Transit Tactic 4 - Renegotiate Multi-Year Contracts

Excerpts from The Internet Peering Playbook: Connecting to the Core of the Internet

Transit purchasers employing this tactic renegotiate their transit agreements before the end of their terms, as shown in Figure 3-4.

Figure 3-4. Tactic 4 - Renegotiating Internet Transit deals mid-contract.

In this tactic, the customer argues (mid-contract) that a renegotiation is needed to bring the unit transit price in line with the current market price. If there is resistance, the customer usually publicly declares the ISP as overpriced, denigrates its service, and accepts that there might be a court settlement years from now. Not wanting the damage to its reputation in the market, the upstream ISP acquiesces. The ISP sales team internally rationalizes this renegotiation as a new sale with extended contract terms.

Of course, this new multi-year sale will be renegotiated next year.