2011/6/7 Jimmy Hess <mysidia@gmail.com>:
(a) Costs of peering; both in terms of administrative overhead, ports, circuits, cabinet space,...
The cost of peering on an IXP is roughly the same as setup fees for a new transit, and a BGP session to an IXP route server is not far from what will a full view cost in RAM and CPU on your edges.
(B) Loss of revenue due to peering. An extreme example is a very large ISP peering with a small ISP, to allow the small ISP to reach large ISP's customers. The large ISP loses revenue, if they provide the peering for free, since it would mean the small ISP is not paying for that transit.
Large ISPs do buy transit too. On a financial perspective, it can be considered as "outsourcing the peering function", with a paid SLA for this connectivity...
And once a customer, never a peer.
Never peer with one of your peer's customer is one basic rule of peering agreements between tier-2 and 1 networks. It's a shame financial pragmatism makes the Internet less "meshy", and thus more fragile... -- Jérôme Nicolle