Figure 2 – The Tier 1 ISP Model

Regional Tier 1 ISP Transit Links to Transit Customers. Shown as attachments underneath the ISP, transit customers connect either directly to the core routers, or more commonly, to tributary routers that feed up into the core router. These transit attachments are often referred to as “Downstream Customers.”

Regional Tier 1 ISP Backbone Backhaul. On the left side of the ISP are backbone interconnections (called “backhaul connections”) linking the Tier 1 ISP’s core routers together. These core routers and core links together represent the core of a Tier 1 ISP transit network, and must be sufficiently large to carry the aggregate peering and transit traffic back through the core and on to the end-customers.

Regional Tier 1 ISP Regional Peering Interconnections. The interconnections between the Tier 1 ISPs tend to be a full-mesh within each Interconnect Region. Each interconnect link needs to have enough capacity to handle the aggregate traffic to and from the other Tier 1 ISPs.  The generalized Interconnection Region is shown graphically below.

The phrase “Tier 1 ISP” is an overloaded term in the industry, so for this discussion we will use the following working definition:

Definition: An Regional Tier 1 ISP is an ISP that has access to the entire Internet Region routing table solely through Peering relationships. 

Regional Tier 1 ISPs are at the top of the hierarchy and don’t have to pay transit fees (since by definition they have access to the entire Internet Region solely through peering relationships with the other Tier 1 ISPs). All other ISPs operating in the region are required to purchase transit from one or more of the Regional Tier 1 ISPs (or indirectly from their downstream ISPs) in order to reach all destinations in the Internet Region.

The value of the “Regional Tier 1” label is proportional to the value of the Internet Region to the Global Peering Ecosystem. Thus, if your friend Todd claims to be a “Tier 1 ISP” in his house, that phrase is both accurate and relatively unimportant to the operators of the Global Peering Ecosystem.

This Regional Tier 1 definition is important for this discussion as it allows us to understand their position in the Internet Peering Ecosystem, the corresponding motivations and expected resulting behaviors as seen in the ecosystem.

Regional Tier 1 ISP Model. The figure below is the graphical representation of the Regional Tier 1 ISP. There are three essential elements of the Regional Tier 1 ISP: downstream transit link(s) to transit customers, peering interconnections, and backbone backhaul links to the ISP’s other core routers. We will discuss each of these ecosystem interconnections in turn.

Regional Tier 1 ISP Peering Motivation. By definition, Tier 1 ISPs don’t pay transit fees, so they are only motivated to peer with each other as a way to provide connectivity for their customers.

Regional Tier 1 ISP Relationship with non-Tier 1 ISPs. Since non-Tier 1 ISPs represent current or prospective customers, or customers of other Tier 1 ISPs, there is little incentive to peer with them. Peering policies tend to reflect this inclination – we will discuss this more in the section on Peering Inclinations and Peering Policies.

Since Tier 1 ISPs are less motivated to peer with anyone else, we heard many stories of Tier 1 ISPs maneuvering in the Ecosystem consistent with this desire.

Telstra Story. James Spencely (Comindico) described the experience trying to obtain peering with Telstra.  Comindico built out their network to meet the restrictive peering requirements of Telstra “providing enough capacity into each territory to provide broadband to every person and kangaroo should they decide to sign up.”  At massive expense they met Telstra’s stated peering policy and went through the process described, including laying out network maps, network traffic statistics, etc. After the first few meetings with Telstra, the Telstra lawyers were swapped out and replaced with new ones that needed to start the process over again. After these meetings, the Telstra policy was changed to be just outside the reach of Comindico. Comindico later filed for bankruptcy.

International Story. For example, a large international ISP built into Brazil and was able to negotiate peering with the dominant regional Tier 1 ISPs, with the argument that it did not represent a serious threat to their home market, and that the free access to its international customers would be beneficial. Once established in that region, the international ISP obtained transit contracts with a few customers within the region, and that traffic traversed the peering connection.

The Tier 1 ISPs saw that the international player was obtaining customers by undercutting their prices in their region and simply passing much of that traffic over their new peering connection. Peering was quickly turned down and the peering policies were revised.

Japan Story. Around 2001, UUNet, one of the largest ISPs in the world at the time and a Regional Tier 1 ISP in the U.S. tried to obtain peering with the Regional Tier 1 ISPs in Japan, NTT, Japan Telecom, IIJ, and KDDI.  Their approaches were refused. As John Milburn (former Dacom) stated, “The desire to protect one’s home market far exceeds and benefits peering could provide.”  Japan Telecom peers openly in the U.S. however, and as expected, prefers to haul that peered traffic across the very expensive transoceanic circuits themselves. This reflects the parties Restrictive Peering Policies within their Internet Region.

Telecom Italia. One exception to the Regional Tier 1 ISPs don’t peer rule exists in Italy. Telecom Italia is a formerly state-owned telephone company and Regional Tier 1 ISP in Italy. They peer openly in region, preferring one interconnect point, but accepting of multiple if the peer prefers. This is exactly opposite from every story heard elsewhere in the world.

When asked why Telecom Italia peers openly within their region, they replied that they don’t want regulators to intervene in their activities, and that the incremental revenue that they gain from circuit sales more than offset the potential revenue lost from transit sales.

Definition: Interconnect Regions are geographical areas within an Internet Region where ISP interconnection occurs. In the U.S. there are roughly eight major Interconnect Regions: New York City Area, Washington DC Area, Atlanta, Chicago, Dallas, Los Angeles, Silicon Valley Area, and Seattle.

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