Facilities and Financial Arrangements of Interconnection Among Backbone Providers Vary

Two types of facilities are used for the exchange of data traffic by  interconnected Internet backbone providers. The first type of facility,  known as a “network access point” (NAP), enables numerous backbone  providers to interconnect with each other at a common facility for the  exchange of data traffic. Internet data traffic is also exchanged by  backbone providers at “private” interconnections. Internet Data Are Exchanged Among Backbone Networks at Two Types of Interconnection Facilities: NAPs and Private Interconnection Points

A NAP facilitates the interconnection of multiple backbone providers. The Introduction of New Services Over the Internet May Be Constrained by Limits in Capacity

New Internet services, such as video streaming and voice telephone calls  over the Internet, are expected to become increasingly common in the  coming years. At  present, however, many backbone networks are not well designed to  provision such “time-sensitive” services. Also, more  broadband content is expected to be transmitted over the Internet. Scope and Methodology

To obtain information about the characteristics and competitiveness of the  Internet backbone market, the Chairman and the Ranking Member of the  Subcommittee on Antitrust, Business Rights and Competition, Senate  Committee on the Judiciary, asked us to report on (1) the physical  structure and financial arrangements among Internet backbone providers,  (2) the nature of competition in the Internet backbone market, and (3) how  this market is likely to develop in the future.
What GAO Found

Although most Americans are familiar with Internet service providers that give consumers a pathway, or "on-ramp," to the Internet, few are familiar with Internet backbone providers and backbone networks. At the Internet's core are many high-capacity, long-haul "backbone" networks that route data traffic over long distances using high-speed fiber lines. Internet backbone providers compete in the marketplace and cooperate in the exchange of data traffic. The cooperative exchange of traffic among backbone providers is essential if the Internet is to remain a seamless and widely accessible public medium. Interconnection among Internet backbone providers varies both in terms of the physical structure and financial agreements of data traffic exchange. The physical structure of interconnection takes two forms: (1) the exchange of traffic among many backbone providers at a "network access point"--a common facility--and (2) the exchange of traffic between two or more backbone providers at "private" interconnection points. No publicly available data exist with which to evaluate competitiveness in the Internet backbone market. Evolution of this market is likely to be largely affected by two types of emerging services. First, demand is likely to rise for time-sensitive applications, such as Internet voice systems. Second, more "broadband"--bandwidth-sensitive--content, such as video, will likely flow over the Internet in the coming years.