Characterizing the Internet as a cloud and a network of networks emphasizes how users benefit from the seamless integration of many different carrier facilities located throughout the world. The Internet design emphasizes convenience and simplicity even as complex network interconnections take place between equipment of different vintage and manufacturer. By agreeing to use a common set of operating standards, all ISPs have the ability to interconnect the equipment needed to transmit, switch, identify, label and deliver traffic. This means that users can access content located anywhere within the Internet cloud by using a universally agreed upon addressing system that uses easily remembered words, e.g., www.worldbank.org. These domain names translate into a sequences of numbers used by devices called routers to identify the origin and destination of traffic as well as the next network that will deliver traffic closer to its intended destination, or to the final destination. The Internet addresses of senders and recipients of traffic are located in the header portion of packets. Content is located in a separate portion of each packet commonly referred to as the payload.

Broadband networks combine high capacity transmission lines with devices such as routers that coordinate the delivery of traffic. By analogy think of the telecommunications lines as high capacity highways, or pipelines and routers as the traffic lights that manage the intersection of lines, i.e., their interconnection, and the routing of traffic that typically involves a switch from one transmission line to another, i.e., a handoff from one carrier’s network onto the network of another carrier.  

The Internet offers fast and reliable management of high capacity traffic bitstreams thanks to the reciprocal agreements among ISPs to share transmission, switching and routing duties.  Peering refers to an agreement between two ISPs to exchange Internet traffic typically with no payment if the traffic handed off to the other ISP roughly equals  the volume received from the other ISP.* For instances where ISPs exchange unequal traffic volumes, the carrier generating more traffic volume typically has to pay the other carrier for its comparatively greater traffic carriage, a financial transaction commonly referred to as transiting.

Peering and Transit Agreements

Source: George Ou, The Internet Society (Nov. 10, 2009), available at http://www.digitalsociety.org/2009/11/fcc-nprm-ban-on-paid-peering-harms-new-innovators/

Internet traffic can quickly and seamlessly maneuver through the cloud using the networks of many ISPs. ISPs agree to interconnect their networks and have both technological means and financial incentives to secure a complete link from an end user upstream via his or her retail ISP and many other interconnected ISPs all the way to the source of desired content and back. The specific networks use at any time during the connection can change, because carriers subdivide Internet traffic into packets and the decision on which carrier network to use for each packet is made “on the fly,” i.e., as the packets are presented to a router. Routers typically use operating standards that switch individual packets on a “best efforts” basis that identifies which of possibly several networks are available and which individual network is most likely to deliver traffic quickly onward to another ISP, or to the retail ISP serving the end user requesting the content. 

Hierarchical Structure of the Internet

The Internet ecosystem divides into a number of separate network elements that combine to provide users with a complete link to and from sources of content. A retail ISP  serving end users provides the first connection that originates an upstream traffic flow used by subscribers to initiate a request for content, e.g., a query submitted to a search such as Google, or to upload their own content, e.g., uplinking a photograph to a social networking site such as Facebook. More than one retail ISP may offer broadband links to individual subscribers, but generally, in developing countries, end users opt to subscribe to only one carrier for all uplinking and downlinking services. 

In many locales consumers have a choice of technological options that include broadband provided by a telephone company that has retrofitted its voice network to provide data services, a cable television company that has reassigned a portion of its video content delivery capacity for data services, one or more terrestrial and satellite wireless carriers and possibly the electric power company. These carriers have limited opportunities to aggregate traffic and achieve operational efficiencies for the first and last kilometer link,* because eventually they must identify and deliver or receive traffic from each and every subscriber on an individualized basis.  However, retail ISPs can aggregate traffic for upstream delivery to other carriers and receive such aggregated traffic from these carriers.

The ability or inability to aggregate traffic has great significance on how much operational efficiency and cost savings an ISP can generate.  As traffic moves upstream from a retail ISP the carriers providing intercontinental and transoceanic transmission have the greatest ability to combine traffic onto the fastest and highest capacity transmission links available. This traffic aggregation function makes it possible for such carriers to accrue best possible scale efficiency and to become a part of the largest class of operators known as Tier-1 ISPs.* These ISPs provide long haul traffic delivery and typically only interconnect directly with other similarly-sized Tier-1 ISPs, on zero cost, peering terms. Smaller ISPs may also enter into peering agreements, but typically have to pay transit fees to Tier-1 ISPs for access to their long haul services. 

The Internet ecosystem can be visualized as a hierarchical pyramid with many comparatively small ISPs serving individual localities and regions, with fewer ISPs operating upstream as Tier-2 and Tier 1 carriers. 

