The In-Crowd

Worldcom's exclusive peering club posts rules

The arcane and secretive world of traffic trading among Internet backbones is in full daylight now that WorldCom has publicly posted its "peering" requirements for the first time.

The result will likely be a wave of consolidations among smaller access providers and a codified first and second class of data carriage, industry experts said.

With little fanfare Jan. 5, WorldCom published on its Web site the specific requirements for peers — networks with which it trades long-distance data traffic for free. The move, described by some industry participants as a watershed event in the history of the commercial Internet, follows an initiative taken by smaller backbones Genuity and Level 3 Communications, which published their peering policies late last year. Cable & Wireless officials said they have no immediate plans to publish that companys peering rules. Sprint executives could not be reached for comment.

Peering has long interested federal and European regulators who shot down WorldComs recent merger with Sprint, primarily because of fears that combining the worlds first and second largest backbones would give WorldCom an unfair advantage in the data transmission business.

"Peering is a business decision, and many business agreements are not public. When you have a contract with another company, you . . . dont put it on a front page of a newspaper," Vint Cerf — senior vice president, Internet architecture and technology, at WorldCom — told Interactive Week. "Putting the criteria in the public record just makes it easier for everybody, but I dont think [not having that] prevented effective peering relationships from being established."

Industry executives dont buy WorldComs explanation that it wants to make the Internet a better place by setting a peering standard, since by gaining peers among Internet service providers (ISPs) it will likely lose money that those companies currently pay in data transit fees.

"I think . . . there is political pressure on [WorldCom] to allow this to happen. They may be truly trying to show they dont have anticompetitive practices that preclude companies from peering with them," said Rodney Joffe, president of Internet think tank CenterGate Research Group.

WorldComs move is expected to start a chain reaction of consolidation among ISPs and Web hosters.

Smaller players can now plan their growth around what is needed to meet WorldComs peering requirements (see chart). Since most large carriers pay an average of $1.2 million per year for long-distance data transit, according to Joffe, ISPs now can weigh their long-distance transit costs against the price of merger and acquisition scenarios.

"I think there is going to be a resurgence in ISPs trying to merge so that they can become peers rather than [transit] customers," Joffe said.

WorldComs move also raises the issue of backbone quality.

Businesses and individuals connected to the Internet via service providers that dont belong to the elite peering club of large backbones will become second-class citizens with inferior access to the Internet, industry officials said.

ISPs that dont get to peer on WorldComs terms must continue to buy transit through one or more large backbones. But that means their packets must make multiple hops to reach the far corners of the Internet. Because of peering, AT&T, Cable & Wireless, Genuity, Sprint, WorldCom and a handful of other large backbones can make such jumps with a single hop, and therefore transmit data more quickly.

The dynamic isnt new. "There is nothing particularly new or significant in what theyve published. It is pretty much whats been their de facto direction," said Mitchell Levinn, senior vice president, office of technology, at PSINet.

Competitors such as Genuity suggested that WorldCom has an iron grip on the access industry because it effectively operates as the market maker for prices on long-distance bandwidth.

"Differences between carriers sitting at the top of the hierarchy and the others became an issue at the time of WorldCom mergers, because those providers that have a full set of peering relationships dont actually depend on the transit price they get from somebody else, and therefore the cost of price policies that they establish has the tendency to percolate through the rest of the industry," said Scott Marcus, Genuitys chief technology officer.