1. The Changing Peering Environment Keith Mitchell keith@linx.net Executive Chairman, London Internet Exchange Internet Peering 3rd December 1998

2. Overview Trends Is the market consolidating ? Peering & Settlement Experiences at LINX Competition

3. Some Trends Growth in IXP numbers: –handful in 1993 –over 100 end 1998 –distribution typical (~50% in US) –more “local” exchanges “IXP” = Internet eXchange Point

4. Growth in ISP Numbers

5. Growth in ISP Membership of IXPs

6. Growth in IXP Traffic

7. Telephony 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

8. Tariff 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

9. Has the ISP market 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

10. Is the ISP market Consolidating ? New players are seeing market opportunities: –due to new technologies –in particular market segments Is this different from other industries ?

11. Will the ISP market 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

12. Settlement & 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

13. IXPs & Competition Exchange point and co-location facilities promote fair competition: –reduce supplier lock-in –lower barriers to entry –increase transparency

14. UK State of Play Most peering via LINX –majority of members do peer (~80%) –disputes unusual Some smaller players via 2 regional exchanges Limited (<10) private bi-lateral peerings Lots of settlement-based bi-lateral wholesale/transit

15. LINX Background LINX is UK national Internet 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”

16. LINX Peering Environment Published & well-defined membership criteria Minimum of interference in member peering autonomy Peering agreements private matter between members Incentives to peer

17. 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

18. 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

19. Good Peering Practice “Self-regulatory” measures Peering policies should be: –registered –in public domain –consistently & fairly implemented –stable

20. Settlement 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

21. Alternatives 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

22. QoS 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

23. Quality 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

24. QoS in Practice 3 ways to do link rate-limiting: –private point-to-point links –ATM switches –new generation of LAN (ethernet) switches

25. Where do IXPs fit in ? Within EU, “national” IXPs should be needed less as telecoms market opens Small number of pan-European IXPs emerging e.g. AMS-IX, DGIX, DE-CIX, LINX, VIX all have 25-35% non-domestic members

26. IXP Growth Many of the new IXPs are local/regional e.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

27. Growth 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 !

28. Growth in Co-location Remains much unmet demand for co-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

29. Co-Lo Growth & Peering Private bi-lateral peering is not simple or cheap across multiple co-lo sites Cheap dark fibre may be one solution e.g Stockholm, Palo Alto, almost Docklands Is scaling this future role for IXPs ?

30. Conclusions 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

31. Summary Market will determine: –when –whether –where settlement or not is best There is room for diversity Attempts to buck market will probably fail