The Politics of Peering

Deep inside global data centers where networks meet and trade traffic at gigabit speeds, the shape of the core of the Internet is changing along with the business of content delivery and peering arrangements.

by Alex Goldman ISP-Planet Associate Editor [April 29, 2002]

Not all data centers are created equal. Inside some, servers hum away, delivering Web pages to individuals over thin lines using simple protocols. But there's another kind of data center where ISPs trade traffic at gigabit speeds. These speeds are changing the face of the business of the Internet.

Some of these traffic exchanges are built by Equinix, giving co-founder and Chief Technology Officer Jay Adelson an inside view of the changes that are occurring at the core of the Internet.

Formerly, Adelson managed the Palo Alto Internet Exchange (PAIX) when it was owned by Digital Equipment Corp., before Digital was bought by Compaq Computer Corp. He also founded Netcom On-Line Communications, Inc., which is now owned by ICG Communications.

Equinix builds peering exchanges that are based on the PAIX model. Equinix refers to its peering exchange centers as Internet Business Exchanges (IBX). An IBX has all the hallmarks of your typical best-of-breed data center, like a wholly redundant infrastructure, backup power generators, and dry fire suppression systems, just to name a few. Equinix offers cross connect services in various forms and functions ranging from per-port programs to colocation real estate.

Adelson gave a speech on the politics of storage at the George Gilder's Storewidth Conference held at the end of March in Laguna Niguel, Calif., in which he outlined the changing face of the Internet.

Adelson said that in this particular ecosystem, where businesses hand off Web traffic with other businesses, the game is changing. In the past, data carriers (like Level 3, Qwest, and UUNET) were developing portals for their subscribers, and paid content providers (like MSN, Google, and Yahoo) to provide fast for their subscribers. But as content providers' business models change to subscription-based or upsell models (from ad-supported content), they are becoming more interested in access to the eyeballs owned by the major ISPs.

As a result, these companies are starting to ink content deals in which both players link their networks, but no money changes hands. Adelson says the change is gradual but it is occurring.

"For content providers, the value of a peer is based on the peer's number of eyeballs, not the size of its routing table," Adleson said. "Some international telcos have an entire nation of eyeballs and are especially valuable."

Remember, content peering is not content delivery, at least according to Adelson. But it can achieve the same ends.

"We're seeing Yahoo and Hotmail now peering directly through each other. Traffic through peering is better than an edge cache because replicating content from core to core is cheaper and more efficient than replicating content from edge to edge," Adelson said. "Large content providers may no longer pay a premium to CDN providers if they can do it themselves for cheaper."

In the future, Adelson said he expects that even smaller data carriers, such as local ISPs, will be able to purchase space in his IBXs.

"As core peering becomes more prevalent, where you store content becomes an architecture decision, not a price decision. At that point, a Tier-4 regional ISP with unique eyeballs can come into a single IBX and try to negotiate a free exchange, eyeballs for content, with a content provider like Yahoo," Adelson explained. "The ISP wins a better portal and Yahoo wins greater exposure."

It's not happening now for the small ISPs, but this could be a trend in the future. Keep your eyeballs peeled on new opportunities in content peering if your ISP serves a unique audience.

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