--- title: "ISP interconnection and tier-1/2/3 ISPs" subject: "Internet and Intranet" chapter: 1 key: "semester_8/internet_and_intranet:isp-interconnection-tiers" source: https://www.bctengineer.com/q/semester_8/internet_and_intranet/isp-interconnection-tiers site: BCT Engineering --- # ISP interconnection and tier-1/2/3 ISPs Internet and Intranet · Chapter 1: Introduction - Asked in: 2074 Bhadra, 4+6 marks; 2073 Bhadra, 4+6 marks (asked 2 times) - Video: [How Internet Runs? Actual Cost Of Internet? Tier 1,Tier 2,Tier 3 ISPs Explained](https://www.youtube.com/watch?v=0JbuC6boAUs) — Chalo Seekho - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_8/internet_and_intranet/isp-interconnection-tiers - Whole chapter: https://www.bctengineer.com/md/semester_8/internet_and_intranet/chapter-1 ## Question Explain ISPs and how they are interconnected and also explain distinguishing feature of a tier-1, tier 2 and tier 3 ISPs. ## Short answer ISPs provide internet access and interconnect via transit (customer pays provider) or peering (settlement-free exchange). Tier-1s reach the whole Internet without buying transit, Tier-2s buy transit for some routes, and Tier-3s buy transit for all upstream. ## Answer #### ISPs and how they are interconnected An **Internet Service Provider (ISP)** is an organisation that sells Internet access (and related services such as e-mail, hosting and DNS) to homes, businesses and other ISPs. No single ISP covers the whole world, so thousands of ISPs, each running its own Autonomous System (AS), are joined together to form the Internet. A customer of any ISP can reach a customer of any other ISP because the ISPs are interconnected in two main ways. 1. **Transit (customer-provider):** a smaller ISP pays a larger ISP to carry its traffic to the rest of the Internet. Money flows from customer to provider. 2. **Peering (settlement-free):** two ISPs of similar size connect directly and exchange traffic only for their own customers, usually without paying each other. Interconnection takes place at the following points and through these arrangements: - **Points of Presence (PoPs):** buildings where an ISP keeps routers and where customer ISPs connect. - **Internet Exchange Points (IXPs):** a shared switch fabric where many ISPs peer with each other, e.g. NPIX in Nepal. This keeps local traffic local and reduces transit cost. - **Multihoming:** an ISP buys transit from two or more providers for reliability. The routing information between ISPs is exchanged using **BGP-4**, and each ISP is identified by an AS number. ```text Tier-1 ISP <---peer---> Tier-1 ISP / \ / \ Tier-2 Tier-2 <--peer--> Tier-2 ... / \ | | Tier-3 Tier-3 Tier-3 Tier-3 | | | | Users Users Users Users (lines going up = paid transit, <--> = peering) ``` #### Tier-1, Tier-2 and Tier-3 ISPs | Feature | Tier-1 | Tier-2 | Tier-3 | |---|---|---|---| | Reach | Whole Internet | Regional or national | Local / last mile | | Pays for transit? | No, only peers | Pays Tier-1 for some routes, peers for others | Pays Tier-2 (or Tier-1) for all upstream | | Peering | Settlement-free with all other Tier-1s | With other Tier-2s and at IXPs | Rarely, mostly buys transit | | Network | Owns global fibre and submarine cables | Owns regional backbone | Owns access network only | | Customers | Tier-2 ISPs, large enterprises | Tier-3 ISPs, businesses | Homes, small offices, cyber cafes | | Examples | Lumen, NTT, Arelion, Tata | Regional carriers such as Airtel, PCCW | Most Nepali ISPs such as WorldLink, Vianet, Subisu | **Distinguishing feature:** a Tier-1 ISP can reach every network on the Internet without buying transit; a Tier-2 ISP buys transit for part of the Internet; a Tier-3 ISP depends on upstream providers for all of it and mainly provides access to end users. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. How do transit and peering differ between ISPs? A. Transit is settlement-free between equals; peering is a smaller ISP paying a larger one B. In transit a smaller ISP pays a larger ISP to carry its traffic; in peering similar-sized ISPs exchange only each other's customer traffic, usually without payment C. Both always involve payment from the larger ISP to the smaller one D. Transit is used only inside one AS and peering only between countries Answer: B. Transit is customer-provider with money flowing upward; peering is settlement-free exchange of traffic for each other's customers between ISPs of similar size. (Key point: Transit vs peering) 2. What is the main benefit of an Internet Exchange Point such as NPIX? A. It assigns AS numbers to ISPs B. It converts domain names to IP addresses C. Many ISPs peer on a shared switch fabric, keeping local traffic local and reducing transit cost D. It makes every ISP a Tier-1 ISP Answer: C. An IXP is a shared switch fabric where ISPs peer, so local traffic need not travel through paid upstream transit. (Key point: Role of IXP) 3. Which statement correctly distinguishes Tier-1, Tier-2 and Tier-3 ISPs? A. Tier-1 reaches the whole Internet without buying transit; Tier-2 buys transit for part of it; Tier-3 depends on upstream for all of it B. Tier-1 serves only homes; Tier-3 owns submarine cables C. Tier-2 never peers with anyone; Tier-3 peers with all Tier-1s D. All tiers buy transit, differing only in speed Answer: A. A Tier-1 only peers and pays nobody for transit, a Tier-2 pays for some routes, and a Tier-3 pays upstream for everything and mainly serves end users. (Key point: Distinguishing feature of Tier-1) 4. Which protocol exchanges routing information between ISPs, each identified by an AS number? A. OSPF B. RIP C. DNS D. BGP-4 Answer: D. BGP-4 is the inter-AS routing protocol used between ISPs. (Key point: Routing between ISPs) ## Related in Internet and Intranet - [N-tier challenges and tiered ISP backbone](https://www.bctengineer.com/question.md?key=semester_8%2Finternet_and_intranet%3An-tier-challenges-tiered-isp) — Internet and Intranet, chapter 1 ## Related in other subjects - [Interconnection advantages and real power-frequency balance](https://www.bctengineer.com/question.md?key=semester_5%2Fpower_system_analysis_ii%3Ainterconnection-advantages-frequency) — Power System Analysis II, chapter 1, asked 3× - [T/F: interconnection decreases SCMVA](https://www.bctengineer.com/question.md?key=semester_8%2Ftransmission_and_distribution_system_design%3Atf-interconnection-scmva) — Transmission and Distribution System Design, chapter 1, asked 2×