There was an interesting anonymous comment by anon on yesterday's Net Neutrality article:
if you have to treat all traffic on your network the same, you look closely at what traffic you put on the network.. settlement free peering is the next battle
I think I know what he means and I think he has a point worth exploring. Let me try to explain and perhaps readers with more extensive background in the nitty gritty of how the internet works will chime in and correct me.
Settlement free peering relationships between networks are simple ones. Two similar networks, each getting paid by their customers to deliver data, each agree to mutually hand off the traffic bound for the other over a connection they both promise to maintain and upgrade. Without the connection, they would need to pay a third party for transit somehow. But at the same time, settlement free peering relationships are immensely complicated because of the inherent ambiguity in the word 'similar', which must somehow cover everything from traffic levels to geographical territory, to company size and market share, and to different types of customers and traffic.
It is that last part that commenter 'anon' seems to be referring. The customers of last mile networks such as AT&T (NYSE:T, news, filings) and Comcast (NASDAQ:CMCSA, news, filings) are primarily eyeballs. The customers of over-the-top providers like Google and Akamai (NASDAQ:AKAM, news, filings) are primarily content sources. Others like glbc, Level 3 Communications (NYSE:LVLT, news, filings), and Cogent Communications (NASDAQ:CCOI, news, filings) lie at various spots between those two extremes. The traffic that originates from the two sides tends to be rather asymmetric, e.g. an end-user sends a few bits requesting a streaming movie and the content source sends a flood back. This asymmetry affects the economics of peering and hence peering relationships often contain restrictions on how balanced the traffic exchanged must be.
By forcing certain bandwidth hygiene on the last mile providers, network neutrality rules could shift that balance by elevating the importance of traffic ratios to one side. Google has all sorts of peering relationships with ISPs of all sizes, and Akamai's entire network was built around peering with ISPs by putting servers in their closets. It's not just them, the industry teams with peering relationships. The ISPs did it because it saved them money on transit and offered better performance for their customers. But if they must treat all traffic the same within their networks and traffic from content providers takes on a threatening hue, the economic case for maintaining those peering connections is weakened.
If an ISP must absorb all that traffic and isn't allowed to treat it differently, why not just let that peering connection's upgrades lag a bit and throttle traffic by inaction rather than action? For a tier-1 backbone with last mile networks, why peer at all in some cases? Why not try to make them accept paid peering or even buy transit? It's not black and white, peering will still save both money in the end for most cases. But if the regulatory power balance between content and eyeballs shifts far enough, there will inevitably be some sort of echo in the peering/transit connections throughout the internet.
It could be a peaceful realignment, or it could escalate into something uglier as anon suggests. Any opinions out there?
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