Peering and transit are two types of Internet interconnection among ISPs.Peering has been a core concept to sustain Internet industry. However, for thepast several years, many ISPs broke their peering arrangement because ofasymmetric traffic pattern and asymmetric benefit and cost from the peering.Even though traffic flows are not a good indicator of the relative benefit of anInternet interconnection between the ISPs, it is needless to say that cost is afunction of traffic and the only thing that we can know for certain isinbound/outbound traffic volumes between the ISPs. In this context, we suggestMax {inbound traffic volume, outbound traffic volume} as an alternativecriterion to determine the Internet settlement between ISPs and we demonstratethis rule makes ISPs easier to make a peering arrangement. In our model, thetraffic volume is a function of a market share. We will show the market sharedecides traffic volume, which is based on the settlement between ISPs. As aresult, we address the current interconnection settlement problem withknowledge of inbound and outbound traffic flows and we develop an analyticalframework to explain the Internet interconnection settlement.
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