IP Transit

Internet Transit Service

IP Transit Services allow network traffic to cross or transit a provider’s network. Typically this is used to connect smaller Internet service providers (ISP) and content providers with the Internet backbone networks. Users connect to their ISP and the IP transit provider connects them to the Internet. Carriers and large ISP’s offer IP transit services, which are large bandwidth connections delivered over fiber optic lines or data center cross connects. Also included is advertising of the customer routes to ISP’s and their customers, which help gain both inbound and outbound traffic for them. IP transit pricing models are based on either usage, tiered, or flat rate billing and contracts.

Usage rate billing is a metered service that is a unit cost of IP transit on per megabit-per-second (Mbps) basis. Actual billing is based on a concept called 95th percentile traffic (95/5). The 95th Percentile Billing methodology uses a measurement recorded every five minutes, and these are the basis for determining usage. Top 5% of usage is not billed, which is good for customers with short high volume traffic patterns.

Flat rate Internet transit pricing methodology bills the customer a specified fixed monthly cost for a given speed, regardless of the customer’s actual bandwidth utilization. Pricing is based on a full port commitment for the circuit. Typically this is most advantageous for customers with large sustained usage.

Tiered rate IP transit pricing limits bandwidth at a tier specified by the customer, which is a fractional port commitment on the full circuit. Billing is based on that bandwidth speed tier, and is a fixed monthly cost regardless of the customer’s actual bandwidth utilization. This rate plan is good for customers looking to start out small and grow. IP Transit Service is also known as Internet Transit Service, Wholesale Bandwidth Service, or Internet Interconnect.