Why do US ISPs want to charge for peering? Peering makes the Internet cheaper. Here’s how

As more broadband networks connect directly to each other via peering agreements, the amount of money paid for Internet transit could fall, according to a report from TeleGeography. That’s good for users of the Internet, but will cut into transit revenue at companies that range from Level 3 and Cogent to ISPs.

Of course, TeleGeography isn’t sure if this will take place.

By cutting out the Internet’s middlemen, peering agreements lower the cost of bandwidth and the cost of IP services. The TeleGeography report lays out the case for peering gaining ground over transit, and shows how it expects peering to grow. This is good for the Internet as a whole, but this anticipated shift to peering over paying for transit has led to some behavior shifts that are causing harms for consumers.

It also means trouble for existing transit providers, especially those without other lines of business. Peering, the practice of two networks exchanging traffic directly either for free or for money, has been going on for decades. Historically, networks of a certain size would sign peering agreements because it would save them money.

Instead of building out an Internet pipeline to every endpoint, two networks meet in the middle and exchange traffic. In 2012, an OECD report found that peering has helped lower the overall cost of providing bandwidth and that most peering agreements are unpaid.