What is IP Transit? Service and Pricing Guide
The internet is a global set of interconnected networks that use standard protocols to communicate or exchange information. This communication process is known as IP transit and it occurs when traffic gets sent and then reaches its destination through the TCP/IP stack. With an in-depth understanding of IP addresses, you will be able to make better choices when it comes to your network accessing the internet and how best to serve your customers.
Before getting into the details of how IP Transit works, let’s look at some of the building blocks that make up IP Transit.
An IP (Internet Protocol) address acts as an identifier for a specific network system (either a network device or a host device) on the internet. For now, two versions of IP addresses exist they are IPv4 (32-bit) and IPv6 (128-bit).
These addresses are arranged in blocks and are allocated to regional internet registries (RIR), who, in turn, assign them to different local entities such as enterprises, government agencies, and internet service providers.
For an internet service to function, a connection has to be made directly with internet networks or by connecting through a network that is linked to other networks on the internet; a user can have access to the network or become a part of a network by buying access from a single service provider. When this happens the service provider borrows the enterprise IP addresses from its network block. However, service providers cannot claim ownership of IP addresses.
What is IP Transit?
IP transit refers to a service through which groups of public networks or autonomous systems are connected and have access to the rest of the internet via Border Gateway Protocol (BGP). IP (Internet Provider) transit is a commercial service in which one network gains access to the entire internet routing table by making a payment in exchange for the access.
IP transit is a component of the expanding wholesale internet business, including internet connectivity, settlement-free peering, paid to peer, and content delivery. However, IP transit charges are either made on how frequently you use the access (usage basis) or monthly. These services are determined by the BGP. The BGP allows the internet to exchange routing information between autonomous systems (AS).
Therefore, if anyone buys a transit, they will need to operate and administer their IP address and autonomous system. To manage and administer an IP address and autonomous system, you must understand BGP routing standards and what hardware can run it. Regardless of whether or not you administer your own IP address, you will need IP transit services in some capacity.
IP Transit vs. Peering
IP peering is when two internet service providers agree to a mutual data exchange without incurring any charge. Both internet service providers enjoy the benefits as the amount of data shared is usually equal, which explains why no fee is incurred.
An organization pays for the other person to connect to its Internet Service Provider (ISP) in IP transit service. It works upstream as the organization being paid is upstream of the one paying; the higher you are in the internet service provider hierarchy, the more access you gain to the entire internet.
IP Transit vs. DIA
Dedicated internet access (DIA) is when you have your connection to the internet active. When you use dedicated internet access, the connection belongs to you alone, and you also get the bandwidth you paid for, with no traffic whatsoever to reduce it.
Using dedicated internet access comes with more costs, but it is secure and reliable as you have full internet access to yourself, and you do not have to share the connection with any ISP. Dedicated internet access is best for you if you use large amounts of data or handle large amounts of users.
When you use an IP transit service, this implies that you are indirectly connected to the internet through several different interconnections. You may experience failure in service and connection while using IP transit due to traffic jams.
Tiers of IP Transit Providers
There are three tiers of IP Transit providers.
Tier 1 internet service providers have an expansive global reach; they can reach a wide range of all the networks on the internet. The tier 1 providers act as the backbone of the internet; they peer with each other and work as the global conduit to all networks. Under the tier 1 network, there are roughly six total networks that connect the globe.
These six networks have one-hop latency to one another by design and subsequently to the smaller networks underneath them. Tier 1 providers work by freely peering with each other. Tier 1 has a lower charge fee, making it easy for anyone to access their network service. These providers include AT&T, Century Link (Qwest), and Level3.
Tier 2 internet providers have extensive networks with multiple physical locations and data centers. Tier 2 internet service providers freely peer with each other to avoid the cost usage of using a tier 1 network and expand the breadth of their content delivery capability. Tier 2 internet service providers include Amazon, Netflix, and Genesis Adaptive.
Tier 3 internet service providers are local providers with a list of small clients. Therefore, they purchase a smaller portion of IP Transit through a Tier 2 provider to avoid the higher costs of buying directly from a Tier 1 ISP.
IP Transit Service
Internet transit service seeks to connect Internet Service Providers (ISPs) or content providers to access larger networks. A reliable, high-performance, and cost-effective solution is guaranteed on multi-homed and Border Gateway Protocol (BGP) enabled platforms when using IP Transit. An IP transit provider allows operators, with their Autonomous System Number (ASN), to benefit from resilient, scalable, high-performance BGP connectivity directly to the Internet.
Single-Homed and Multi-Homed
An IP transit customer is classified as single-homed, dual-homed, or multi-homed. The classification of an IP transit customer is dependent on the number of upstream options available to them.
Single-homed IP transit customers connect to only one ISP, using a single link. Single internet service providers have more straightforward routing policies and fewer moving parts in their network designs. When it comes to the cost of single-homed, they have lower prices because the customer is connected to only one or two links.
Customers can also enjoy discounts under single-homed as they are from the same internet service providers. The downside of using single-homed is that if there is a failure inside the ISP or the ISP is being restricted from accessing the rest of the internet due to problems with the upstream, the customer will be affected and can be isolated from the rest of the internet too.
A dual-homed IP transit customer is only connected to one internet service provider, but with multiple links. These links can be between the same or different routers on the customer and internet service provider sides.
In this case, a dual multi-homed customer can be connected with two links to two internet service providers. However, links on the customer side can be terminated on the same or different routers.
Dual-homed services allow for the highest redundancy level; each link can be terminated to different customer routers. The disadvantages of dual-homed IP transit services are their complex routing policies and high service cost.
To enjoy dual-homed service from the two upstream ISPs, you must receive the full Internet table, roughly 860k routes from each ISP. This full internet table allows for more complex routing policies.
IP Transit Pricing
The pricing depends on the internet provider. There are different ways IP transit can be priced. It can be billed based on the usage, the tier used, or through flat-rate monthly billing.
Metered usage is one method of pricing. It is measured by megabit-per-second (Mbps). It uses the 95th percentile billing methodology whereas the top 5% of usage is not billed. This method is done through measurement; the metered usage takes a measurement every five minutes to determine how much usage will be billed.
To determine the best IP transit pricing plan for your business, you need to know how often you use the IP transit service. In essence, the pricing plan depends on your usage. However, if you are using a large amount of traffic over a long period of time, a monthly-flat rate plan may be best for your business. With this method, you will be paying for the speed of your connection rather than the bandwidth used.
Tiered pricing is determined by the bandwidth used. If you use more bandwidth, you need to move up to the next tier, which most times comes with a flat rate.
Understanding the use of IP Transit services and pricing will help you make better decisions on how your organization may utilize the internet. At ServerMania, we offer high-quality IP transit services that are reliable and cost-effective. With our IP transit services, you can enjoy premium network routes, 24/7 monitoring, IPv6 access, excellent performance, consistent pricing, and more.