What is Peering? How Networks Interconnect
Peering is the arrangement between two autonomous systems to exchange traffic directly, without paying a third party to carry it. Peering, alongside transit, is one of the two fundamental commercial relationships that determine how traffic flows across the internet — and how much it costs to get there.
Peering vs Transit
Every network on the internet needs to reach every other network. There are two ways to accomplish this:
- Transit — You pay a larger network (your "transit provider" or "upstream") to carry your traffic to the rest of the internet. The transit provider announces your routes to all of their peers and transit providers, and gives you a default route to reach all destinations. Transit is straightforward but adds cost proportional to the volume of traffic exchanged.
- Peering (settlement-free) — You negotiate a direct BGP session with another network. Neither side pays the other. Each network only announces its own routes (and its customers' routes) to the peer — not the full internet. Peering reduces transit costs and typically improves performance for traffic between the two networks.
The critical difference: a transit provider gives you a route to the whole internet; a peer only gives you a route to their network and their customers. A network with only peers and no transit could only reach networks it directly peers with — which is why large backbone providers that peer with everyone (Tier 1 networks) need no transit.
Types of Peering
Public Peering at an IXP
Networks connect to an Internet Exchange Point (IXP) and peer over the shared layer-2 switching fabric. Public peering is cost-effective: a single physical connection to an IXP gives access to hundreds or thousands of potential peers at that exchange. The IXP typically charges a flat port fee (a few hundred to a few thousand dollars per month for a 10G or 100G port), and traffic exchanged over the fabric is free.
Private Network Interconnect (PNI)
When traffic volumes between two networks are high enough, they may establish a dedicated direct fiber circuit — a Private Network Interconnect. This bypasses the shared IXP fabric entirely. A PNI might be a single 100G circuit colocated in a shared data center, or it might span multiple circuits for redundancy. PNIs offer predictable capacity and are used between networks that exchange terabits per day.
Paid Peering
Peering is usually settlement-free, but not always. A large content provider delivering far more traffic to an ISP than the ISP sends back creates a significant traffic imbalance. Some ISPs charge the content provider for the "asymmetric" exchange — this is called paid peering. The distinction between paid peering and transit can be blurry: paid peering usually involves exchanging only routes for each network's own customers, whereas transit includes a full default route.
The Internet's Tier Structure
Peering relationships create a rough hierarchy:
- Tier 1 networks — Backbone providers that can reach every destination on the internet through free peering alone, without purchasing transit from anyone. If two Tier 1s cannot agree on free peering, one of them would need to pay transit to reach the other's customers, which would undercut their "Tier 1" status. Current Tier 1 networks include Lumen/Level 3 (AS3356), Arelion/Telia (AS1299), NTT (AS2914), Verizon (AS701), and a handful of others. The exact list is debated.
- Tier 2 networks — Large regional or national networks that peer extensively but also purchase transit from Tier 1s to fill coverage gaps. Most large ISPs, mobile carriers, and content platforms fall here.
- Tier 3 networks — Smaller networks that primarily rely on purchased transit for most of their connectivity. Small ISPs, enterprise networks, and hosting providers.
The Tier 1 designation matters economically: Tier 1s have zero transit costs, giving them a structural cost advantage. This is why Tier 1 status is fiercely guarded and why peering disputes between large networks occasionally make the news.
Peering Policies
Networks publish peering policies that describe under what conditions they will peer:
- Open peering — Will peer with any network that meets basic technical requirements (often just a minimum traffic threshold or an ASN registered in a routing registry). Hurricane Electric (AS6939) is famous for its extremely open peering policy.
- Selective peering — Requires that the peer have a certain traffic volume, geographic presence, or technical capability. Most large ISPs are selective.
- Restrictive peering — Rarely peers with anyone new; uses transit for nearly all external connectivity.
Peering policies are published in the PeeringDB database, which is the industry standard registry for peering information. An entry typically includes the network's ASN, NOC contact, peering policy, locations (which IXPs they are present at), and which IPv4/IPv6 prefixes they will accept.
The Economics of Peering
See the economics of internet peering for a detailed treatment. The short version: peering makes sense when:
- The traffic volume between the two networks is high enough to justify the cost of a port or PNI
- The traffic ratio is roughly balanced (or the dominant-traffic party accepts the imbalance)
- Both networks are present at the same IXP or colocated in the same data center
A CDN like Cloudflare, which delivers enormous outbound traffic volumes to every ISP, has every incentive to peer as broadly as possible. Its AS13335 entry in the looking glass shows hundreds of peer relationships and an extensive presence at IXPs worldwide.
Peering and BGP AS Paths
Peering relationships are directly visible in BGP AS paths. When two networks peer, traffic between them shows a short AS path — just two ASNs. Traffic routed through a transit provider shows the transit AS in the middle of the path. Networks with extensive peering appear with very short AS paths from most vantage points.