Networking for Nerds

Networking for Nerds: Do You Know the Difference between IP Peering vs. IP Transit for Enterprise Internet Interconnection?

Brad Gregory

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, takes an enterprise perspective and discusses where it makes the most sense to explore implementing IP peering versus IP transit in the enterprise. We will also delve into the building blocks and the financial advantages of peering.

The first thing to do is become grounded in 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 entities – and their associated hierarchies – that make up the internet. IP peering is a mutual exchange of data between two ISPs, and the amount of data exchanged is typically close to equal. The respective ISPs do not charge for this arrangement as both parties benefit equally – this is known as settlement-free, and it simply means that neither ISP will pay the other under an agreement.

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 so there is no longer a peering relationship from an internet standpoint because both parties do not benefit equally from the exchange. When enterprises connect to an ISP for the purpose of reaching the entire internet, it is known as IP transit. 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.


Equinix Internet Exchange Data Sheet

The Equinix Internet Exchange™ allows networks including ISPs, Content Providers and Enterprises to easily and effectively exchange Internet traffic.

Equinix Internet Exchange

Plan a full peering lifecycle

When thinking about peering versus transit, approaching it from a lifecycle standpoint is a good start because it 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.

Technically, 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 have IP transit and are sending and receiving all routes from your ISP so there is nothing you need to worry about from an asymmetry standpoint. Later, you add a cloud-based secure web gateway and suddenly eighty percent of your traffic is now destined to your SWG provider. Now you 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 will be receiving a subset of routes from the respective peer which would necessitate you advertise a subset as well to maintain symmetry.

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

Public peering would typically be adopted as bandwidth to destinations is consistent and continues to grow. For public peering, make sure you choose a provider that has many peers. The main benefit of public peering is a single peering port can reach multiple destinations, making public peering more affordable on a cost per Mbps basis versus transit. Public peering is done via an Equinix Internet Exchange™ (IX) which can act as a Layer-2 switch. With public peering, all peering sessions happen over a single port that is 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 you 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 in public peering, enterprises should be where there are many peers in a single collocation. Private peering can scale to very high bandwidths at a very low cost per Mbps vs. 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. As such, collocation and IX providers are there to facilitate a 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 peering.db which is a database of networks that are peering, where they are peering, and if they are likely to peer with you. From the peering.db website, you just enter who you would like peer with and it will show you all the locations available for peering as well as the type of peering available (i.e. public vs. 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 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 is a Layer 2 platform that enables interconnection (peering) between multiple networks in an operationally-efficient and cost-effective manner. Since the initial launch of Equinix in Ashburn at DC1, peering and the Internet Exchange platform has been at the center of attracting carriers, network service and content providers, and enterprise networks to our facilities. With over 1,300 networks peering on our 35+ global IX platforms, the Internet Exchange continues to provide value to existing customers and attract new peering participants to IBX locations.

For more information, read the Equinix Internet Exchange datasheet.

You may also want to check out the following blogs on the Internet Exchange:

Taking the Grand Internet Exchange Tour

Brad Gregory
Brad Gregory Senior Product Manager Brad Gregory is a Senior Product Manager for the Equinix Network Edge platform and develops virtual network solutions for interconnection. Brad analyzes network interconnectivity trends and focuses on customer feedback to enable the latest solutions in an increasingly interconnected world.