The ChangingThe ChangingPeering EnvironmentPeering Environment

Keith Mitchellkeith@linx.net

Executive Chairman, London Internet Exchange

Internet Peering

3rd December 1998

OverviewOverview

• Trends

• Is the market consolidating ?

• Peering & Settlement

• Experiences at LINX

• Competition

Some TrendsSome Trends

• Growth in IXP numbers:– handful in 1993

– over 100 end 1998

– distribution typical (~50% in US)

– more “local” exchanges

“IXP” = Internet eXchange Point

Growth in ISP NumbersGrowth in ISP Numbers

Growth in ISPGrowth in ISPMembership of IXPsMembership of IXPs

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Members Applications

Growth in IXP TrafficGrowth in IXP Traffic

Telephony Tariff TrendsTelephony Tariff Trends

• Much retail voice telephony traffic is becoming “too cheap to meter”

• e.g.– inclusive minutes– Internet telephony– national “L” rate 0845 in UK– free local call regime standing up to

Internet dial-up demands in US

Tariff ConvergenceTariff Convergence

• Trend is not simply of voice settlement model being adopted by Internet

• Evidence that as bandwidth demands increase, it is not always economic or practical to count every last bit

Has the ISP market Has the ISP market Consolidated ?Consolidated ?

• A few very big players

merging merging merging• Medium players getting larger

• Total number of ISPs is staying constant

• So there must be new entrants

Is the ISP market Is the ISP market Consolidating ?Consolidating ?

• New players are seeing market opportunities:– due to new technologies

– in particular market segments

• Is this different from other industries ?

Will the ISP market Will the ISP market Consolidate ?Consolidate ?

• Biggest difference from other industries is issue of “capture”

• Key emergent resources and technologies need protection from vested interest control

• Stifling competition stifles innovation• Key is strong regulation of potential

capturing monopolies– e.g. Microsoft, NSI

Settlement & CompetitionSettlement & Competition

• Non-settlement exchange can inhibit competition by preventing peering where there is no other basis for agreement

• Settlement exchange can inhibit competition by encouraging revenue flow from small to large players

IXPs & CompetitionIXPs & Competition

• Exchange point andco-location facilities promote fair competition:– reduce supplier lock-in

– lower barriers to entry

– increase transparency

UK State of PlayUK State of Play• Most peering via LINX

– majority of members do peer (~80%)– disputes unusual

• Some smaller players via2 regional exchanges

• Limited (<10) private bi-lateral peerings

• Lots of settlement-based bi-lateral wholesale/transit

LINX BackgroundLINX Background

• LINX is UK nationalInternet Exchange Point

• Represents 60 largest UK++ ISPs

• Tries to encourage open peering and competition between ISPs

• Promotes self-regulation (e.g IWF), but is not “regulator”

LINX Peering EnvironmentLINX Peering Environment

• Published & well-defined membership criteria

• Minimum of interference in member peering autonomy

• Peering agreements private matter between members

• Incentives to peer

LINX Peering Practice (1)LINX Peering Practice (1)

• Members must peer with at least:

– one other member

– LINX routers

• In order to:

– to acquire voting rights

– to remain member after 3 months

LINX Peering Practice (2)LINX Peering Practice (2)• Members must:

– publish peering contacts– respond to peering requests

within 2 days

• Peering matrix on web page helps end-users put pressure on

• Independent staff can intervene

• Template “standard” peering agreement bring worked upon

Good Peering PracticeGood Peering Practice

• “Self-regulatory” measures

• Peering policies should be:

– registered

– in public domain

– consistently & fairly implemented

– stable

Settlement at the LINXSettlement at the LINX

• Recently removed restriction on settlement-based peering

• Historical rule set by founder members

• Was inhibiting some large players from joining

• Potential regulatory concern area

• Not consistent with principle of non-intervention in peerings

Alternatives to SettlementAlternatives to Settlement

• Tiered peering used by some and works well:– exchange of subset of customer

routes/territory– multiple ASes/routing policies– or bandwidth limited

• Fixed fee peering

QoS and SettlementQoS and Settlement• Quality of service commonly

advocated reason for need for settlement-based peering

• It is a red herring

• Existing complex inter-provider arrangement are at manageability limit already

• This will be a minority premium service, not the norm

Quality of Service IssuesQuality of Service Issues

• Inter-provider routing on Internet is policy based, uses BGP

• BGP does not support QoS

• QoS routing (e.g. RSVP) cannot do inter-provider policy routing

• So only practical inter-provider QoS mechanism is link rate limiting

QoS in PracticeQoS in Practice

• 3 ways to do link rate-limiting:– private point-to-point links

– ATM switches

– new generation of LAN (ethernet) switches

Where do IXPs fit in ?Where do IXPs fit in ?

• Within EU, “national” IXPs should be needed less as telecoms market opens

• Small number of pan-European IXPs emerginge.g. AMS-IX, DGIX, DE-CIX, LINX,

VIX all have 25-35% non-domestic members

IXP GrowthIXP Growth

• Many of the new IXPs are local/regionale.g. MaNAP, LoNAP, Scot-IX in UK;

many in US

• Motivated by strong IXP/co-lo synergy (e.g. PAIX)

• Often intent is to stimulate local Internet economy rather than simply efficient traffic exchange

Growth in Co-locationGrowth in Co-location

• Major boom industry at present– e.g. Telehouse, Compaq, Co-lomotion

• TeleCity in UK major venture-capital funded start-up

• No less than 8 responders to LNX 2nd site tender less than 10km apart !

• PAIX is research project that makes profit !

Growth in Co-locationGrowth in Co-location

• Remains much unmet demand forco-lo space outside UK & US

• ISPs want quality space

• Web hosting ISPs want lots of quality space

• Co-lo customers want choice of ISPs & carriers in facilities

• Existing facilities filling up

Co-Lo Growth & PeeringCo-Lo Growth & Peering

• Private bi-lateral peering is not simple or cheap across multipleco-lo sites

• Cheap dark fibre may be one solutione.g Stockholm, Palo Alto,

almost Docklands

• Is scaling this future role for IXPs ?

ConclusionsConclusions

• Open peering can promote competition

• Closed bi-lateral exchange can inhibit it

• Open peering arbiter can facilitate competition:– as L1/L2 exchange– as organisational environment

SummarySummary• Market will determine:

– when– whether– where

settlement or not is best

• There is room for diversity

• Attempts to buck market will probably fail