times
but they typically didn't have bgp out to the edge (or we didn't
have it there) so it wasn't easy to do so.

Essentially, he said that paying more for peering that for transit is
typical, and to be expected, and most people accept this.

  If it's cheaper to buy transit than to show up at an exchange
point why would it be worth it? Then you can use your SLA to your
advantage. Get a few free months possibly depending on how your
upstream operates their network and how they do their SLA.

  Plus having someone you can call and open up tickets about
congestion, etc.. where if you peer with the network that has
the congestion and there is no money changing hands there is not
a lot of incentive for them to fix it just for you. Use your
account manager to your advantage IMHO and work to get good
quality service out of your network. Or get some money
back or a discounted service then work on showing up at the various
exchange points, IMHO.

  - Jared

Date: Fri, 30 Nov 2001 11:52:28 -0500 (Eastern Standard Time)
From: Alex Rubenstein <alex@nac.net>

Essentially, he said that paying more for peering that for
transit is typical, and to be expected, and most people accept
this.

<sarcasm>
And paying more for dialup than OC3s is typical, and most people
accept this.
</sarcasm>

Does this salesdroid even know WTH peering and transit provide?
Sorry, I just don't seeing anyone with a modicum of sense paying
more for a few thousand routes (with little or no redundancy,
depending on peering arrangements) than a full table with a fair
amount of redundancy.

At the risk of overgeneralizing, it sounds like he's fresh out of
cableco school. I once contacted a couple of cable companies re
peering... and they wanted to charge more than transit. They
considered it "priority service" and thought there'd be no
benefit to them. Ungh?

I mentioned this on a mailing list (isp-whatever? inet-access?
NANOG?) a while back, and someone else responded that s/he'd had
a similar experience.

Eddy

There is also an important reason to be connected at several exchange points: reliability. If you just have one transit provider, you're more vulnerable than with one transit provider plus a variety of peerings, which will still carry at least part of the traffic if the main provider fails.