What is Network Peering and How Can It Enhance Performance & Efficiency?

Not all Data Centers are created equal. Carrier hotels are specialized types of data centers that stand out for their unique ability to boost business performance with network efficiency. You can measure the potential effectiveness of your data center by comparing features such as real-time data exchange capability, application performance, cloud access, and peering opportunities, especially via the strength of its Network Peering Ecosystem.

Much like the famous quote from investor Charlie Munger, when choosing a data center you need to “fish where the fish are” by choosing a data center operator that has already developed a robust ecosystem of network peers in their carrier hotel. They facilitate peering by providing the essential infrastructure and services that make their facilities attractive hubs for a broad network of providers.

An ecosystem of providers includes network service providers, cloud service providers, content delivery networks, managed solution providers, internet providers, and peering exchanges.

How does that work? Read on for an explainer on Network Peering agreements, why they exist, how Network Peering Ecosystems develop, how to select a data center carrier hotel for your business, and the benefits of a data center carrier hotel with a robust Network Peering environment.

What is Network Peering?

Network Peering, also known as “Internet Peering,” occurs when two or more networks agree to exchange traffic directly with each other. This peering exchange allows both providers to bypass sending traffic via third-party carriers, reducing latency, improving speed, and lowering bandwidth costs and transit fees.

Providers that enter into a peering contract mutually benefit by exchanging traffic directly at one or more mutual points of presence (PoP), such as an internet exchange point (IXP). Carrier hotels serve as central points for Network Peering by hosting multiple Network Service Providers (NSPs) and IXPs.

By establishing direct peering agreements within the data center, traffic between these networks can bypass the conventional routing through the broader public internet, enhancing speed and reducing latency. With fewer steps between source and destination for their traffic, NSPs, CDNs, and large streaming companies benefit from lower latency and better control over data transit. Rural network providers can extend service for their customers by peering.

It’s important to understand that the carrier hotel itself does not directly engage in peering. Data Center operators don’t negotiate peering contracts or manage the peering exchange. They support the infrastructure where the exchange is hosted. It acts as a point of presence (PoP) where NSPs have agreed to exchange their data via IXPs to increase speed and efficiency for both other networks and for end users. The carrier hotel provides the essential services and infrastructure that attract NSP tenants and enable them to peer among themselves.

There are several types of companies that elect to engage in peering arrangements. CDNs and streaming companies peer because they have a lot of data to transmit to a variety of places and direct routes enable better user experiences. Large enterprises, cloud providers, NSPs, all participate in peering. Cable service providers, network service providers, internet service providers peer as well, especially smaller regional ISPs because they need to use others’ networks since they are smaller and this can provide their customers with better service, so they also participate in peering.

When a data center carrier hotel says it offers opportunities for Network Peering, the data center is specifically designed to house multiple NSPs and IXPs with the necessary colocation infrastructure and meet me room for these providers to house their equipment and host the internet exchange for network peering. The more NSPs and IXPs, the richer the environment for managing traffic exchanges efficiently.

Carrier hotel customers contract with these providers directly and then connect to their services by housing infrastructure via colocation and then negotiating connection to the other business in a Meet-Me Room.

Why does Network Peering exist?

Peering started as a practical need to route large volumes of internet traffic. It has grown with the internet to handle changing business models and what users expect from the internet that we rely on today.

In the early days of the internet, most traffic was routed through a relatively small number of central networks that formed the backbone of the internet. These central networks were largely funded by government or academic institutions (e.g., NSFNET).

As the internet became more commercialized, private networks increased – as did decentralized routing systems. Traffic only continued to grow, and it needed to be routed to an ever-increasing number of destinations. Relying on centralized networks was no longer scalable or efficient.

As a result, Internet Exchange Points (IXPs) were established in certain data centers, where multiple networks could meet to exchange traffic directly rather than routing it through longer and more expensive carrier or upstream provider networks.

The first IXPs were simple! They could simply have a single Ethernet switch in a neutral location. Over time, IXPs grew more sophisticated. As peering arrangements were adopted, networks could decrease their dependency on expensive transit agreements by peering with networks that direct connect to the most frequent traffic destinations.

The rise in content delivery networks and cloud services drove more demand for peering. Large content providers and cloud service providers look for peering relationships to ensure high performance and reliability for their end users.

Today, businesses use peering to address a variety of operational and strategic needs, leveraging the benefits it provides to support modern digital operations. The result was the development of highly interconnected data center ecosystems, like the ones you can find in Netrality core interconnection data centers, or carrier hotels. Examples include:

Cloud services. Businesses that rely on SaaS or PaaS solutions can get faster and more secure data transfers to make the applications work better.

IoT Devices. Devices that operate in real time and generate vast amounts of data rely on peering for efficient data transmissions that is crucial for smart homes and industrial ioT factories where timely data exchange is critical for function and decision making.

Streaming Platforms. Services like Netflix and Youtube and other streaming platforms can deliver buffer free content when they peer and reduce the hops between the content source in the data center and the end user.

Online Gaming. CDNs can deliver videos, images and streaming data rapidly with less latency and they can distribute that traffic through localized nodes so the content is fast and accessible.

Telemedicine. The healthcare sector can have better real-time patient monitoring, remote consultations, and handle large medical transfers via peering.

Financial Institutions. The finance industry leverages peering to support high speed trading platforms for secure and immediate data transfers to remain compliant.

What is a Network Peering Ecosystem?

Netrality’s carrier-neutral data centers offer a Network Peering Ecosystem – an interconnected environment where multiple network operators voluntarily interconnect to exchange traffic directly with each other, rather than through the internet. This ecosystem is typically facilitated by physical infrastructures such as Internet Exchange Points (IXPs) and data centers, particularly carrier hotels, which serve as central hubs for these exchanges.

