A Beginner’s Guide To IP Transit

ip transit

Have you ever wondered how you could seamlessly access any website in your browser without any issue?

Websites are hosted on servers distributed across the world. Yet, you can easily access any website with little to no delays.

This article shall reveal how IP transit, an interesting feature of the internet, ensures you have a smooth browsing experience.

But before exploring IP transit, let’s see how the Internet works in general and the role of the IP address in your browsing experience.

Table Of Content

  1. How Does the Internet Operate
  2. The Role of IP Addresses
    1. Independent Provider (PI)
    2. Provider Aggregated (PA)
  3. What is the IP Transit Service?
  4. Introducing Autonomous System (AS) & Autonomous System Number (ASN)
  5. Understanding the Border Gateway Protocol (BGP)
  6. Tiers of IP Transit Providers
    1. Tier 1
    2. Tier 2
    3. Tier 3
  7. How Does IP Transit Work?
  8. IP Transit Vs. IX Transit Vs. DIA, Which One Should You Choose?
    1. IX Transit
    2. DIA
  9. Conclusion

How Does the Internet Operate

As you know, the global Internet is a collection of interconnected networks that connect the servers, devices, and users in the world. Similarly, a network comprises a collection of devices connected to communicate with one another.

Here’s how information flows across these networks.

A piece of information is divided into small bits, known as packets. These packets are transmitted over a single or several interconnected network(s) before they’re reassembled at the destination.

So, when interconnected networks agree on exchanging traffic, data packets travel from points A to B on the Internet. The most popular form of these arrangements is known as IP Transit.

The Role of IP Addresses

An Internet Protocol (IP) address is the numerical identifier assigned to every network device (network or host devices).

IP addresses have two popular variants – the 32-bit IPv4 and the 128-bit IPv6. Out of these, IPv4 has been around for almost a decade, and IPv6 is in the process of being quickly rolled out as the number of internet-enabled devices increases exponentially.

These IP addresses (both v4 and v6) are organized in blocks and assigned to a regional Internet registry (RIR). The RIRs distribute the assigned blocks to local entities, including ISPs, enterprises, and government agencies.

The IP addresses offered by an RIR come in two flavors:

Independent Provider (PI)

A PI block of IP addresses is allocated directly to the user through the RIR. The user negotiates with their ISP to transfer the block to the Internet. The great thing about PI blocks is that the customer can retain it after moving from one ISP to the next.

Provider Aggregated (PA)

A PA IP block is usually a part of a larger block of IP addresses. The ISP assigns these PA blocks to their customers. Note that the ownership of a PA block remains with the ISP. As a result, when a user switches ISP, the PA block needs to be changed.

What is the IP Transit Service?

On their way to the destination, data packets must pass through several third-party networks.

IP transit is a service that an Internet Service Provider uses to allow traffic to traverse their network. This service uses the Border Gateway Protocol (BGP) to provide global access to the Internet. And, like other service providers, ISPs might need to pay IP Transit service providers for the privilege of accessing their extensive BGP Internet routing table.

IP Transit is available to users with an autonomous System and can establish routing using Border Gateway Protocol. Border Gateway Protocol.

Introducing Autonomous System (AS) & Autonomous System Number (ASN)

Autonomous System (AS) represents an ISP or similarly large component of the global internet connectivity consisting of various interconnected networks.

Each AS has a unique Autonomous System Number (ASN) to identify itself and interact with other AS.

For instance, IPTP Networks is an AS component of the ASN 41095. This network connects its customers as well as other ASes across the globe.

It’s important to understand that only the entities that operate their own AS, or otherwise have an ASN assigned to them can use the IP Transit service.

Understanding the Border Gateway Protocol (BGP)

As you now know that the IP Transit service uses the Border Gateway Protocol (BGP). AS utilizes BGP to communicate with each other and permit cross-network traffic transit through reachability information.

The reachability information that BGP uses includes two lists of IP addresses – one of AS sending the AS and one that receives the AS. BGP uses the reachability information to decide on the best route to send a data packet. The process also decides the path data packets would follow to get to the destination.

Thanks to ASNs and the BGP, networks are able to exchange huge volumes of internet traffic without any issues.

Tiers of IP Transit Providers

Internet transit companies (ISPs) are classified into three service levels depending on their capabilities.

