Worth a Read: Innovation and Investment in IP Interconnection (PDF)

1. Decentralization of the Internet: the emergence of national and regional Internet Exchanges facilitates private peering
arrangements by increasing number of ISPs’ access networks edges in one central location.
2. Commoditization of IP Interconnect prices (falling IP transit, CDN or router costs) led to substitutability of IP Interconnection
products and countervailing powers in the IP Interconnection value chain.
3. Proliferation of Content Delivery Networks: Content & Application Providers leverage the increased value of their Internet
content by building proprietary caching server parks or, alternatively, using independent, commercial CDN services that are
located close to the ISPs’ access networks.
Still, the majority of Internet traffic is progressively being concentrated to a limited number of large Content & Application Providers
and a few wholesale carriers. In 2013, 35 networks carried 50% of all Internet traffic in North America, down from 150 networks in
2009. The concentration of IP traffic is a major evolution in the IP Interconnection value chain, and has the potential to influence the
negotiating power among connectivity stakeholders and affect the current equilibrium in the Internet ecosystem.

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