Transit Tactic 10 - Capture Content and Access Customers

Excerpts from The Internet Peering Playbook: Connecting to the Core of the Internet

In this tactic, ISPs seek to keep the traffic on their network with a strategic customer-acquisition strategy. They acquire both the content and eyeballs customers.
There are three possible scenarios, shown in Figure 3-10.

Figure 3-10. Tactic 10 - Three ways for traffic between content and eyeballs.

• #1 - Only the content side pays you. Scenario #1 is where your content customers' traffic goes through your upstream transit provider.  If this direction is the dominant direction of your traffic flow (i.e., you are "content heavy"), then you are paying for that traffic to be delivered. At the same time, you are being paid by your content customer for that content to be delivered. You get to keep the difference in prices.
• #2 - Only the eyeball side pays you. Scenario #2 is where your eyeball customers are requesting content that comes through your upstream provider. If you are "access-heavy", then you are paying for this traffic. At the same time, you are being paid by your eyeball customers for that content to be delivered to them. Again, you get to keep the difference between the prices.
• #3 - Both content and eyeball networks pay you. Scenario #3 is the best-case scenario since you are being paid by your eyeball customers to reach content that you are also being paid to deliver. You are being paid on both sides and simultaneously reducing your transit fees. The only costs are the costs of the infrastructure to carry this traffic across your network.  Economists call this scenario a "two-sided" market.

Many ISPs have offered cheap transit simultaneously to the access and content-heavy networks. Around the turn of the century, for example, an ISP called Level 3 had most of the North American cable companies as downstream customers and simultaneously acquired some of the larger content customers that wanted to deliver to those eyeballs. Obtaining customers by "charging the other side" is a common tactic in the industry.