C&W says that it cut the link because traffic from PSINet's network had dwindled to such a low level that the peering arrangement between the two was not worth continuing. The blackout lasted four days, from the announcement of PSINet's descent into chapter 11 bankruptcy proceedings on 1 June 2001 until the night of 5 June, when C&W finally agreed to re-establish the link.

Peering is an arrangement between two networks in which they agree to swap data traffic for no charge. The dispute underscores the fragility of such arrangements, which currently underpin the Internet.

The cutting of the link between C&W and PSINet meant that neither network could see the other, although traffic on both networks could eventually have used alternative routes to reach their destinations. But for companies with sites hosted by C&W with clients provided Internet access by PSINet, or vice versa, the suspension of the peering arrangement would have led to performance problems.

Peering arrangements between the two companies has been free for a long time because the two networks were approximately of equal size. However, PSINet's well-publicised financial problems led to a haemorrhage of customers and a consequent drop in traffic to such a level that C&W said that continuing the arrangement no longer made sense.

The two companies had been in talks since February 2001. C&W wanted PSINet to sign an exchange agreement which would see it start paying for its traffic to traverse C&W's network. That was not an option for PSINet, which was already in trouble and rapidly running out of money.

Despite the restoration of the link, C&W says that it will cut it once again if PSINet does not manage to raise its traffic levels.

Analysts believe that the technology slowdown could lead to further disputes of this kind as the major network operators 'turn the screws' on more cash-strapped competitors.

Infoconomy features:
Unplugged (May 2001)
The precarious position of PSINet has raised fresh concerns about the dependence of companies on their web services partners. How real are the risks of cyber blackouts?
PSINet clients fear power shut-off (May 2001)
Time for European customers to consider their options
Nervous hosts (April 2001)
Widening losses at high-profile providers has raised fears about the viability of the hosting services market, but optimists insist there are still profits to be made.
Local difficulties? (December 2000)
Is the climate for technology companies toughening, or are the difficulties more localised?

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