Now let's have a look at a network
operators goal.
Network operators want to minimize
the cost of operating the business.
It's only natural. If you're a commercial ISP,
the more it costs to operate the business,
the more expensive it is for an end user.
For an academic and research
network operator similar applies--
the more costs for operating the
network infrastructure, the more cost it
is for the universities and the research
institutions or for the funding entities.
Ttransit means that the network
operator has to pay for the circuit
whether it's international or domestic.
They usually have to pay for the data.
Under that is usually a cost per megabit
per second and this has to be repeated
for every transfer provider the operator
subscribes to and it is a significant
cost of being a service provider.
Peering,on the other hand, the network operator
would share the circuit cost with the
peer if it's a private peer or runs
infrastructure to the public peering
point which is a one-off cost--
there's no need to pay for any data.
It reduces the transit data volume and
therefore reducing the transit cost.
So let's look at how transit works.
Suppose we have a small access provider
providing Internet
access for a city's population.
It could be a mixture of dial-up, we still have that, Wireless and fixed broadband,
possibly some business customers,
possibly also some internet cafes.
So how do their customers get access
to the rest of the Internet?
Well, the operator will buy access from
one, two or more larger ISPs who already
have visibility of the rest of the internet
and this is transit.
They are paying for the physical connection
to the upstream and for the traffic volume
on the link to the upstream.
As for peering, if two network operators
are of equivalent sizes,
they generally have equivalent
network infrastructure coverage,
equivalent customer size and numbers,
similar content volumes to be shared
with the internet and potentially
similar traffic flows to each other's networks.
And this makes them good
peering partners even if they are
competitors, even if they're trying to
serve the same customer base.
If they don't peer with each other, then they
both have to pay an upstream provider
for access to each other's network, to
each other's customers
and to each other's content.
So the only one who
benefits from this is the upstream
provider because they make money from
the two ISPs funding the transit costs.
© Produced by Philip Smith and the Network Startup Resource Center, through the University of Oregon.
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