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Interconnection: How The Internet Connects

August 21, 2014

What is the Internet? How does the Internet work and transmit data? In short, the internet is a large network of networks that all connect with each other. In order for Internet users to get the content they request they need to connect to the Internet through an Internet service provider (ISP). Since there are thousands of networks spread across the world, ISPs need to find ways to send traffic everywhere.  To facilitate this process, ISPs connect with one another to carry each other’s traffic.

In the most basic case, an ISP purchases transit, where it simply pays one or more other ISPs for connections to the global Internet. 

Sometimes, when two ISPs connecting with each other mutually agree that the value they bring to each other is about the same or they are each sending the other about the same amount of data, they may decide to connect their networks directly to exchange traffic between each other’s customers without either party paying each other.  This is called peering.  Because peering is a barter transaction where the payments would largely offset each other, it is done without the exchange of money. In cases where the parties are not exchanging equal volumes of traffic or the contributions made to enable the exchange of traffic between the connecting parties is not equal, there is no basis for a barter transaction and the party contributing less pays something to help balance things out.

Content delivery networks (CDNs) are similar to local distribution centers—storing many videos, movies and TV shows—that can deliver that high bandwidth content more efficiently by placing copies of the content on servers located much closer to the final consumer.

For more information on how data moves across the Internet, watch our video and check out some of the resources below.



  • Broadband for America, Letter on Interconnection sent to the House Energy and Commerce Committee, 8/8/14
    • A letter from Broadband for America highlighting how an updated Communications Act should address interconnection.
  • Bret Swanson, “How the Net Works: A Brief History of Internet Interconnection,” Entropy Economics, 2/21/14
    • An Overview of the evolution of the Internet, how companies interact in the industry and the dynamic competition in the online ecosystem.
  • Anna-Maria Kovacs, “Internet Peering and Transit,” 4/4/12
    • An Examination of the Internet’s structure and the different ways data is moved.
  • Bill Woodcock and Vijay Adhikari, “Survey of Characteristics of Internet Carrier Interconnection Agreements,” Packet Clearing House, 5/2/11
    • A look at interconnection agreements and the business factors that have changed how interconnection and the Internet has evolved.
  • Michael Kende, “Overview of recent changes in the IP interconnection ecosystem,” Analysys Mason, 1/23/11
    • The research highlights the different uses of interconnection as companies grow and evolve.
  • Internet Society, “An Introduction to Internet Interconnection,” 3/5/10
    • The paper highlights the technical benefits of good interconnection and how it enables innovation, attracts investment and grows local technology communities.
  • Peyman Faratin, David Clark, Steven Baumer, William Lehr, and Patrick Gilmore, “The Growing Complexity of Internet Interconnection,” Akamai and Massachusetts Institute of Technology, Q4 2008
    • An analysis of how the growing complexity of the Internet has led to more diverse and complex interconnection agreements.
  • Interisle Consulting Group, “Interconnection and Peering among Internet Service Providers,” 2005
    • An historical analysis and summary of interconnection agreements among Internet Service Providers.
  • Geoff Huston, “Interconnection, Peering and Settlements—Part I,” Cisco, 6/2/99
  • Geoff Huston, “Interconnection, Peering and Settlements—Part II,” Cisco, 6/2/99
    • An examination of the drivers behind the adoption of the exchange model as the common basis for Interconnection as well as the benefits and pitfalls with exchanges.



  • Dan Rayburn, “Netflix’s Arguments Against The Proposed Comcast & TWC Merger Aren’t Valid,” Streaming Media, 4/21/14
  • Bret Swanson, “Chill Out About the Netflix-Comcast Deal,” US News and World Report, 2/27/14
  • Bret Swanson, “Netflix, Comcast Hook Up Sparks Web Drama,” Forbes, 2/26/14
  • Dan Rayburn, “How Transit Works, What It Costs & Why It’s So Important,” Streaming Media, 2/24/14
  • Dan Rayburn, “Inside The Netflix/Comcast Deal and What The Media Is Getting Very Wrong,” Streaming Media, 2/23/14

Interconnection: How The Internet Connects