5:45 PM -- The news that Oversi Networks Ltd. won a contract with Thai ISP True Internet got me to wondering how long it would be before we saw a major network operator in the U.S. announce a peer-to-peer (P2P) caching contract. (See True Internet Deploys Oversi.)

For those who don't follow, the technology works by storing or caching P2P traffic within carrier networks so that, rather than reaching out across the global Internet, content comes locally from within the operator's own network.

Caching in and of itself is nothing new; the only difference in what companies like Oversi and PeerApp do is that they identify and cache only traffic that is designated as one of the peer-to-peer protocols.

While there are varying accounts of how much P2P traffic flows over ISP networks -- depending on who you ask and what their agenda is, it ranges from somewhere between 30 and 70 percent of all Internet traffic -- but what's clear is that the amount is pretty substantial.

So the question becomes how, and at what cost, operators will negotiate the amount of P2P traffic that travels over their networks.

For all intents and purposes P2P caching makes sense -- after all, why not deploy a technology designed to reduce network congestion, especially at peering points, where handoffs slow down traffic and create bottlenecks? And it lowers costs by keeping files in-net.

The P2P caching companies will tell you that what they do is completely legal and within the terms of the DMCA, and furthermore, that illegal Web traffic gets cached all the time. And P2P caching companies don't differentiate between legal or illegal content -- they intentionally do not know what is legal and what isn't.

But I wonder how Verizon Communications Inc. (NYSE: VZ) or AT&T Inc. (NYSE: T) would feel about caching content that may or may not be legal, as lots of P2P traffic is clearly generated by users not paying for music or movies.

— Ryan Lawler, P2P Proselytizer, Light Reading