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Verizon probably doesn't need to pay Level 3 for the bandwidth. Typically peering points like this are settlement free. In other words it's a voluntary exchange

by ktsmith 12y ago

Verizon probably doesn't need to pay Level 3 for the bandwidth. Typically peering points like this are settlement free. In other words it's a voluntary exchange of traffic and each side of the line keeps 100% of the revenue from its customers using the interchange.

mikecb 12y ago
And Verizon claims that peering points are intended to be roughly equal in directional usage. Which this is not. Are there examples of peering agreements where companies don't care that usage isn't balanced and still don't require some sort of net settlement?
- wmf 12y ago
  Peering links between backbones (like Level 3 and Verizon Business) are supposed to have equal ratios. Peering between content providers and end-user ISPs don't care about ratios.
  - mikecb 12y ago
    Right. And the latter has to pay for it.
    - wmf 12y ago
      The latter what? I think content peering should be free because there's no fair way to set a price for it.
      - mikecb 12y ago
        Why not? There's plenty of price data for high volume bandwidth applications, and even if there weren't, the parties could negotiate for it.
        wmf 12y ago
        An end-user ISP like Comcast has a monopoly on access to their customers, so if they're allowed to charge for peering there is no competition to limit how much they charge. This tends to result in the ISP allocating 99% of the surplus created by peering to themselves.
        mikecb 12y ago
        That's very true. The only limit would be losing customer (HA!) because they didn't connect to the right content providers. There's some interesting network effects here that smell like positive externalities, which would explain the underinvestment. But also suggest that there isn't a good solution.
  - tromobne8vb 12y ago
    Right. If they really cared about ratios they wouldn't offer unbalanced service such as 50/15. They have built their network around users predominately consuming content and then complain when there is too much consumption from specific providers that happen to compete with services they also offer.
- mschuster91 12y ago
  I'd say a lot of the peerings at DECIX and AMS-IX.
  - mikecb 12y ago
    Good to know. And these all remain settlement-free?
    - mschuster91 12y ago
      iirc it is part of the peering culture there, but I am not sure exactly, never having worked in that field
- ktsmith 12y ago
  I'd say that wmf addressed it already. Peering points with one side being primarily consumer services are always going to be unequal due to the nature of the end user and the ways in which consumer ISPs provide bandwidth to their customers. Lots of download, and very little upload speed as an example. As such it's nearly impossible for many peering points primarily used by consumer services to use an equal amount of traffic on both directions. Both sides of the agreement know this and it's still usually in both of their best interests to peer settlement free.

by ktsmith 12y ago

mikecb 12y ago

And Verizon claims that peering points are intended to be roughly equal in directional usage. Which this is not. Are there examples of peering agreements where companies don't care that usage isn't balanced and still don't require some sort of net settlement?

wmf 12y ago
Peering links between backbones (like Level 3 and Verizon Business) are supposed to have equal ratios. Peering between content providers and end-user ISPs don't care about ratios.
- mikecb 12y ago
  Right. And the latter has to pay for it.
  - wmf 12y ago
    The latter what? I think content peering should be free because there's no fair way to set a price for it.
    - mikecb 12y ago
      Why not? There's plenty of price data for high volume bandwidth applications, and even if there weren't, the parties could negotiate for it.
      - wmf 12y ago
        An end-user ISP like Comcast has a monopoly on access to their customers, so if they're allowed to charge for peering there is no competition to limit how much they charge. This tends to result in the ISP allocating 99% of the surplus created by peering to themselves.
        mikecb 12y ago
        That's very true. The only limit would be losing customer (HA!) because they didn't connect to the right content providers. There's some interesting network effects here that smell like positive externalities, which would explain the underinvestment. But also suggest that there isn't a good solution.
- tromobne8vb 12y ago
  Right. If they really cared about ratios they wouldn't offer unbalanced service such as 50/15. They have built their network around users predominately consuming content and then complain when there is too much consumption from specific providers that happen to compete with services they also offer.
mschuster91 12y ago
I'd say a lot of the peerings at DECIX and AMS-IX.
- mikecb 12y ago
  Good to know. And these all remain settlement-free?
  - mschuster91 12y ago
    iirc it is part of the peering culture there, but I am not sure exactly, never having worked in that field
ktsmith 12y ago
I'd say that wmf addressed it already. Peering points with one side being primarily consumer services are always going to be unequal due to the nature of the end user and the ways in which consumer ISPs provide bandwidth to their customers. Lots of download, and very little upload speed as an example. As such it's nearly impossible for many peering points primarily used by consumer services to use an equal amount of traffic on both directions. Both sides of the agreement know this and it's still usually in both of their best interests to peer settlement free.