Evolution of Internet infrastructure in the twenty-first century: the role of private interconnection agreements

The infrastructure of the Internet is evolving from that of a public network to interconnected private networks that are selective in terms and conditions for connectivity to others. The connectivity, reach, and bandwidth of the Internet in the next century will depend on its infrastructure, which in turn depends on the economics and forms of the interconnection agreements that create the global network. We show that the benefits of private interconnection are unevenly distributed and that smaller networks gain more. Further, the smaller networks gain even more as the public peering points get more congested. This makes larger networks less willing to peer with others. This raises public policy issues about network mergers and consolidations that result in some networks being much larger than others.