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What is IP Transit?

Internet Network Pricing

By Cynthia Sandoval-SwegalDec 5, 2019

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Only a few of the world’s largest internet backbone providers get transit-free status, exchanging all of their traffic with other backbone providers via peering.

Alas, downstream internet service providers (ISPs), content providers, and other internet operators must purchase at least some upstream “transit” in order to connect their internal networks to the internet at large.

So what is IP transit?

IP transit is a subset of the increasingly complex market for wholesale internet connectivity, which includes settlement-free peering, paid peering, and content delivery.

IP transit is a subset of the increasingly complex market for wholesale internet connectivity, which includes settlement-free peering, paid peering, and content delivery.

 

Let's break that down.

Purchasing an IP transit port affords access to the entire internet via a provider’s internet backbone, peers, and other transit customers. (Paid peering is similar to transit, but that only grants a customer access to a provider’s network, which includes the provider’s transit customers, but not the provider’s peers.)

IP transit service contracts have a specified term and data rate. The data rate could be the full capacity of a physical router port—such as 1,000 Mbps on a GigE port—or it could be a partial commitment on a port, called a committed data rate—such as 200 Mbps on a GigE port.

The higher the capacity and longer the term, the lower the unit price.

For committed data rates, the customer agrees to pay for at least that amount of capacity, regardless of actual usage. If usage is higher (i.e., traffic “bursts” above the committed rate), the customer pays a burstable price for the extra traffic, which may be different from the committed unit price.

 

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Cynthia Sandoval-Swegal

Cynthia Sandoval-Swegal

Cynthia Sandoval-Swegal is an analyst at TeleGeography, specializing in market and pricing analysis of wholesale and enterprise network services in Latin America. Her research covers trends in private lines, IP transit, MPLS, Ethernet, DIA, and SD-WAN services. Additionally, she manages TeleGeography ‘s Business Broadband Research Service.

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