Hierarchy of ISPs

Internet traffic also has characteristics that affect how ISPs configure their networks. Because most subscribers download more content than they upload Internet networks have to handle more downstream traffic. This asymmetrical traffic volume requires some ISPs, particular retail carriers, to allocate more capacity for downstream transmissions than for upstream flows. Similarly ISPs have to configure networks that can handle and quickly respond to significant variation in the total volume of traffic demand made by individual subscribers. Most Internet subscribers have “bursty” traffic requirements as they will require fast, high capacity downloading capability for a period of time after which they may impose no significant demands whatsoever. ISPs need to have the ability to accommodate high throughput demand, e.g., downloading a very large file containing video content, but also to reassign network resources when one subscriber completes a bursty demand for transmission capacity and starts to watch the downloaded content.

The Internet ecosystem will constantly change as new types of content and uses emerge. Current developing trends include increasing reliance on wireless broadband networks, the proliferation of applications designed for use of these networks and the rapid inclusion of Internet connected sensors, for instance, to monitor the health and performance of both people and devices. These trends will have a substantial impact on how planners design and configure future networks.  With increasing reliance on wireless networks ISPs will need to convince government regulators to reallocate and assign more radio spectrum for Internet access. A growing “Internet of Things”*means that our understanding of what the Internet can do will expand into an even larger ecosystem of people, devices and monitors. 

Another developing Internet trend reduces the hierarchical nature of interconnections and  increases the number of financial compensation arrangements available. When the Internet started only a few carriers participated and they generally had roughly equal volumes of traffic to exchange. Additionally these carriers did not have to pay close attention to traffic volumes, because governments typically subsidized their operations. Most governments have stopped or reduced subsidizing Internet development thereby prompting ISPs to pay closer attention to capital and operating costs, including whether an interconnecting carriers generates more traffic than it receives. ISPs  generating more traffic for carriage by another carrier now have to pay for such access. Faced with significantly higher interconnection costs, these carriers have explored new ways to interconnect networks.  

For example many smaller Tier-2 ISPs have agreed to interconnect directly rather than rely solely on higher capacity Tier-1 carrier networks.  Additionally ISPs of all sizes increasingly opt to interconnect and to store content at a centralized location commonly referred to as an Internet Exchange. Such co-location makes it possible for many ISPs to interconnect in the same premises. This promotes operational efficiency and reduce interconnection costs.

Very large suppliers or repositories of content also consider alternatives to relying on one or more ISPs to manage delivery. These ventures, such as Google, Facebook, and Youtube can secure and manage their own network routings closer to end users.  Some content providers have registered to secure an Autonomous System identifier that specifies routing options as though the content source operated as an ISP. In the alternative Netflix has under consideration the installation of high capacity storage units on subscriber premises that will contain hundreds of the most popular content thereby reducing the aggregate subscriber demand for immediately downloaded content.

  • 5.2.1 The Broadband Supply Chain

    While many components parts make up the broadband supply chain, they split into two basic categories: conduit and content. Conduit refers to the technological means by which geographically separated users of the Internet can connect with equally dispersed sources of content. The Internet seamlessly combines the conduit function with content so that end users can readily access desired content simply by keying in easily remembered names, or Web addresses, or clicking on an icon, a small image that launches an application and accesses content.  

    While willing to pay directly for specific content, applications and software, consumers generally consider their broadband subscription as entitling them to expect their retail ISP to make all necessary arrangements to provide consistently reliable broadband links to all content sources. Accordingly while a complete understanding of broadband supply chain necessitates examination of each component part, consumers generally consider Internet access a single transaction regardless of how many ISPs and diverse telecommunications network facilities participatein the complete routing and management of the links between end users and sources of content.

    A variety of ISPs participate in the transmission, switching, routing, storage and data base interrogation that are necessary for making complete links between end users and content sources. The transmission element refers to broadband transmission technologies that use closed circuit media, such as copper wire and fiber optic cables, as well as radio spectrum to provide a wideband conduit for content to travel to and from end users. These telecommunications links constitute the core carrier functions for which National Regulatory Authorities have direct jurisdiction to ensure that consumers have widespread access on reasonable terms and conditions. In subsequent sections, this Module will explain how each broadband transmission technology operates. 

    To achieve global connectivity, broadband networks need robust and flexible telecommunications line switching and routing functions.  Routers manage the selection of which telecommunications network will deliver traffic for each of possibly many legs in a complete link up. As identified in a traceroute report, the networks participating in the provision of service are accessed by routers that switch between available networks on the basis of available capacity and the destination of the traffic. Routers inject intelligence into the switching and routing process, because they make network selection decisions based on an analysis of network capabilities immediately available as well as interrogation of data bases to identify the source of content and its intended final destination. 

