Somebody has to pay the money to upgrade the equipment and bandwidth available at these exchange points. The very reasonable argument in this article is that the ISPs should pay that cost, which seems reasonable given that their customers are demanding it. It sounds like the ISPs are playing a game of chicken, trying to see if their peers like Level3 will throw money in to pay for the ISP to upgrade its equipment and…
The ISPs aren't dropping the packets, Level3 is. From the article linked to in the blog: "A port that is on average utilised at 90 percent will be saturated, dropping packets, for several hours a day. We have congested ports saturated to those levels with 12 of our 51 peers." "We"in the quote is Level3. They're dropping the packets. Why do the ISPs have to pay for Level3's dropping of packets? Shouldn't the ISPs repl…
i.e. internet is a series of pipes example. Level3 has a big fat pipe with 10Gbit/s of traffic going through to the peering point, where $ISP has a pipe that goes to their network rated at 1Gbit/s. Since the traffic can't fit into $ISP's pipe, the extra packets get dropped.