Peering is an arrangement in which two networks connect and exchange traffic directly for the routes each agrees to share: typically its own addresses and those of its customers. Instead of handing that traffic to an upstream provider to deliver onward, the two networks hand it to each other. Peering may be settlement-free or paid; what defines it is the direct exchange of a limited set of routes, not whether money changes hands. Peering is how internet service providers, content and cloud companies, and other networks keep traffic on shorter, often cheaper paths, and it is one of the ways the internet’s many independent networks are stitched together.
At a glance
- Peering exchanges traffic only for the routes the two networks share, usually their own and their customers’, not for the whole internet.
- It can be settlement-free, with neither side paying for traffic, or paid, where one network pays the other.
- It happens either over a shared switch at an internet exchange point (public peering) or over a direct link (private peering).
- Peers use Border Gateway Protocol (BGP) to tell each other which addresses they can reach.
- Most networks combine peering with paid IP transit for everything they do not peer with.
What problem it solves
Without peering, traffic between two networks might travel through one or more third-party transit networks, sometimes through a distant city, adding cost and latency and leaving the route outside either network’s control. When two networks exchange significant traffic with each other, connecting directly can shorten the path, reduce what each pays for transit and give both more control over performance, depending on where they connect and on the commercial terms.
For buyers, peering matters in two ways. When choosing an ISP or transit provider, how well that provider peers with the networks you depend on, such as major cloud and SaaS platforms, affects the performance you get. And for organizations that run their own networks with their own address space, peering can be a way to improve performance and reduce transit costs directly.
How it works
Agreement. Two networks agree to peer, sometimes informally and sometimes under a written agreement. Larger networks often publish peering policies with requirements for traffic volume, locations and operations.
Physical connection. Public peering uses an internet exchange point (IXP), where each network buys a port on a shared switching fabric and can peer with many others over it. Private peering uses a direct cross-connect between the two networks’ equipment, usually in the same colocation facility or carrier hotel.
Routing. Each network runs Border Gateway Protocol (BGP) with its peers and announces the address ranges it has agreed to share, typically its own and some or all of its customers’. Each side’s routers then send traffic for those addresses directly over the peering link.
What peering does not cover. A peer does not carry your traffic to third parties. To reach networks you do not peer with, you still need IP transit or another arrangement.
Peering in the cloud context. Cloud providers also use the word for private connections between a customer network and the provider’s network, and for links between virtual networks inside a cloud. These share the idea of exchanging routes directly, but the terms and pricing are set by each provider.
Our interconnection page covers cross-connects, exchanges and direct cloud links in more detail.
When it matters for buyers
- Choosing an ISP or transit provider. Ask how the provider connects to the cloud, SaaS and content networks you use most.
- Running your own network. If you have your own autonomous system number and address space, peering at an exchange may improve performance and reduce transit spend.
- Selecting a data center. Carrier-neutral facilities with an internet exchange and many networks present make peering practical.
- Troubleshooting slow routes. Poor performance to a specific destination is sometimes a peering or capacity issue between two networks rather than a problem on your circuit.
Questions to ask vendors
- Which major cloud, SaaS and content networks do you peer with directly, and where?
- How much headroom do your peering links have at peak, and how do you handle congested peers?
- Which internet exchanges are you present at?
- If we peer at an exchange ourselves, what are the port, membership and cross-connect costs?
- For transit providers: how do routes learned from your peers compare with those learned from your upstreams?
- Who do we contact when traffic to a specific network takes a poor route?
How it differs from IP transit
IP transit is a paid service in which an upstream network carries your traffic to every destination on the internet and announces your addresses to everyone. Peering exchanges traffic only for the routes two networks agree to share, usually their own and their customers’, and may be settlement-free or paid. Transit gives full reach with one connection; peering gives more direct, often cheaper paths to specific networks. Most networks, including the ISPs businesses buy from, use both: peering for the networks they exchange the most traffic with, and transit for everything else. Exchanges between carriers for voice and Ethernet services are covered under carrier interconnection.