Networking for Nerds

IP Peering vs. IP Transit for Enterprises

Learn the differences between these two options for moving enterprise traffic, and situations when you might choose one or the other

Brad Gregory
IP Peering vs. IP Transit for Enterprises

There are many blogs that explain the difference between IP peering and IP transit. Most of these blogs contrast them as they pertain to internet service providers (ISPs). This blog, however, is written from the enterprise perspective. It discusses where it makes the most sense to implement IP peering or IP transit in the enterprise. We will also delve into the building blocks and financial advantages of peering.

The first thing to do is learn the definition of the two options and the context in which the terms are used. IP peering and IP transit are ISP definitions used to describe how connections are made between the entities that make up the internet—and their associated hierarchies.

IP peering is a mutual exchange of data between two ISPs, and the amount of data exchanged is typically close to equal. Since both parties benefit equally, the arrangement is settlement-free, meaning the respective ISPs do not charge each other.

IP transit is when one entity pays another for the right to transit its upstream network. In this arrangement, one entity is higher than the other in the hierarchy. There is no longer a peering relationship because both parties do not benefit equally from the exchange.

From the enterprise perspective, IP transit happens when an enterprise connects to an ISP for the purpose of reaching the internet. This should not be confused with connecting to an ISP over border gateway protocol (BGP) peering for internet connectivity. BGP peering is a network definition, not an ISP definition. Additionally, peering is only for a participant’s prefixes and their directly connected peer.

Now that we have established clear definitions between IP peering and IP transit, let’s look at which one makes sense from an enterprise standpoint.

Plan a full peering lifecycle

When thinking about peering versus transit, approaching it from a lifecycle standpoint is a good place to start. This forces you to think about the drivers for choosing peering over transit—namely, traffic levels to specific destinations.

The figure below represents a peering lifecycle model.

The best way to think about a peering lifecycle is from a routing standpoint—specifically, the routes that are sent and received between routing peers. As you progress through the lifecycle, the routes that are received and advertised become more refined as the destinations become more defined. You must be very careful to maintain routing symmetry because you could have more than one type of peering based on traffic flows to certain destinations.

For example, say you use IP transit and are sending and receiving all routes from your ISP, so you don’t need to worry about asymmetric routing. Later, you add a cloud-based secure web gateway and suddenly, 80% of your traffic is destined for your SWG provider. You now have an 80/20 split of traffic between two providers, and it could make sense to establish an IP peering relationship with your SWG provider. Again, IP peering assumes you’ll receive a subset of routes from the respective peer, which would require you to advertise a subset as well to maintain symmetry.

For IP transit, you should look for a colocation provider with a rich ecosystem of partners. This is the lowest-cost way to reach all internet destinations on a cost-per-megabits per second (Mbps) basis.

Enterprises typically adopt public peering as bandwidth to destinations is consistent and continuing to grow. For public peering, make sure you choose a provider that has many peers. The main benefit of public peering is that a single peering port can reach multiple destinations, making it more affordable than transit on a cost-per-Mbps basis. Public peering happens via an internet exchange (IX), which can act as a Layer 2 switch.

With public peering, all peering sessions happen over a single port that‘s connected to the IX switch. Additionally, there are two types of BGP peering connections when connecting to an IX: multilateral and bilateral. With multilateral peering, you connect to a route server with a single BGP peering session and send/receive all routes with anyone connected to the route server. Bilateral peering is a direct BGP peering relationship with another entity on the exchange.

Private peering is used when traffic to a single destination becomes very large. As with public peering, enterprises should be where there are many peers in a single colocation environment. Private peering can scale to very high bandwidths at a very low cost compared to public peering. Private peering is a dedicated physical connection between you and your peer.

Enterprises should keep in mind that peering is an agreement between two organizations, and colocation and IX providers are there to facilitate that connection. However, they can only facilitate connections between two willing entities, so you must do your research to determine who would be willing to peer with you.

A good tool to get started is PeeringDB, a database that can help you find out which networks are peering, where they’re peering, and if they’re likely to peer with you. From the PeeringDB website, enter who you’d like to peer with, and it will show you all the locations available for peering and the types of peering available (public or private). It will also give you a link to the organization’s peering policy. The policy is the most important thing because it defines the parameters of the peering relationship and provides contact information to begin peering.

Equinix Internet Exchange® enables networks, content providers and large enterprises to exchange internet traffic through the largest global peering solution across 35+ markets. It’s a Layer 2 platform that enables peering between multiple networks in an operationally efficient and cost-effective manner.

Since its launch, the Equinix Internet Exchange platform has been at the center of attracting carriers, network service providers, content providers and enterprise networks to our facilities. With over 2,100 networks peering on our 35+ global IX platforms, Equinix Internet Exchange continues to provide value to existing customers and attract new peering participants to Equinix IBX® data centers.

We recently surpassed a new milestone of 30 terabits per second (TB/s) of peak traffic across all Equinix Internet Exchange locations. This is the highest rate of any IX or peering company, and represents a 50% increase in about 18 months.

For more information, read the Equinix Internet Exchange datasheet.

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