Worldcom's Exclusive Peering Club Posts Rules
By Max Smetannikov
Interactive Week
January 14, 2001 5:19PM PT

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

The result will likely be a wave of consolidations amound smaller access providers and a codified frist and second class of data carriage, industry experts say.

With little fanfare Jan. 5, WorldCom published on its Web site the specific requirements for peers - networks 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 and initiative taken by smaller backbones Genuity and Level 3 Communications, which published their peering policies late last year. Cable and Wireless officials said they have no immediate plans to publish that company's peering rules. Sprint executives cound not be reached for comment.

Peering has long interested federal and Europeon regulators who shot down WorldCom's recent merger with Sprint, primarilybecause of fears that combining the world's first and second largest backbones would give WorldCom an unfair advantage in the data tranmission business.

"Peering is a business decision, and many business agreements are not public. When you have a contract with another company, you...don't put it on a front page of a newspaper," Vint Cerf - senior vice president, Internet architecture and technology, at WorldCom - told Interactive Week. "Putting [unreadable text] everybody, but I don't think [unreadable text] being established."

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I think...there is a political [unreadable text] truely trying to show they don't have anticompetitive practices that preclude companies from peering with them," said Rodney Joffe, president of Internet think tank Centergate Research Group.

WorldCom's move is expected to start a chain reaction of consolidation amount ISPs and Web hosters.

Smaller players can now plan their growth around what is needed to meet WorldCom's peering requirements. Since most large carriers pay an average of $1.2million 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 aquisition 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.

WorldCom's move also raises the issues of backbone quality.

Businesses and individuals connected to the Internet via service providers that don't 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 don't get to peer on WorldCom's 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 and 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 isn't new. "There is nothing particularly new or significant in what they;ve published. It is pretty much what'd 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 heirarchy and the others became an issue at the time of the WorldCom mergers, because those providers that have a full set of peering relationships don't 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 percolatre through the rest of the industry," said Scott Marcus, Genuity's chief technology officer.