The traditional world of Internet peering is undergoing radical change with the commercialisation of the Internet. The result may be the emergence of a running battle between the Internet backbone providers and ISPs, before the two agree on the creation of a new interconnection regime.

The structure of interconnection agreements in the past has been based on a non-commercial model, bundled up with the notion that the Internet is 'free'. Yet these models are being reassessed with Internet backbone providers no longer prepared to remain bound by Internet interconnection arrangements which fail to take adequate account of associated infrastructure costs.

Peering arrangements have in many instances been adopted blindly; peering has come to be seen as an end in itself, driving the economic imperatives.

Fundamental economic problems have arisen as a result of blindly adopting SKA peering. The SKA peering model has allowed networks to develop rapidly. However, the model provides no real platform for organic growth. Ongoing investment in broadband capacity is therefore dependent on the development of new interconnection models that provide incentives for investment in infrastructure.

Internet backbone providers are now looking to financial settlement models which allow Internet backbone providers to enter into interconnection arrangements without losing the ability to be fairly compensated for their infrastructure costs. The arrangements have the potential to enhance Internet connectivity and to provide an optimal level of interconnection in the long term.

In effect, we are moving towards a tiered pricing structure.

In the future, in the trend toward settlements-based interconnection arrangements, we will see opportunities for Internet backbone providers to derive increased revenues where they are able to attract popular content to their networks. However, the impact of content on the value of the interconnection services provided is not without its problems, given that Internet content varies enormously in terms of its usefulness, popularity and ultimate value.

The continuing saga of Internet connectivity is chipping away at a well-intentioned vestige designed to keep accessibility to the Net squarely in the public domain.

It remains to be seen whether the industry can self-regulate and if public peering will survive.

The NSF helped to create NAPs. It lured service providers to connect to these access points by making participation mandatory for ISPs signing government contracts.

Congestion turned many ISPs away from public peering and toward private alternatives. With private peering, traffic typically is still exchanged for free, but rather than connecting at a public exchange, two ISPs instead connect their routers at other points in the network.

A widening gulf soon developed between public and private peering.

Some charge that the dominant backbone providers -- UUNet, Sprint and Cable & Wireless -- have used peering to retain what amounts to an oligopoly.

"Both the private peering and the public peering points have grown in parallel. Quite simply, that's the bandwidth explosion we continue to see."

The fray over peering - or for some, the lack of it - is spurring new ventures that fill the void in Internet connectivity.

"The money will flow into providers that can solve [the BGP] problem."

"We're trying to get away from the current peering and transit model," says Level 3.

"The only way for the Internet to survive is with public peering," says AboveNet.

Tom Nolle believes one of two things will happen. "One, we're going to build what I call a shadow Internet." The other possibility is that the industry will see some regulation in the Internet space, Nolle explains. "If one of those two things doesn't happen, the Internet will crash eventually."

Says PSI: "Our primary strategy for growing our backbone is through the acquisition of capacity. We do this to reduce costs."

The sky is falling, the popular press says. The Internet is browning out. You don't have to look far for proof of the Internet's imminent demise.

Pundits making dire predictions aren't always on intimate terms with the Internet's underlying architecture.

Having enough bandwidth obviously is a major issue in Internet growth. To keep up with customer demand, providers like Uunet started ordering lines farther in advance. This is competition at play, not a collapse.

The biggest Internet backbone providers have started exchanging traffic directly with each other to avoid the crowded peering points altogether. Rather than coming up with complex payment schemes to handle each other's traffic, they're working on a "if you'll take mine, I'll take yours" model.

"This really is a great approach for everybody."

If you're used to the telecommunications model where carriers pay each other to handle their traffic, the private peering arrangements seem shockingly unstructured. Some telecommunications companies would be more comfortable if someone was in charge of the Internet to bring it order and organization.

Prospects are dim for a full fledged recovery for telecom as long as the best effort paradigm remains as the only way of doing business.

The Internet became a capital repellant best-network paradox because it was assumed by the implementers that a best effort network would be good enough as a foundation on which to build the new digital foundations of telecom.

They were wrong.

There is little incentive to over-provision anything except to preserve one's market share. But preserving market share requires pouring more money in than one gets back. Eventually, the carrier runs out of money and declares bankruptcy.

The Internet peering model is fundamentally broken.

A key future question may well be whether the center can ever deliver a value proposition to the edge.