Peering and Interconnection

Peering refers to the direct exchange of data traffic between two networks without a detour via transit providers. This article explains the difference between public peering at internet exchanges and private interconnects and shows why direct paths lower latency and costs and increase control over the data path.

The path of a data packet through the internet is a chain of handovers between independent networks. Where and how these handovers take place determines the transit time and costs of a connection. Interconnection refers to the deliberate design of exactly these handover points. Instead of routing all traffic over purchased transit, network operators exchange data directly with one another. For companies, the topic becomes tangible as soon as cloud use, real-time communication, or international sites place higher demands on network quality. Then it matters which direct paths one's own provider can offer and how much control it actually has over the path of the data.

What is peering and interconnection?

Interconnection is the umbrella term for the physical and logical linking of independent networks. Peering is the best-known form: two networks exchange the traffic of their own customers directly with each other, often without mutual compensation. Both sides benefit, because the detour via a paid third party is eliminated.

In public peering, many networks meet at an internet exchange, a neutral exchange platform. Over a single connection, BGP sessions with many participants can be set up there simultaneously. The DE-CIX in Frankfurt is one of the largest of these nodes worldwide. In a private interconnect, also called Private Network Interconnect or PNI for short, exactly two networks connect via a dedicated line, typically a fiber cross-connect in the same data center. The counter-model is called transit: a provider sells reachability of the entire internet as a service. In everyday use, the terms overlap; anyone who speaks of peering often means the entire field of direct network linking.

How does peering work?

BGP as the basis: Over a BGP session, both networks announce to each other the IP prefixes of their customers. The traffic then flows directly between the two networks.
Route servers at the exchange: Anyone who wants to peer with many participants simultaneously at an internet exchange uses route servers. They distribute announcements centrally and save the setup of many individual sessions.
Peering policy: Every network defines with whom it exchanges traffic directly. Criteria are, for example, the traffic volume between the two networks, geographic presence, or strategic benefit.
Private interconnects for large flows: Above a certain volume, the exclusive direct connection is worthwhile. It offers guaranteed capacity, clear responsibilities, and keeps traffic away from shared platforms.
Cloud connectivity via interconnection platforms: The path into public clouds can also be designed as a private interconnect, for example via platforms such as Megaport. The traffic to the cloud then leaves the open internet.

Why peering matters

Direct paths shorten the chain of the networks involved; this lowers latency and reduces packet loss.
The data path becomes traceable: those who hand over directly know where their traffic flows and at which point it leaves their own sphere of influence.
The dependence on individual transit providers decreases, as does the susceptibility to their outages or price changes.
Costs become more plannable, because a fixed connection to an exchange replaces recurring transit fees for large traffic volumes.
More direct handover points mean more alternative paths and thus higher failover reliability in an emergency.
For real-time applications such as voice and video, every millisecond counts; direct handovers pay off directly on this.

Typical scenarios

A company with its own SaaS platform peers at an internet exchange so that end customers access the service over short paths and with stable response times.
A mid-sized company shifts workloads into the public cloud and replaces the path over the open internet with a private interconnect with fixed capacity.
An internationally operating company needs stable connections to Asia and routes its traffic via controlled handover points into suitable partner networks.
A network operator lowers its transit costs by analyzing the largest traffic flows and establishing direct peerings with the networks concerned.

Peering vs. transit

Transit is the flat-rate solution: a provider takes over, for a fee, delivery to the entire internet, regardless of the destination. Peering is the selective solution: it connects exactly those networks between which relevant traffic flows. In practice, network operators combine both. Peering handles the large, recurring flows to important destinations, transit covers the rest of the world. The quality of a provider shows in how well thought out this mix is and how close its handover points lie to the destinations of its customers.

KAEMI as your partner

KAEMI operates its own autonomous system and maintains direct handover points to relevant networks, among other things in cooperation with the DE-CIX. Customer traffic toward the public cloud we route preferentially via private paths with plannable capacity, as described by our service Cloud Connectivity & SDN . For connections to and from China, we combine licensed partner networks with controlled handover points so that sites and applications there remain reliably reachable; details on this under China Connectivity . In this way, interconnection turns from an abstract provider topic into a concrete lever for the quality of your connections.

Frequently asked questions about Peering and Interconnection

What is the difference between peering and transit?

In peering, two networks exchange the traffic of their own customers directly, usually without mutual payment. Transit is a paid service in which a provider delivers reachability of the entire internet. Peering specifically covers large traffic relationships, transit provides the rest. Most network operators use both models in parallel.

What is an internet exchange?

An internet exchange is a neutral platform where many networks come together to exchange traffic directly. Participants connect to the shared switching infrastructure and set up BGP sessions to other participants over it. The DE-CIX in Frankfurt is one of the largest nodes worldwide. The closer one's own provider is to such nodes, the shorter the paths.

When is a Private Network Interconnect worthwhile?

A PNI is worthwhile when large amounts of data flow permanently between two networks or when there are special requirements for capacity and confidentiality. The dedicated connection delivers guaranteed bandwidth without a shared platform. Typical cases are the connection to cloud providers or the data exchange between a company and its most important service provider.

Is peering free?

The exchange itself takes place, in classic peering, without mutual compensation. It is not free of charge nonetheless: connection ports at the exchange and ongoing operation cause effort. The calculation works out as soon as sufficient traffic flows over the direct connection and transit costs drop accordingly. For companies, the network operator or managed provider usually takes over this trade-off.

What does peering bring for cloud connectivity?

Direct handover points to cloud providers shorten the path between the corporate network and workloads. Latency and fluctuations drop, the bandwidth becomes plannable. In addition, the traffic stays on defined paths instead of in the open internet, which accommodates compliance requirements. This can be realized via interconnection platforms or dedicated connections all the way into the desired cloud region.