A bilateral peering agreement, also known as a peering agreement, is a contract between two internet service providers (ISPs) that enables them to exchange internet traffic directly without having to route it through third-party networks. The primary objective of this agreement is to reduce network latency, increase speed, and improve the overall internet connectivity experience for users.
In a bilateral peering agreement, each ISP agrees to carry the other`s traffic on their network as a priority, and in exchange, they receive the same treatment. This arrangement is mutually beneficial as it allows both ISPs to achieve cost savings and improve their network performance.
The underlying principle of a bilateral peering agreement is to establish a direct connection between the two ISPs, allowing them to exchange data directly without having to pay a transit provider. This arrangement eliminates the need for intermediate networks, which can often be congested and lead to slower internet speeds.
Bilateral peering agreements can be established on a national or international level, depending on the location of the ISPs involved. They are usually set up through a peering coordinator or an internet exchange point (IXP), which facilitates the exchange of traffic between ISPs.
One of the benefits of a bilateral peering agreement is that it can reduce the cost of internet connectivity for both ISPs. By exchanging traffic directly, they can avoid paying transit fees to third-party networks, resulting in cost savings that can be passed on to their customers.
In addition to cost savings, bilateral peering agreements can also improve the quality of internet service for users. By reducing latency and increasing speed, ISPs can deliver faster and more reliable internet connectivity to their customers. This can be especially important in areas with high internet usage, where network congestion can cause slow speeds and connection issues.
In summary, a bilateral peering agreement is a valuable tool for ISPs to improve internet connectivity, reduce costs, and provide better service to their customers. By establishing a direct connection between two ISPs, they can exchange data without going through third-party networks, resulting in faster, more reliable internet speeds.