The national Internet service provider will not make any new agreements to "peer" with ISPs that cannot route traffic at the same rate as UUNet. About 35 ISPs currently use UUNet's backbone, and the free ride could end for at least 12 companies.
Peering allows ISPs of similar size to route each other's email or Web browsing traffic to places on both of their networks. No money is exchanged, but both parties are expected to generate and handle the same amount of traffic.
ISPs that don't qualify as peers can pay an existing monthly rate of $2,000 for a T1 connection and $6,000 for a fractional T3 connection. Smaller ISPs, which can't apply to be a peer, worry that the move might force them to pass along the costs to customers or go out of business.
"When somebody wants to peer with us, it means they want to use our network for free. But hundreds already pay the normal wholesale price to use our network," said John Sidgmore, president and chief executive officer of UUNet.
"They can sign a peer agreement with us as long as they have a significant national network with four network points in the United States that are geographically diverse, so that we don't have to carry all the traffic for free," he added.
UUNet argues that the cutoff is justified to help cover a $300 million investment the company said it will use to build up its infrastructure.
Small ISPs are facing a shakeout across the country as the try to stay competitive as large companies with a lot more money are investing in technology and customer service. A recent decision by the Federal Communications Commission will also put the pinch on mini-ISPs. By next year, all businesses including ISPs will have to start paying $2 to $4 for each additional phone line they use.
UUNet's plan to stop interconnecting with smaller ISPs became known last month when Whole Earth Networks and more than a dozen other ISPs began protesting after receiving letters from UUNet stating that they might be charged a fee to use its backbone, as reported by NEWS.COM.
However, Whole Earth Networks and UUNet agreed last month to continue the interconnection of their networks, at least temporarily.
ISPs that have existing agreements with UUNet are cutting their own deals. Nathan Stratton, president of NetRail, received an email from UUNet last month saying he would soon be dropped from his peering agreement. Stratton was considering taking UUNet to court over the matter.
But on Friday, Stratton signed a confidential agreement with UUNet and has backed off on his threat to sue. "I can't comment on the conditions due to a nondisclosure agreement with UUNet, but right now I'm happy," he said.
UUNet confirmed the deal. "We've been negotiating with these guys for a few weeks, and we've already worked out a deal with The WELL and a few others that I can't name," Sidgmore said. "I'd be surprised if we didn't work out deals with all of them in the next few weeks."