Should Large ISPs Apply the Same Settlement-Free Peering Policies To Both ISPs and CDNs?

Abstract

Large Internet Service Providers (ISPs) often require that peers meet certain requirements to be eligible for free-settlement peering. The conventional wisdom is that these requirements are related to the perception of roughly equal value from the peering arrangement, but the academic literature has not yet established such a relationship. The focus of this paper is to relate the settlement-free peering requirements between two large ISPs and understand the degree to which the settlement-free peering requirements between them should apply to the peering between large ISPs and content providers. We analyze settlement-free peering requirements about the number and location of interconnection points (IXPs). Large ISPs often require interconnection at a minimum of 6 to 8 interconnection points. We find that the ISP's traffic-sensitive cost is decreasing and convex with the number of interconnection points. We also observe that there may be little value in requiring interconnection at more than 8 IXPs. We then analyze the interconnection between a large content provider and an ISP. We show that it is rational for an ISP to agree to settlement-free peering if the content provider agrees to interconnect at a specified minimum number of interconnection points and to deliver a specified minimum proportion of traffic locally.