Votes: 0Posted On: Apr 10, 2017 07:00:11
The term “transit” is defined as the transportation of entities from one place to another. In networking itself, a large amount of data flows from one network element to another.
The data passes through many networks before reaching its destination. These networks could belong to different cities, states or even countries. The interconnection of these networks is achieved through the internet. There are several companies that provide internet services all over the world. These companies are called the Internet Service Providers (ISPs).
Whenever the term “IP transit” is mentioned it is generally not in a technical aspect. IP transit simply means the obtaining of internet services by an Internet service provider from an Internet Service Provider higher than itself in the hierarchy.
Different levels of ISPs
There is a hierarchy of internet service providers all over the world. Imagine you are accessing the internet at your home. The internet is provided by Tier-3 ISPs. These are the most basic level of ISPs are subject to a limited area. There can be multiple ISPs operating within a city. These ISPs obtain services of a larger level of ISPs called as the Tier-2 ISPs. These ISPs cover a larger demographic and provide services to all Tier-3 ISPs. The Tier-2 ISPs can cover a state or sometimes an entire country. The Tier-2 ISPs obtain services from Tier-1 ISPs which are at the top of the hierarchy. Tier-1 ISPs are the Internet service providers that are responsible for global internet connectivity. There are a limited number of Internet service providers all around the world.
With reference to IP transit these IPSs have non-disclosure agreements with each other for the transit of data. These may include the amount of data to be exchanged, the use of the equipment among others.
Tier -1 ISPs - The Tier-1 ISP is a transit free network. It means that it does not have to pay for internet transit. In fact, these are the transit providers. All the other level ISPs have to pay them if they have to obtain services of internet transit.
Tier -2 ISPs – The Tier-2 ISP networks pay for internet transit to Tier-1 ISP to obtain access to some parts of the internet. These, in turn, provide services to Tier-3 ISPs. These ISPs also have an agreement for internet sharing with each other called peering.
Tier-3 ISPs – The Tier-3 ISPs are at the bottom of the hierarchy and have to pay for transit as well as peering services.
By definition, peering is settlement-free, “bill and keep,” or “sender keeps all”. It simply means that neither of the ISPs pay each other for the exchange of traffic under a mutual agreement. The users of one ISP can exchange data from the users of other ISP, all they have to do is to pay their respective service providers. In contrast to transit, where the ISPs have to pay to obtain transit services, the process of peering is just a mutual exchange of data between two ISPs. The process of peering poses some limitations. There has to be a mutual agreement between the two ISPs. The transfer of data between the two ISPs should be close to equal. If one ISPs transfer a substantial amount of data with respect to other ISP, the other ISP can cancel the agreement or demand for revenue.
IP Transit and Peering
One of the major differences between IP Transit and Peering is the cost. When we obtain services from a transit service provider we have to pay the traffic settlement costs. But in case of peering there is negligible cost as the exchange of data is mutual. The cost involved in peering is due to equipment and power consumption among others.
When we talk about IP transit there is an SLA (Service Level Agreement) between the ISP and the transit provider. The SLA defines a clear agreement between the two parties where the transit provider has to provide certain services to the ISP at pre-defined costs.
Whereas, in the case of peering there is a mutual agreement between the two ISPs by which they obtain a mutual exchange of data.
Another comparison that can be made is on the basis of levels of ISP. A transit connection is usually made between a Tier-2 ISP and a Tier-1 ISP. Whereas, peering connection is made between two Tier-2 ISPs.
To know more about Internet transit services, please click on the link below.