Towards Equitable Peering: A Proposal for a Fair Peering Fee Between ISPs and Content Providers

TL;DR

This paper proposes a method to determine fair peering fees between ISPs, content providers, and transit providers by analyzing cost sharing and traffic localization to promote equitable interconnection agreements.

Contribution

It introduces a cost-based framework for calculating fair peering fees considering traffic ratios, localization, and interconnection points, addressing current disputes.

Findings

Derived peering fees that equalize net backbone transportation costs.

Showed how peering fees depend on traffic ratios and content localization.

Provided a fair cost-sharing model applicable to ISPs, transit providers, and content providers.

Abstract

Disagreements over peering fees have risen to the level of potential government regulation. ISPs assert that content providers should pay them based on the volume of downstream traffic. Transit providers and content providers assert that consumers have already paid ISPs to transmit the content they request and that peering agreements should be settlement-free. Our goal is to determine the fair payment between an ISP and an interconnecting network. We consider fair cost sharing between two Tier-1 ISPs, and derive the peering fee that equalizes their net backbone transportation costs. We then consider fair cost sharing between an ISP and a transit provider. We derive the peering fee that equalizes their net backbone transportation costs, and illustrate how it depends on the traffic ratio and the amount of localization of that content. Finally, we consider the fair peering fee between an ISP and a content provider. We derive the peering fee that results in the same net cost to the ISP, and illustrate how the peering fee depends on the number of interconnection points and the amount of localization of that content. We dispense with the ISP argument that it should be paid regardless of the amount of localization of content.