The Internet is a collection of networks, all joined together so that data can be transferred from one network to another. Often two networks won't be directly connected but instead are connected via one or more 3rd party networks.
For data to get from Network A to Network E it must cross 2 other networks (B and either C or D)
It takes time for data to traverse a network due to latency and congestion (lag). The more networks that data must cross, the more latency that will be encountered and the greater the chance for for the data to run into congestion. Each network traversed also adds another potential point of failure, possibly preventing the data from arriving at it's destination at all.
When two networks meet to exchange data then the operator of both networks must make a choice:
Do we accept traffic from the other network that isn't for us and pass it on to its destination?
If a network operator says "yes" then they are providing "transit" to the other network. When you pay connect.com.au, Telstra, Optus or other provider to connect your network to the Internet this is what you are paying for - transit. They agree to take traffic from your network and pass it out onto the Internet (that is to everyone else's network) and, in the other direction, carry traffic from the Internet to your network.
If both network operators say "no", that is they will only accept traffic from the other network that is destined for them, then the two networks are "peering". As long as the data came from one network and is destined for the other it can pass through the peering connection but no other traffic can.
Most organisations charge money for transit, either by the size of the connection (e.g. $990/month for 64Kbps) or by the amount of data carried (e.g. $0.19/Mb). Transit is usually provided by big networks that are connected to many others. Transit is usually bought for smaller networks that are only connected to one or two other networks.
Peering is usually done between networks of approximately similar sizes on a non profit basis. As the costs involved with a peering link are only for the cable with no payment to the other party they tend to be much cheaper than transit links and so can be much faster.
A peering point is a place where many networks interconnect together to exchange traffic on a peering basis - that is a place where many networks peer. It allows a network to peer with many other networks but only endure the expense of a connection to one place.
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| Peering Without a Peering Point | Peering With a Peering Point | ||||
|---|---|---|---|---|---|
| (n-1)/2 links for each network | 1 link for each network | ||||
Peering and peering points reduce the number of networks that data must traverse to get to its destination and therefore improve the speed and reliability of the Internet. If geographically close networks peer, then data can travel a short path no matter what the configuration of transit provider's networks may be.
Peering points are also known as Network Access Points (NAPs), Internet eXchanges (IXs) or sometimes Metropolitan Area Exchanges (MAEs). There are several in Australia including points in Brisbane, Sydney, Melbourne, Adelaide and Perth.