Peering is the exchange of data - typically on a cost-neutral basis
All kinds of networks like carriers, Internet Service Providers (ISPs) and network operators, need to exchange data in order for the Internet to work. The data exchange is either agreed on a bilateral payment basis (for transit/upstream) or on a typically cost-neutral basis, also known as peering.
Usually, peering takes place at Internet Exchanges (IXs or Internet Exchange Points, IXPs). This is where the participating networks come together. At DE-CIX in Frankfurt, for example, more than 1000 networks are connected to peer with each other.
Every microsecond counts for surfing, streaming, uploading, and downloading
Because these networks exchange their data with one another on the spot, the data does not need to take long routes to the next point where, by chance, both networks – or the transit providers of the respective networks – are located in the same data center and have a direct fiber-optic interconnection. In this way, the participants save on the costs for long routes (transit), can use one single connection to peer with hundreds of networks rather than needing hundreds of single connections, and the data packets reach their destination much more quickly. This is an advantage for Internet users, because every microsecond counts for surfing, streaming, uploading, and downloading.