After reading about the FCC’s NPRM banning Paid Peering, someone asked me a great question yesterday that wanted to know:

“Is there any reason in the world why anybody would keep paying for transit if they have the option of paid peering?  I can’t see why they would”

If you are really small and you don’t have that much traffic, or you’re big and you don’t have that much traffic because all you’re pushing is text and some webpage images, then transit is the right solution.  That’s because you don’t have to deal with the complexity of building out additional network infrastructure to get to all the paid peering points.  Remember there are many paid peering points you have to get to (at least 1 per ISP) and each peering point only gets you to a small pocket of the Internet.

A transit connection is only connected at one place and it gives you access to the entire Internet.  Your broadband connection is an example of a heavily shared transit connection but you as an individual don’t have that much traffic.  There is a nontrivial cost to building the necessary infrastructure to get set up on paid peering, so it all depends on scale and size.  In general, any non video service is better off with a few transit connections unless the service is massive.  A business can get a $100 transit connection in a data center that can reach millions of viewers for routine webpages and there’s no reason they’d even consider the complexity of paid peering.  Paid peering makes a lot of sense for large content distributors who are distributing music or video, but there is a crossover point where Paid Peering begins to make economic sense.