Dissecting the cost of peering: Global evidence from internet exchange points (IXPs)

Telecommunications Policy Study | September 1, 2026

Highlights

• Peering is significantly cheaper than IP transit, offering major cost savings.

• Lower peering costs link to lower broadband prices and expanded mobile coverage.

• Developing economies see greater benefits from peering.

• First study to directly compare peering and IP transit costs and market effects.

Abstract

Internet Exchange Points (IXPs) are critical Internet infrastructures that facilitate local traffic exchange between Internet Service Providers (ISPs) through various peering arrangements. We posit that peering can significantly impact telecommunications costs and market outcomes. This paper examines the economic costs associated with peering compared to IP Transit services and analyzes their downstream effects on telecommunications markets globally. Using a comprehensive dataset combining publicly available peering port pricing data with proprietary IP Transit pricing information from 2019 to 2024, we demonstrate that peering costs are substantially lower than IP Transit costs by a large magnitude. Our analysis reveals that greater cost savings from peering are associated with lower broadband prices for consumers, expanded mobile network coverage, and increased overall telecommunications revenues. The links between transit-peering price differentials and positive market outcomes is particularly pronounced in moderately regulated economies and low-to lower-middle-income countries, suggesting that developing economies may derive greater benefits from IXP development. These findings have important policy implications, indicating that governments should consider supporting IXP growth and implementing policies that enable stakeholders to understand peering costs. Our study provides the first direct comparison of peering and IP Transit pricing while exploring the economy-wide implications of such decisions.

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