Internet traffic exchange: 2 billion users and it’s done on a handshake

The transport of data over the internet is not tightly regulated, nor is it an expensive affair. Most of it is done by direct peering arrangements between participants, and there aren’t even any formal contracts or agreements. The cost: it’s about a hundred thousand times cheaper than the equivalent of voice minutes the mobile providers are selling us.

Here a few excerpts from an interesting article on a new OECD report that describes how things are done at the internet’s highest levels…

The report provides evidence that the existing Internet model works extremely well, has boosted growth and competition and brought prices for data down to 100,000 times less than that of a voice minute. A survey of 4300 networks, representing 140,000 direct exchanges of traffic, so called peerings, on the Internet, found that 99.5% of “peering agreements” were on a handshake basis, with no written contract and the exchange of data happening with no money changing hands. Moreover, in many locations, multilateral agreements are in place, using a so-called route server, where hundreds of networks will accept to exchange traffic for free with any network that joins the agreement. The parties to these agreements include not only Internet backbone, access, and content distribution networks, but also universities, NGOs, branches of government, individuals, businesses and enterprises of all sorts – a universality of the constituents of the Internet that extends far beyond the reach of any regulatory body’s influence.

Not only has the open model of the Internet supported two billion users in an incredibly short period of time, it also lends itself to supporting the type of innovation and competition that will drive growth for the next two billion users. Importantly, it has done this through a mixture of multi-stakeholder participation and self-governance. The current model of Internet traffic exchange can only exist in an environment that stimulates market entry and investment. This requires that regulators allow telecommunication and non-telecommunication operators to enter into the market, to compete and to interconnect. Indeed where development of the Internet has been less than satisfactory this often stems from a lack of sufficient liberalization…

See the whole article here

Internet traffic exchange: 2 billion users and it’s done on a handshake