Tier 1

These ISPs are the Internet’s backbone and have a global reach. They do not charge for transport/peering (connecting to and exchanging of data) to other ISPs at no cost. Tier 2 and Tier 3 ISPs can connect to Tier 1 networks by paying a ‘transit fee’ for connectivity.

Tier 2

Tier 2 ISPs have extensive networks with either national or regional coverage. Just a handful of Tier 2 ISPs can serve customers across multiple continents. These providers share their data with other Tier 2 providers to cut down on IP transport costs. However, they still need to purchase IP transport from ISPs in Tier 1 to connect to the other parts of the Internet.

Tier 3

Tier 3 ISPs are regional service providers with networks that span some countries or subregions. These ISPs purchase only Internet traffic. To avoid the expensive costs of Tier 1 IP transit, they often buy the IP of Tier 2 service providers. Tier 3 ISPs generally do not have transit clients and are usually focused on local consumer and business markets.

The ISP hierarchy categorizes traffic with higher Tiers as Upstream and those with lower Tiers as Downstream. For example, when traffic is moving from Tier 3 to Tier 2, it’s moving upwards. In this scenario, the ISP with a lower Tier (Tier 3) is Downstream and buys IP Transit service from a Tier 2 ISP (that acts as the Upstream service provider. ISPs with a similar Tier, like Tier 1 and Tier 1 ISPs, are called peers.

How Does IP Transit Work?

IP Transit connects a customer’s network to the Internet and offers a fast route for traffic to reach its destination. The user is charged a fee for transit for connecting to a specific location called a POP (Point of Presence) which the provider provides.

The provider then ensures that the user can connect to any server on the Internet and all internet servers.

IP Transit is priced per megabit per month. Usually, the contract comes with an SLA that defines the service quality and reimbursement terms for cases where the customer cannot connect to the Internet for a pre–agreed duration.

Based on the network’s size and the service tier, the company will have to purchase one or more networks to move the customer’s data to the desired destination through their upstream transportation link.

IP Transit Vs. IX Transit Vs. DIA, Which One Should You Choose?

In addition to IP Transit, you can also opt for two other connectivity options: IX Transit and DIA.

Let’s start with the definitions of these terms.

IX Transit

IX Transit is a peering service for public use accessible via an Internet Exchange Point (IXP).

An IXP is the point of connection through which an ISP’s network can join to exchange Internet traffic. It is also referred to as a portion of IP Transit that allows traffic to connect with other peers and downstream ISP’s networks for the best latency.


DIA refers to Direct Internet Access and works similar to IP Transit.

DIA is by far the most commonly used internet service available to those who do not have an ASN. Compared to IP Transit, DIA is an affordable alternative. However, DIA users might face some downtime.

Budget, the number of peers, and your specific requirements for latency are some aspects to consider when choosing IP Transit, IX Transit, or DIA.

DIA would be the best option if you still need an ASN and are only looking for an affordable and simple internet service suitable for general use.

IX Transit is a good fit for businesses that work with latency-sensitive apps and want to be in control of their network routing and traffic optimization, all on a tight budget.

Regardless of how you choose to connect to the internet, IP Transit is a necessity for businesses that need global connectivity.


IP Transit offers Internet connectivity by allowing networks to connect to global networks through a high-bandwidth network.

It connects networks to an upstream provider through a data center or Point of Presence. IP Transit is used by companies, organizations, and ISPs that require high-speed, reliable connectivity to the Internet.

IP transit prices are by the volume of data transferred through the connection and other elements like the reliability and quality of the upstream provider and the amount of support they provide.


Q: Who is the typical user of IP Transit?

The best fit for IP Transit is businesses that require fast, reliable internet connection. Typical use cases include transferring large quantities of data, hosting, and other online services, or connecting to different networks or services.

Q: What are the advantages of IP Transit?

The advantages of using IP transit are access to an extensive global range of services, fast and reliable Internet connectivity, and the capability to connect to different networks and services. IP transit also has redundant and failover features to ensure that connectivity is not lost when one provider or connection fails.

Q: How much is IP Transit priced?

The cost of IP transit is often determined by the volume of data transferred through the connection and expressed in Mbps (megabits per second) or Gbps. (gigabits per second). The price may also vary according to the reliability and quality of the upstream service provider, the level of support provided, and similar variables.