More peering clashes seen possible

Telecom industry analysts fear that peering disputes such as the recent flare-up between Level 3 Communications and Cogent Communications could become more common as the largest Internet backbone providers get bigger and more powerful through mergers and acquisitions.

Peering is a contractual relationship between ISPs that allows them to exchange Internet traffic over each other's backbone networks. Initially, most peering relationships were free of charge. In recent years, large Internet backbone providers have begun charging smaller access providers to carry their traffic.

ISP experts fear that peering disputes could become more common after the mergers between AT&T and SBC, and MCI and Verizon , are completed.

"As the big backbones get bigger in terms of how much traffic they are running over their networks, they can play hardball with some of the smaller networks," says Melanie Posey, director of the telecom service at IDC. "This issue is about balance. The whole idea behind peering is that you exchange similar amounts of traffic. If the big backbones are carrying more than the small ones, they're going to say: 'Pay up.'"

The issue of balance is at the heart of the peering dispute between Level 3 and Cogent.

On Oct. 5, Level 3 discontinued its peering relationship with Cogent, which resulted in some blocked Internet traffic for customers of the two companies. Level 3 reestablished the connection Oct. 7, but warned customers it would shut down its connection with Cogent again Nov. 9 unless Cogent agrees to a new peering contract.

Peering disputes such as this one were more common in the late 1990s, as UUnet and other major Internet backbones began moving from free to paid peering arrangements. The question is whether peering disputes will rise along with the current ISP industry consolidation.

"What will happen with the mergers and acquisitions is that there will be a lot more smaller providers paying more transit fees because they won't qualify as a peer with the big backbones," says Brownlee Thomas, principal analyst for telecom and networking at Forrester Research. "The trend is toward more formal interconnection agreements, and there will be costs associated with them."

Thomas warns that smaller, local DSL providers could be more susceptible to peering disputes than top-tier providers that offer both local and long-distance access.

"It's always going to be an access/ingress issue," Thomas says. "Most enterprises don't have more than one carrier for the local loop so these disputes are more potentially problematic if the local DSL provider is involved. . . . That's why a smart enterprise negotiator should put specific speeds in the contract - not services such as DSL - so that carriers have to give them a fractional T-1 if there's a problem with the local DSL provider."

Analysts say that there's not much that the industry can do to prevent peering disputes.

"These are commercial, bilateral agreements that are negotiated on a one-off basis," Thomas says. "The enterprise doesn't have any protection except in the terms and conditions of its contract."