Peering isn't just for VOIP anymore.

Carriers are beginning to form peering arrangements by which they mutually honor each other's QOS requirements at the transport layer. (See VOIP Cuts Out Middlemen.)

That's one of the findings of a new Heavy Reading report titled “VOIP Peering & the Future of Telecom Network Interconnection.”

“They need to go beyond VOIP peering to support their customers, principally their enterprise customers,” says John Longo, the Heavy Reading analyst who wrote the report. “They want to provide voice services as well as their own advanced applications end-to-end for their customers.”

International corporations want guaranteed performance of such applications as video conferencing, even when some of the conferees are sitting in overseas offices. So the company's service provider must hook up with a foreign carrier to deliver that service over a foreign last mile.

But just a "best effort" Internet connection isn't good enough. “The fact is the enterprise customers want their applications to work seamlessly, so they are really forcing carriers to negotiate peering at Layer 3 and MPLS, with the appropriate QOS,” Longo says. “That wasn't the case for just plain old Internet traffic.”

Specifically, when Carrier A sends Carrier B a packet with a QOS tag attached, Carrier B is obliged to honor it. “What that means is the carrier will honor certain terms relating to packet loss, jitter, and delay,” Longo says.

This type of peering arrangement is not a handshake at the higher application layers, Longo points out, but rather a guarantee at the transport layer that the bandwidth needed for those applications to perform will be available.

In short, transport layer peering gives the carrier a way to sell end-to-end service level agreements (SLAs) even when its network doesn't have the global reach its enterprise client requires.

Longo cited Verizon Communications Inc. as one carrier that is actively working on such peering arrangements.

The transport layer peering, as well as VOIP peering, could also be accomplished by the enterprises themselves. Hunter Newby, chief strategy officer at the peering company TelX Group Inc., believes enterprises will increasingly buy Ethernet service from carriers, then establish direct peering relationships with each other. Newby says that will eventually be the way enterprises achieve real end-to-end service level agreements (SLAs) with one another.

Longo discusses enterprise-to-enterprise peering in his report. He points out that such peering arrangements can resolve compatibility issues between enterprises, and can open an opportunity to purchase wholesale voice service at reduced rates.

"Right now it is more of a threat than a reality," Longo says, "but some are starting to do it."

Direct peering between enterprises may represent another scenario where the carrier is reduced to the role of dumb-pipe provider, while its enterprise customer handles the applications on its own.

For more information on the new Heavy Reading report, please click here.

— Mark Sullivan, Reporter, Light Reading