In the past, a transit networks like Level 3 would trade traffic with home ISPs like Comcast without either party paying a fee. This is called “settlement free peering.” These arrangements worked because both parties were sending and receiving similar amounts of traffic. But that changed when networks like Level 3 started carrying Netflix’s streaming video, and they were delivering more traffic than they were receiving. This led to what’s called “paid peering,” where the transit network must pay for the delivery of its extra traffic.
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