    Because routers need to look up the identity of traffic sources and recipients, network operators create data bases, located in computers with high storage capacity known as servers. Just as routers have to select the next telecommunications link to transmit traffic onward toward its final destination, these devices also have to interrogate servers containing information about the identity of network users. Servers responding to this “look up” function may be located at a distance from the router, but a very fast lookup of Internet Protocol addresses must occur before the router can decide onto which network to switch the traffic. Based on traffic conditions and the location of the destination for a particular bitstream routers then coordinate the hand off from one network, the initial source of traffic, onto another network possibly operated by a different ISP.

  • 5.2.2 The Transition to All-IP Networks

    Technological and marketplace convergence favor increasing reliance on a single Internet-based network to provide most information, communications and entertainment (“ICE”) services.  Current and next generation networks* use uniform Internet standards, formats and protocols making it possible for them to deliver globally just about any type of content, including that previously available only from one specific type of medium, e.g., broadcast radio and television, via wireless point-to-multipoint technology.  With increasing reliance on the Internet as a single source of content, previous medium-specific media may become less important.

    The Internet is becoming a single conduit for all types of content, because it can switch, route, sort and store digital bitstreams. All types of content can be converted into digital bits and subsequently organized into packets. Packet switching technology can send bitreams representing many different types of content, e.g., voice, music video, text, photographs, etc. generated by different sources via shared networks that combine to form the Internet.

    One can analogize packet switching with the older legacy delivery of mail by postal carriers. Much of the traffic handled comes to a post office in two parts: 1) an exterior envelope containing information about the source and destination of the communication; and 2) an interior space for content, such as a letter. Packet switching uses the same two part structure: packet headers contain routing information including the IP addresses of sender and intended recipient and the payload containing content.

    FIGURE 5.7

    One can anticipate the transition to an ICE marketplace served primarily by the Internet as a “one stop shop” for most content thanks to digitization and standard operating protocols. Consolidation by the Internet can trigger a migration by consumers from several standalone and mutually exclusive networks. Instead of using a separate network for telephone calls, watching video programming and web browsing consumers increasingly can rely on a single, versatile Internet available via several wired and wireless transmission technologies, each using the same Internet formats.

    The term all-IP network refers to the ability of networks using the same standard formats to offer many different types of services that previously were available only via separate, single purpose networks. By consolidating the number of networks needed to deliver all forms of ICE, all IP-networks can reduce or eliminate the need to have separate networks for radio, television, cable television, telephone service, data and even other physical delivery systems used to reach consumers of print media such as newspapers and magazines.

    Migration to an all IP-network will enhance the value of broadband Internet access for both network providers and consumers. Having digitized their networks and replaced many different operating standards for the single, now preferred Transmission Control Protocol/Internet Protocol combination, network operators can market Internet access as a single, preferred medium for any and all ICE services. Consumers can benefit when previously separate demand for content can be aggregated and delivered via a single, more versatile and convenient conduit.

  • 5.2.3 Cloud Computing and Enterprise Networking

    Even as carriers in developed and developing nations strive to extend broadband services to residential and small business users, the more sophisticated requirements of large business users also require accommodation. High volume users increasingly want telecommunications and Internet carriers to combine telecommunications and information technologies to offer customized services. Carriers now have the ability to provide managed networks using software to configure a temporary, “virtual” network designed to meet the specific requirements of one large volume broadband user. 

    A technique known as Multiprotocol Labeling Switching (“MPLS”) enables carriers to insert routing instructions as labels that preclude the need to inspect packet headers and to look up the location of the source and destination of traffic. MPLS and other techniques work to make it possible for an entire corporate network, spanning many countries and continents, to operate much like a local area network which provides campus-wide Ethernet connections to many computers.

    The integration of information and telecommunications technologies may have started at the multinational corporate level, but increasingly sophisticated individual users also have diversifying network requirements.   With a broadband connection employees and sole proprietors have the means to maintain a Web presence 24 hours a day, 7 days a week.  The line between work and leisure can become fuzzy when one can respond to work demand at home and at other off site, remote locations at any time.  Additionally employees have a preference to use personal handsets and privately owned home computers to handle work-related requirements.  It appears quite possible that high level ICT applications designed for corporate users may extend to employees as they work from home and other remote locales.

    • Reference Documents and Case Notes

      An IP-Centric Ecosystem

      The Internet’s versatility and ease of use makes it plausible to suggest that it will operate as the primary medium for delivering most of the information, communications and entertainment service consumers want.   Viewing the Internet as a single source for all forms of content promotes efficiency and scale, but risks the formation of very powerful ventures having significant control over the Internet marketplace.  Competition need not be threatened, or eliminated simply because all network operators choose to use the same transmission, routing and switching protocols.  However, reliance on a single medium for all types of content means that previously separate and stand alone networks may consolidate and converge into one massively large and powerful medium.*