What is IP transit and how does it work?

By Lily Bennett|9 September, 2026

5:45

The Internet may feel like a single, seamless network but behind every connection is a vast web of interconnected networks. For businesses, Internet service providers (ISPs) and other network operators, reaching users and services around the world depends on how efficiently traffic can move between these networks.

This is where IP transit comes in. IP transit is a commercial service that gives a network access to the wider Internet by allowing its traffic to travel across another provider’s network. But how does it work, and how is it different from peering

What is IP transit?

IP transit is a paid service that gives a network access to the global Internet through an upstream provider. Rather than building connections to every network and destination worldwide, an organisation can connect to an IP transit provider and use its network to reach virtually any Internet destination.

For enterprises and network operators, this can provide a scalable way to access the Internet without having to build and manage a global backbone themselves. The provider handles the complexity of routing traffic across interconnected networks, while the customer benefits from broad reach, capacity and network resilience.

IP transit providers are often categorised into three tiers. Tier 1 providers sit at the top of the Internet hierarchy, with extensive global networks and peering relationships with other Tier 1 networks. Because they operate their own backbone and can route traffic across it directly, Tier 1 providers can help reduce the number of network hops traffic takes to reach its destination.

This can translate into lower latency, greater control over routing and more predictable network performance. These are important considerations for businesses running cloud applications, real-time services and other bandwidth-intensive workloads.

How does IP transit work?

IP transit relies on the Border Gateway Protocol (BGP), the routing protocol that enables Autonomous Systems (AS) to exchange information about how traffic should reach different IP addresses.

Every autonomous system has a unique Autonomous System Number (ASN), while networks advertise the IP address ranges they can route. When a business or network operator connects to an IP transit provider, BGP is used to exchange routing information between the two networks.

For example, an organisation with its own ASN and IP address space can establish a BGP session with an IP transit provider. The provider then advertises routes to destinations across its network and the wider Internet. In return, the customer can advertise its own routes, allowing traffic to travel between its network and destinations worldwide.

In simple terms, IP transit provides the connection between a local network and the wider Internet, while BGP determines where the traffic needs to go.

Security and resilience are also important. Technologies such as Resource Public Key Infrastructure (RPKI) can help validate route announcements and reduce the risk of routing incidents, while DDoS protection can help mitigate attacks before they disrupt Internet-facing services.

IP transit vs peering: what’s the difference?

IP transit and IP peering both enable networks to exchange Internet traffic, but they serve different purposes.

IP transit is a paid commercial arrangement that provides access to the entire Internet. A customer pays an upstream provider to carry its traffic to destinations beyond its own network.

Peering is an arrangement between two networks to exchange traffic directly, typically for their respective customers or networks. Peering can be settlement-free, where neither party pays the other for the traffic exchanged, or paid, where one network pays the other.

Peering can take place publicly at an Internet Exchange Point (IXP), where multiple networks connect at a shared location, or privately through a direct connection between two networks.

For content providers, hosting companies, broadband providers and regional network operators, peering can reduce reliance on IP transit, lower costs and improve performance by keeping more traffic local.

The two approaches are therefore complementary. A network might use peering to exchange traffic directly with high-volume partners while relying on IP transit to reach the rest of the Internet.

How PCCW Global supports IP transit

PCCW Global provides carrier-grade IP Transit through its Tier 1 IP backbone, AS3491, helping businesses access reliable, high-performance global Internet connectivity.

Global reach: Connect to the Internet through PCCW Global’s Tier 1 IP network, designed to provide direct routing and minimise unnecessary network hops.
High performance: Benefit from lower latency, high bandwidth and guaranteed packet delivery performance.
Reliable connectivity: Our Global Internet Access solution is backed by a 99.99% monthly service availability SLA, with guaranteed low transit delay and high packet delivery.
Flexible routing: Choose between BGP or static routing, with support for dual-stack IPv4 and IPv6 connectivity.
On-demand scalability: Use Internet On-Demand to self-provision, scale and manage Internet connectivity through the Console Connect platform or API.
Built for demanding workloads: A carrier-grade backbone provides the connectivity foundation for cloud services, AI workloads and other bandwidth-intensive applications.