Peering basics: a closer look at Internet Exchanges

In my previous blog post, I gave an overview of public and private peering, discussing the pros and cons of each. Today we’ll take a closer look at the most cost-effective form: public peering.

Internet Exchanges

Public peering is done through Internet Exchanges (abbreviated: IX). We already touched a bit on these networking platforms last time, but here’s a quick rundown. An IX is a physical setup developed, built and maintained by an Internet Exchange Provider. This can either be a commercial organization or an association with members. Internet Service Providers (ISPs) directly interconnect through an IX with various other networks to exchange data traffic. Doing so lowers the need for a third-party network, thus bypassing potential traffic bottlenecks, and reducing both costs and latency. The process of peering is often based on mutual peering agreements, allowing traffic to be exchanged without additional payment.

Usually the physical infrastructure of an IX consists of one or more network switches. If an IX association bears operational cost, it is shared by all the participating ISPs (AKA their members). Members are usually also charged a set fee based on the port type they use. Commercial IXPs also have many other ways to cover costs and generate revenue.

Here’s fun a little fact by the way: the first commercial IX (the aptly named Commercial Internet eXchange, or CIX for short) was actually co-founded in 1991 by William L. Schrader, the CEO of Leaseweb USA. Back then, the dominant Internet networks were all funded and regulated by the US government. Through the combined efforts of a couple of 90’s Internet Pioneers an independent IX was created, which played an important part in the development of the Internet you know and love today.

Digging a bit deeper into IX connections

IXs have several PoPs in major colocation facilities such as data centers. If a network wants to connect to an IX, and is present in the same facility that houses the IX PoP, the connection is established using short fiber cables within the premises.

However, if the network that wants to connect to an IX is not geographically located near an IX PoP, a remote connection has to be established. This may be done using fiber cables, but usually technologies like DWDM are required. The price of such connections can go up to 5,000 Euros / 6,500 US dollars (or more) in some cases. Why does it cost so much? Here’s an example: with some technologies, you need to install expensive equipment every 100 kilometers or so to transfer a signal over long distances. This has to be housed in secure environments with backup batteries, emergency power generators and so on. As you can imagine, this can become quite costly if the equipment has to be maintained in a far-off place!

Things we consider when connecting to IXs

So to keep the costs as low as possible, we are always assessing new Internet Exchanges – along with options for Private Peers. This ensures your servers use the best possible paths (among many redundant ones) with minimal latency and the largest available bandwidth. There are various elements we take into consideration when setting up a peering connection with an Internet Exchange. A few examples:

  • The distance to the IX: Distance affects price – the cost of the connection goes up as the distance between the connecting network and an IX increases
  • Number of members – When an IX has more participating networks, the number of destinations that can be reached increases, and more traffic can be exchanged at a lower cost. The biggest IXs may have even more than 500 members.
  • Port price – Different IXs have different port prices (some of them are even free of charge). In major IXs, the price range of a 1GE port is between 250 – 500 Euros (325 – 650 US dollars), while a 10GE port ranges between 1,000 – 2,500 Euros (1,300 – 3250 US Dollars).

So there you go, now you know a little bit more about Internet Exchanges and public peering. We will generally peer with anyone who is interested. If you would like to know more about our peering policies, you can contact us at Of course, you can also leave a comment below if you have a more general question.

  1. Andy
    November 29, 2012 at 1:49

    Some questions:

    I have another server in another data center in another country and I want to make a connection between the mentioned server and the one in LeaseWeb.
    The mentioned data center is present in some internet exchange points common with LeaseWeb. As I understood, they would connect to each other through peering exchange points.

    1) There are IP Addresses here:
    Are they useful in any way for a Dedicated Server owner? They can be used in any specific configuration in the dedicated server? Or everything will be done automatically?

    2) There is usually no traffic fees for peering. Should I still pay for the data transfer between my servers?

    3) If I want to have a really low-latency connection between my servers, what are my choices? Is it possible to have a dedicated connection between my servers?

  2. Grzegorz Janoszka (Network Design Engineer))
    Grzegorz Janoszka (Network Design Engineer))
    November 30, 2012 at 9:53

    Hi Andy,

    If you just have one colocation server, then peering with us is not possible. In order to peer you need to operate a network, with its own IP addresses (given out by RIPE NCC), BGP routers and of course you need to buy a port to the Internet Exchange.

    Peering is not completely free of costs, but it is usually cheaper than transit. We measure all outgoing traffic from your server, regardless of where it is headed. Usually our customers` traffic profile consists of a mix between peering and transit traffic. This is already accounted for in the prices of our servers.

    Internet latency is mostly caused by geographical distance. To have a connection between servers with as low a latency as possible, you need to host them in one city/region, preferably at the same hosting provider. But keep in mind that the traffic routes in Europe are very optimized, and even the most direct link will usually not make much of a difference, only reducing Internet latency by less than 10%.

    If you want to know more, don’t hesitate to ask.

  3. Sachin
    February 10, 2013 at 13:08

    Very Informative Post. Continue Posting Such Articles in near future.

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