What an ISP Actually Does
An ISP performs two distinct functions: last-mile access and routing. Last-mile access is the physical connection between your home and the ISP's network — the fiber strand, coaxial cable, copper telephone wire, or wireless radio link that carries your data. Routing is the process of forwarding your data packets from your home through the ISP's network and onward to their destination on the internet, then bringing the response back.
When you load a webpage, your device sends packets to your router, which forwards them to your ISP's equipment at the end of your last-mile connection. The ISP's routers then forward those packets across its regional network toward the server hosting that webpage — potentially crossing several other networks before arriving. The webpage's server sends the response back along a similar path. All of this happens in milliseconds, and your ISP is the gateway that makes every step of it possible.
The ISP Tier System
The internet is organized into a hierarchy of ISPs grouped into three tiers based on their network scope and their relationships with other networks. Tier 1 ISPs operate global backbone networks — massive fiber infrastructure spanning continents and undersea cables connecting them. What defines a Tier 1 network is settlement-free peering: it has agreements with every other Tier 1 network to exchange traffic at no charge, so it can reach any destination on the internet without paying anyone for transit. Examples of Tier 1 networks include AT&T, Lumen (formerly CenturyLink), NTT Communications, Telia, and Cogent.
Tier 2 ISPs operate regional or national networks and pay Tier 1 networks for transit — the right to send traffic across the Tier 1's infrastructure to reach parts of the internet the Tier 2 cannot reach on its own. Most large consumer ISPs that people interact with — including Comcast, Charter, and regional fiber providers — operate as Tier 2 networks. Tier 3 ISPs are local or small regional providers that purchase all of their transit from Tier 2 or Tier 1 networks. A small-town cable operator or local WISP is typically a Tier 3 network.
How Your Data Travels Across Networks
When you send a request from your home to a server across the internet, your packets travel through a chain of networks connected by a routing protocol called BGP (Border Gateway Protocol). BGP allows each network — identified by its Autonomous System Number (ASN) — to advertise which IP address ranges it can deliver traffic to. Routers use this information to find a path from your home's ISP to the destination server's ISP.
A typical packet from a residential customer might travel: from the home router, through the local ISP's network, to a regional aggregation point, then to an internet exchange or transit connection, across a Tier 1 backbone, to an exchange point near the destination, and finally into the destination network's infrastructure. Each hop adds a small amount of latency, which is why geographically distant servers have higher ping times — packets simply have more hops and more physical distance to cross.
Peering and Transit Agreements
ISPs interconnect through two types of arrangements: peering and transit. In a peering arrangement, two networks exchange traffic directly with each other at no charge, typically at an internet exchange point (IXP). Peering makes financial sense when both networks have roughly balanced traffic flows — what one sends to the other is roughly equal to what it receives. Major IXPs like DE-CIX in Frankfurt and Equinix in multiple cities host hundreds of networks that peer with each other.
Transit is a paid arrangement where a smaller network pays a larger network to carry its traffic to the rest of the internet. A Tier 3 ISP pays a Tier 2 for transit; a Tier 2 may pay a Tier 1 for partial transit to destinations it cannot reach through peering. These commercial relationships shape how efficiently traffic flows between different parts of the internet — and disputes over peering terms between ISPs and content networks have historically caused congestion that affected end-user speeds.
CDNs and How They Change Routing
Content Delivery Networks (CDNs) like Cloudflare, Akamai, and Amazon CloudFront have fundamentally changed how internet traffic flows. Rather than having all traffic originate from a few central data centers, CDNs place servers — called edge nodes or points of presence (PoPs) — inside or adjacent to ISP networks worldwide. When you request content served by a CDN, your ISP routes your request to the nearest CDN edge server rather than all the way to the content's origin.
This dramatically reduces latency and the number of network hops for the most popular content on the internet. A Netflix stream delivered via a Netflix Open Connect appliance co-located inside your ISP's network may travel just a few milliseconds across a single network, rather than crossing multiple ISP boundaries. CDNs are one reason that streaming video and web performance have improved dramatically even on connections with the same raw speed as a decade ago.
