The Internet backbone is a network of public networks, or autonomous systems (AS) connected to each other. Autonomous systems are essentially a unique collection of IP addresses/address blocks and network hardware within a common administrative domain. They are like independent, digital countries – each with a distinct geographical footprint, infrastructure, and routing policy.
For full Internet access, a connection needs to either be established directly with all of these networks, or by a connecting through a network that is connected in some way to all of the other networks on the Internet. Generally, retail or enterprise users buy access from a single service provider and effectively become a part of that network (from and IP addressing point-of-view, at least).
Autonomous systems communicate route information and steer traffic to each other using a protocol known as the Border Gateway Protocol, or BGP.
IP Transit is a service by which networks have access to the rest of the Internet via BGP. In contrast to peering, where AS networks exchange only their own customer routes (on a mutual benefit and cost neutral basis), IP Transit is a commercial service whereby one network provides access to the entire Internet routing table (or a subset thereof), in return for payment. IP Transit services are typically charged on a usage basis, or by flat monthly fee. Because IP Transit services are based on BGP, networks buying IP Transit are required to operate and administer their own AS. A prerequisite for this is good knowledge of BGP routing and hardware capable of running it.
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