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War at the Core

The core of the Internet is stitched together by agreements that allow traffic to pass from one company's network to another's. A recent dispute between AOL and Cogent Communications showed that these agreements are shockingly fragile.

by Max Smetannikov
[January 24, 2003]

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America Online and Cogent Communications have a disagreement.

In November, Cogent upgraded its peering fabric with AOL by consolidating several OC-3 and OC-12 into eight OC-48s, choosing to connect to AOL in fewer locations but at greater speeds.

The move coincided with what may be a change in strategy at AOL. Traditionally a large buyer of IP transit and access, AOL now wants to spend less on networking. Part of this cost cutting task has fallen to AOL's peering coordinators, who have been tasked with developing AOL's backbone so that the carrier can barter traffic with seven of world's largest backbones including WorldCom, Sprint, Cable & Wireless, and AT&T.

It is a complex process that AOL allegedly hopes to complete no sooner than end of 2003. Cogent appears not to be on AOL's list of desirable peering partners. Reports claimed AOL sought to charge Cogent $75,000 per month in order to keep the peering relationship intact, an amount that Cogent's chief executive David Schaeffer described as "approximately correct."

"We believe that AOL is looking to turn a cost center into a profit center and charge for connectivity feeling they have proprietary content," Schaffer said. "They want their customers to access their content for free and for customers of other ISPs to pay to get to their content, which includes sites like"

AOL was mum on the specifics of the situation with Cogent, except to say that the two companies are trying to work out a solution.

"As a corporate practice we don't go into ongoing characterization of discussions with our suppliers or vendors," said Nicholas Graham, AOL spokesman. "Having said that, many claims that Cogent have made so far are inaccurate and contain misrepresentations."

According to Schaeffer and people close to the situation, the specifics of AOL-Cogent dispute center around the traffic ratio between the networks, i.e. the amount of traffic partiers exchange through peering links. One fact that neither party disputes is that Cogent sends to AOL three times as much traffic as it receives.

AOL says that means that Cogent does not have parity with AOL, and seeks a monetary or transit settlement that would compensate it.

Cogent argues that AOL doesn't have a network to speak of, thus while Cogent does send a lot of traffic to AOL it is all local, whereas AOL's traffic typically has to travel long distances on Cogent's network, costing Cogent a pretty penny.

Cogent is different from many truly second tier ISPs since it controls a large national fiber optic backbone. Thus, a settlement with AOL could include some kind of barter where Cogent would offer AOL national transit at below market prices.

However, Cogent's situation is indicative of what may happen to other smaller ISPs that fall on the wrong side of AOL's new peering policy. When Cogent refused to pay up, AOL switched off its connection, leaving Cogent's customers without adequate access to AOL's content. Since Cogent has very low rates for bandwidth, many ISPs buy backbone access through it, so AOL's move apparently affected thousands of consumers.

Cogent had to scramble in order to get all these end users connected back to content controlled by AOL. Its links with Level 3, another major peer, quickly became congested, and Cogent had to set up a transit relationship with AboveNet, one of the properties controlled by bankrupt MFN. Schaeffer denied that Cogent was paying Abovenet more that $35 per Mbps, the very low rate that Cogent is famously selling its own bandwidth for. Pointing out that the MFN link was set up partly a personal favor, he said the AboveNet bill doesn't jeopardize Cogent's business model.

Still, AOL's move comes on the heels of Sprint cutting its peering with Cogent right after the company took over the networking assets of backbones PSINet and Netrail. Schaeffer points out that with 230 peering relationships, Cogent is in no danger of going disconnected, but he voiced concern that Sprint, AOL, and possibly other large backbones are reviewing existing peering agreements yet again, trying to extract more cash out of downstream peers.

"We believe this was a calculated test case on behalf of AOL," Schaeffer said.

Independent observers, such as former Netrail CTO and now senior industry consultant David Diaz, believe episodes like Cogent's can be prevented.

"If AOL felt it was getting something extra from Cogent early on may be this incident could be brought under control without having to disconnect the peering," Diaz said. "Peers constantly evaluate the value proposition of their peering partners. It's important to realize this is never a static space."

As long as the Internet is stitched together by agreements that are as personal as they are professional, the web itself can be damaged at any time as strands get disconnected without warning.


Related articles:
  [April 29, 2002] The Politics of Peering
  [April 4, 2002] Cogent Completes PSINet Acquisition
  [June 7, 2001] C&W Briefly Drops Peering Agreement with PSINet

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