ISP Types by Technology
ISPs are also distinguished by the physical technology they use to deliver the last-mile connection. Cable ISPs like Comcast and Charter use coaxial cable infrastructure originally built for cable television. Fiber ISPs — including AT&T Fiber, Google Fiber, and Frontier Fiber — use fiber-optic cable. DSL ISPs use telephone copper lines. Wireless ISPs (WISPs) use radio links. Satellite ISPs use orbital spacecraft. Mobile carriers including T-Mobile and Verizon offer home internet over cellular networks.
The technology determines the speed ceiling, latency characteristics, and geographic availability of the service, but the ISP's routing and peering relationships determine how well that connection performs when reaching specific destinations on the internet. A fast physical connection through a poorly peered ISP can produce disappointing real-world performance to certain services.
ISP Tier Comparison
| Feature | Tier 1 ISP | Tier 2 ISP | Tier 3 ISP |
|---|---|---|---|
| Network scope | Global backbone | Regional or national | Local or small regional |
| Transit relationship | Pays no one for transit | Pays Tier 1 for transit | Pays Tier 1 or Tier 2 |
| Examples | AT&T, Lumen, NTT, Telia | Comcast, Charter, Cox | Local cable, rural WISPs |
| Typical customer type | Other ISPs, enterprises | Consumers and businesses | Residential consumers |
| Peering agreements | Settlement-free with all Tier 1s | Selective peering | Minimal or none |
Frequently Asked Questions
What is the difference between Tier 1 and Tier 2 ISPs?
A Tier 1 ISP operates a global backbone network and has settlement-free peering agreements with all other Tier 1 networks — meaning it can reach any destination on the internet without paying another network for transit. Examples include AT&T, Lumen (formerly CenturyLink), NTT, and Telia. A Tier 2 ISP operates a regional network and pays one or more Tier 1 networks for transit to reach destinations outside its own footprint. Most large regional and national ISPs that consumers interact with are Tier 2 networks.
How does my ISP connect to the rest of the internet?
Your ISP connects to the broader internet at Internet Exchange Points (IXPs) — physical facilities where multiple networks meet and exchange traffic — and through private network interconnections (PNIs) with other ISPs and content providers. At these exchange points, your ISP either peers with other networks (exchanging traffic at no cost) or purchases transit from a higher-tier network that can carry its traffic to any destination. Traffic from your home travels through your ISP's regional network to one of these exchange or transit points, then hops across other networks until it reaches its destination.
What is a peering agreement?
A peering agreement is a contract between two ISPs to exchange internet traffic directly with each other at no charge, rather than routing that traffic through a paid transit provider. Peering makes economic sense when two networks have roughly equal traffic flows between them. When one network sends significantly more traffic to the other than it receives — as content-heavy networks like Netflix do toward consumer ISPs — the receiving ISP may demand payment for the traffic imbalance. These paid peering or transit arrangements affect how efficiently your ISP can deliver traffic from major content providers.
Why do some ISPs deliver faster speeds to certain websites?
Speed differences between websites on the same ISP connection often come down to peering and transit relationships. If your ISP has a direct peering connection or a CDN cache server co-located for a particular content provider, traffic to that service takes a short, uncongested path. Traffic to a service your ISP reaches through multiple transit hops — or through a congested interconnection point — will be slower and have higher latency. This is also why speed test results to servers hosted by your own ISP often look better than real-world browsing speeds.
What is an autonomous system number (ASN)?
An Autonomous System Number (ASN) is a unique identifier assigned to each network on the internet that operates its own routing policy. Every ISP, content provider, and large enterprise that connects to the internet has one or more ASNs. The Border Gateway Protocol (BGP) uses ASNs to route traffic between networks. When you look up an IP address, tools like bgp.he.net can show you which ASN — and therefore which network — that address belongs to. Comcast's ASN is AS7922, Google's primary ASN is AS15169, and Cloudflare's is AS13335, for example.
Can my ISP throttle specific websites or services?
Technically, yes — ISPs have the capability to inspect and selectively slow traffic to specific services using deep packet inspection (DPI). Whether they are legally permitted to do so depends on the net neutrality regulatory environment at the time. During periods when net neutrality rules are in effect in the US, ISPs are prohibited from blocking or throttling lawful content. Without such rules, ISPs can and some have throttled streaming video, VoIP calls, and BitTorrent traffic. Using a VPN tunnels your traffic so the ISP cannot identify its destination or application type, which prevents application-level throttling.