Dedicated Internet vs. IP Transit vs. Peering

Internet, Peering, and IT Transit are terms that are often used synonymously, until now…

Peering and Transit diagram
Matt Pinto

Apr 13, 2022


Internet/Dedicated Internet, Peering, and IP Transit Services...  What are the differences?

Purely by definition, all three of these terms are synonymous with “Internet”, so really there’s no need for this blog (kidding - read on below).

Merriam Webster defines the Internet as… 

Internet - noun - In·​ter·​net | \ ˈin-tər-ˌnet: an electronic communications network that connects computer networks and organizational computer facilities around the world.

So - Internet, peering and IP transit are just more examples of telecom jargon? Correct! 

There are several schools of thought when defining (Dedicated) Internet Service, Peering Service, and IP Transit Service. This post is here to share how I define the differences between the three.

Exhibit 1: Diagram of Internet Service Types

Peering and Transit diagram

Internet / Dedicated Internet Access 

The Internet is denoted as the blue lines in Exhibit 1. 

The Internet is what 95% of users interact with; the Internet is Fiber, Broadband, LTE, Satellite, DSL, and amazingly in some areas Dial Up.  

This is the service that is commonly provided by an Internet Service Provider (ISP).  The ISP plans are generally priced based on overall download and upload throughput (a.k.a. Internet bandwidth) with add ons like Public IPs, Managed Routers, and Firewalls.

If you don’t know the difference between Dedicated Internet and best effort internet service, you can read up on it here.  


Peering is denoted as the red lines in Exhibit 1. 

Peering is when traffic is handed off from one ISP to another ISP. 

Typically ISPs set up mutually beneficial arrangements where they “peer” and handoff traffic to each other - almost exclusively within the data centers that they operate in.  There is a cost to setting up peering arrangements, most of which aren’t directly related to the actual peering.  Since peering takes place almost exclusively in data centers, ISPs need to pay for colocation space, power, and the necessary cabling needed to connect systems.  Most of the costs for peering are data center costs.  Peering is typically two-way beneficial so there’s little or no cost to enter into the actual peering arrangement.

IP Transit

IP Transit is denoted as the green lines in Exhibit 1. 

IP Transit is when traffic is moved by ISPs beyond their peering network. 

It happens in steps.  A local user or business that is sending or receiving data to or from the internet communicates with their ISP.  The ISP inspects the traffic to see if the source / destination can be offloaded to one of their peering partners.  If not, they send the traffic out to a Transit provider.  ISPs are motivated to attempt to send traffic across peering connections because there’s typically no (or very nominal) charge associated with offloading traffic this way.  

In most cases, transit is a metered service.  Meaning, the more you use it the more it costs.  

What next?

Telecom jargon is everywhere and the way one person explains something may differ from the next. I hope you found this post helpful for breaking down the differences between Internet, Peering, and IP transit. 

If you enjoyed this post, I recommend you check these resources out next:

Want to learn more about how Lightyear can help you?

Let us show you the product and discuss specifics on how it might be helpful.

Not ready to buy?

Stay up to date on our product, straight to your inbox every month.

Featured Articles