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Internet Peering and Transit

Internet Peering and Transit

The Internet has evolved from four university mainframes connected by 64-kilobit lines to a network of networks that spans the globe, connecting hundreds of millions of devices and carrying hundreds of exabytes of traffic per year. Its key characteristics have been adaptability and responsiveness. It has accommodated changes in its own infrastructure and topology, changes in technology at its edge, changes in type and volume of traffic, changes in types of market participants and their relationships, and changes in methods of compensation for the exchange of traffic.

The Internet has had very little formal governance and no regulation to slow its responses or divert its course. The absence of rate regulation has been particularly helpful, providing the flexibility that allows the Internet to accommodate seamlessly ever-larger volumes, suddenly-emerging new types of traffic, and new players both at the core and the edge. The Internet’s traffic moves along on commercial agreements, many of them hand-shake agreements. The system has evolved from peering among academic and government networks to a mixture of paid and unpaid peering and transit among various types of commercial networks. Competition is rife, with the five largest bandwidth providers carrying only about a third of the international capacity of the U.S., and new entrants like Google and Comcast smoothly displacing incumbents in the top 10. Because of its informality, this unregulated system has facilitated the necessary investment in infrastructure to support the explosive growth of traffic that the Internet carries, and carries at ever-lower prices. That, in turn, has stimulated economic growth and job creation in the U.S. and around the world.

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