This document describes the evolution of interconnection in developing markets. It also provides a review of the ways in which a company's IT manager or a local ICT policy maker might undertake planning in order to build a successful interconnection strategy for an organization, a country or a region. Most of the document takes Internet Service Provider (ISP) networks as examples, but the concepts introduced could be applied to any other network. This document is organized as follows: first, a brief evolution of interconnection in developed and developing countries is given; second, the major actors in interconnection are introduced; third, a list of interconnection steps and the localization of interconnection is described.
Today, we take for granted that when connecting to the Internet we can access any content just with the click of a mouse. Access to news, social networks, instant messaging - doing it from home, from work or on the move - all of this is possible on the global Internet.
But, how does this connection happen? The answer is in the architecture of the network, how it was originally designed and how it has evolved.
The Internet is not simply one network, but thousands of networks for which there are some basic routing and interconnection principles - this is the origin of the expression network of networks. The ability to interconnect networks in different parts of the globe has been central to the evolution of the web. Ensuring Interconnecting networks not only has technical benefits, but it also encourages services innovation and customer demand, attracts investment and helps foster local ICT (Information and Communications Technologies) market development by fostering the efficient, reliable, and cost-effective exchange of traffic. acting as a logistics center of sorts for the Internet where economic activity is fostered in part by the availability of capacity at lower costs.
Since the moment when engineers started connecting networks to form the Internet, commercial relationships and agreements related to the exchange of Internet traffic were, and still are, different when compared to existing legacy networks.
Prior to the Internet, interconnection was largely based on the traditional telephony system. A traditional phone call takes very little bandwidth and is typically symmetrical (the same amount of bandwidth on both directions), as opposed to asymmetrical bandwidth, which is typical of Internet usage (usually, more download bandwidth than upload). The economics of traditional telephony agreements were based in call termination minutes. The parties involved negotiated the value of terminated minutes (not bandwidth) so there was a genuine commercial interest from both parties to interconnect, even if this meant paying for or sharing the costs of international capacity. For international phone calls, the prices related to the exchange of traffic minutes between networks had been traditionally specified through the International Telecommunication Union's (ITU) "Accounting Rate System". For several decades this system generated revenues to companies in developing countries, independently of the local development of telecommunications infrastructure. However, the emergence of competition in the local and international telephony services placed pressure on the traditional "Accounting Rate System" in favor of encouraging by bilateral negotiation between carriers for call termination.
Conversely, for the Internet, bandwidth usage (and not minutes) is an important part of the economics of the Internet, along with the associated application and/or content. In addition, the terminology and methods in which networks on the Internet connect differs significantly from that of the traditional telephony world. Understanding the basics of the unique way networks on the Internet exchange traffic between one another is important for policymakers, regulators, and network operators to understand in order to make decision that will improve the economic and technical efficiency of their infrastructures.