|Issue:||Asia-Pacific III 2008|
|Topic:||Exchanging Internet traffic|
Samuel Lee, the President of Equinix Asia-Pacific, is responsible for all Equinix operations in the Asia-Pacific region, including its Internet Business Exchange™ (IBX®) centres in Tokyo, Hong Kong, Singapore and Sydney. At Equinix, Mr Lee has served in a variety of roles from Managing Director of Hong Kong to Vice President and later President for Asia-Pacific. Prior to Equinix, Mr Lee held management positions at Pacific Gateway Exchange, Teleglobe International, Intel, Sprint and founded Telekom Consulting Limited, a consulting firm offering strategic assistance to network providers. Mr Lee holds a BA from City University of Hong Kong.
The individual companies and ISPs linked to the Internet interchange data, either by paying an Upstream Transit Provider for the traffic or by peering directly with other companies or ISPs. In peering, two companies reciprocally exchange access only to each other’s customers through an Internet exchange (IX) and share the cost. To gain access to content originating in Asia, international ISPs are increasingly peering with Asian ISPs for lower cost, higher quality access to the local content they offer.
In the past 20 years, the Internet has grown and evolved to become such an integral part of our lives that even non-users cannot escape its influence. For example, advocates use the Internet to campaign for the rights of minorities living in areas where access to the Internet is limited. Both developed and developing countries feel the far-reaching influence of the Internet on their politics, business and social environments. According to Internet World Stats, in mid 2008, over 530 million of Asia’s 3.8 billion people are Internet users. Asia accounts for 37.5 per cent of the world’s usage, the highest for any region; China, Japan, India and South Korea lead the pack. Back in 1969 when the Arpanet, the world’s first multiple-site computer network, was created, few would have envisioned the impact that the Internet has on the world today. The development in computing technology and access to broadband Internet also changed the way consumers utilize the Internet. It is common these days to see people accessing the Internet at locations such as coffee houses to complete a banking transaction or to blog. The Internet is a vast collection of inter-connected networks where information is shared and transmitted. However, most users are unaware of where these networks are housed and how they cooperate with each other to transmit the data to the individual user. During the microcomputer boom of the 1980s, many of these networks were deployed with little concern about their environment. However as information technology (IT) operations began to get more complex in the 90s dot.com bubble era, companies realized the need for better IT resource control in order to maintain a reliable presence on the Internet. This was the beginning of Internet Data Centres (IDC). The larger companies built their own data centres while smaller companies which do not have the resources to build or maintain their own data centres started to aggregate in commercial data centres. These companies needed Internet Service Providers (ISPs) in order to connect to the Internet and the World Wide Web. It was mutually beneficial for ISPs and enterprises to have a presence in these data centres. The aggregation of ISPs, content providers and enterprises creates an environment that is conducive to peering, an exchange of traffic directly between participants known as peers. Whether a company’s IT operation is located in a data centre or in a dedicated server room, it needs a way to connect to the Internet and distribute its content. Similarly, an ISP, as a seller of access to the Internet, must itself connect to the Internet. There are two methods of connecting to this network of networks – transit and peering. Transit is a business relationship in which an ISP sells access to the global Internet. An ‘Upstream Transit Provider’ accepts and attempts to deliver all data packets between the customer and the Internet. Transit costs are usually tiered according to how much upstream traffic an organization commits to each month. On a smaller scale, this is akin to how an average consumer would pay their ISP for access to upload and download content from the Internet based on their usage group. Peering, on the other hand, is a business relationship whereby two companies reciprocally exchange access to each other’s customers. The difference between peering and transit is that peering does not provide access to all destinations in the Internet. Instead, peering is a local optimization in which companies exchange routes to each other’s customers so that neither pays an upstream provider for the traffic. Peering usually takes place in an Internet exchange (IX) where peering partners can interconnect directly. A number of IDCs, where there is a large aggregation of both ISPs and content providers, are able to position themselves successfully as a commercial IX. The benefits of an IX include reduced cost and improved network performance. Typically, the traffic passing through an IX is not billed. However, there is usually a fixed monthly peering cost associated with the service. Many IXs cater to specific target groups such as academic or commercial organizations. In established markets such as Japan, South Korea or Hong Kong, consumers actively seek new local or international content. The accelerating growth of high-bandwidth fibre-to-the-home (FTTH) services and increasing demand for online and mobile content turn these markets into epicentres of broadband traffic. The growth of video traffic means that content providers must come up with more innovative delivery methods and ISPs need to scale their networks to accommodate this growth in a cost effective manner. This is especially a concern for the growing international traffic across the Pacific and within Asia. There are three main forms of peering policies. Depending on the needs of the ISPs and the content provider, they may engage in open peering, restrictive peering or selective peering. Open peering occurs when a peer is willing to peer with anyone. Typically, content providers and most tier-2 ISPs have an open peering policy. Tier-1 ISPs on the other hand engage in restrictive peering where they will only peer with ISPs that meet a number of stringent conditions, are of similar size, and have a certain volume of traffic. Very few peering relationships are formed with those favouring a restrictive peering policy. On the other hand, large tier-2 ISPs prefer selective peering and will peer once certain prerequisites are met. They are willing to peer, but the relationship must be adequately justified either financially or strategically. As more content is being produced and stored in Asia, international ISPs might negotiate peering agreements with local Asian ISPs to gain access to the local content they offer. Many global content providers and content delivery networks, such as Limelight or Akamai, are also actively peering in Asia. These providers generally seek peering relationships with local ISPs to gain access to their content and save the transit costs. Peering is not the right answer for everyone. As mentioned earlier, the cost of transit is determined by tiered usage while peering is generally a fixed cost shared by both peers regardless of the amount of traffic exchanged. Thus, sufficient traffic must be exchanged for peering to be beneficial. If there is sufficient traffic, the peers can enjoy substantial savings. Other than cost, the direct interconnection between peers eliminates intermediate network backbones. This streamlined connectivity reduces latency, enhances performance and reliability. The Internet has transcended physical and language barriers and while PCs were once the primary means of accessing the Internet, Internet-enabled devices such as Personal Digital Assistants (PDAs) and cell phones are now commonplace. As technology continues to improve, we will see greater Internet usage and ISPs, CDNs (content delivery networks), and enterprises will have to continue to explore ways to exchange traffic.