Those network operators can include internet service providers (ISPs), content delivery networks (CDNs), cloud service providers (CSPs), and other digital service providers.

While a data center operator does not unilaterally decide who peers with whom, they play a crucial role in creating an environment conducive to the development of a robust Network Peering Ecosystem by offering necessary facilities and services. Much like an ecosystem in nature, a Network Peering Ecosystem evolves in carrier hotels that offer many providers the network services they need.

A carrier hotel data center provides the infrastructure and environment that attracts different network operators and companies. That includes colocation services (space, power, cooling, security, etc.) for the customer network equipment. The feature-rich environment allows providers to establish peering relationships among themselves. That is enabled by Meet-Me Rooms (MMRs), where providers can cross connect and exchange traffic. This is usually called “bilateral peering” between parties.

The more providers exist within a single carrier hotel system, the more likely they will agree to network peering arrangements. And, when many providers in a single system execute those agreements, it creates a Network Peering Ecosystem.

Companies like Netflix, Spotify, Akamai, CloudFlare, and more decide to peer in locations like Netrality’s carrier hotel ecosystem because we offer them best-in-class connections to providers via our Meet-Me Rooms (MMRs). Meet-Me Rooms (MMRs) serve as centralized spaces within the data center where different tenants’ network equipment is housed. Here, they can establish physical interconnections directly, without the need for extensive cabling throughout the facility, thereby simplifying and securing network traffic exchanges.

Effectively, carrier hotels provide MMRs as “neutral ground” that gives equal opportunity for interconnections between tenants without the carrier hotel favoring any party. Once a company has a presence in a carrier hotel, they can establish direct peering relationships in the MMR with other customers in the building by negotiating with them directly.

For an example of one of our own robust Network Peering Ecosystems, check out the entry on PeeringDB for our 1102 Grand Kansas City data center. As of this writing, it hosts over 70 networks and 5 local exchanges – including Amazon.com, Cable One, Cloudflare, Google Fiber, Netflix, and more!

A carrier hotel with a rich Network Peering Ecosystem enables numerous peering and interconnection opportunities to be easily and cost-effectively realized. This setup significantly enhances network efficiency, reduces latency, and can decrease costs associated with data transit.

What are the Benefits of Network Peering?

Why do providers choose to engage in Network Peering? And, why is it important for your business to be in a carrier hotel with a robust Network Peering Ecosystem? Let’s look at the key benefits:

Lower Costs. Peering reduces operational costs by allowing networks to exchange traffic directly without the need for expensive transit agreements. This mutual exchange can significantly cut down on the costs associated with data transport over long distances, making it a cost-effective solution for managing large volumes of internet traffic. For networks exchanging a large amount of traffic, like a streaming provider, those savings can be massive.

Greater Control. Peering provides networks with greater control over their data routing, allowing for more predictable and secure handling of traffic. By avoiding complex, multi-hop routes over the public internet, networks can minimize potential points of failure that could expose network users to packet loss or higher latency. That ensures more reliable connections.

Improved Network Performance. Network performance is enhanced through peering due to reduced latency and congestion. Direct connections between peering partners ensure data travels the shortest possible route, bypassing the public internet – which often involves more hops and potential points of congestion. This improves speed and reduces latency, which is crucial for improving the service bandwidth-intensive applications like streaming platforms and online gaming – where even small delays can affect the user experience.

Higher Bandwidth Capacity. Peering allows for more efficient bandwidth utilization and capacity management. By facilitating direct pathways between networks, peering helps distribute traffic loads more evenly, enhancing the network’s ability to handle large-scale data transfers without degradation in service quality.

Dynamically Scaling Bandwidth. Carrier hotels provide an environment where it’s easier to scale operations up or down based on demand. As the user base of a service like Spotify or Netflix grows, so does the need for more bandwidth and network capacity. Carrier hotels, with their dense network of ISPs and CDNs, allow for quick and flexible adjustments to network capacity and arrangements.

Resiliency. Direct network connections mean you have more resiliency against internet outages across the internet. Dual or multiple network entries to the facility ensure continuous connectivity even if one entry fails. Plus, peering with other networks gives you access to a greater pool of support resources in the event of a network outage or connection failure.

Network Expansion. The ability to strategically expand your network, since these carrier hotels are located in key geographic and economic hubs with access to a broad user base. For global peering users, peering at these locations supports better service delivery across regions and markets.

Enhanced Security. Peering can contribute to enhanced security measures. Direct exchanges of traffic reduce the exposure to potential security threats that can occur on longer, more convoluted internet paths. This direct control over the traffic flow allows networks to implement more stringent security protocols directly with their peering partners.

Plus, accessing a Network Peering Ecosystem via a data center means you can benefit from a solutions ecosystem that could be beneficial for innovation and problem solving, as well as all of the other amenities a data center has to offer – such as storage, class A office space, and more.

Partner with a Robust Network Peering Ecosystem

Now that you understand the essentials of Network Peering, you can see that not all data centers are created equal. The strength of a carrier hotel’s ecosystem is a key differentiator when it comes to the value of your data center provider.

Network Peering keeps traffic local, providing faster connections between multiple networks. It’s also more affordable, because the networks are directly exchanging traffic, rather than paying a third party to do it. And, it gives greater control over traffic flows, improves overall network performance and increases bandwidth capacity.

Are you ready for your business to partner with a carrier hotel with a robust Network Peering Ecosystem that includes major ISPs and content delivery networks? Talk to a Netrality Sales Engineer today!

May Lee