What Is a Tier 1 ISP?

IP Transit

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A Tier 1 ISP is a network that can reach every other network on the internet without paying for IP transit. They do this through settlement-free peering with other Tier 1 providers..

Key traits of Tier 1 ISPs:

Don’t pay for upstream transit
Have a global backbone network
Peer with other Tier 1 ISPs only
Usually operate their own undersea cables and data centers
Examples: Lumen, Arelion (formerly Telia), NTT, Tata Communications

Tier 1 ISPs are at the top of the internet hierarchy. If you're buying IP transit directly from a Tier 1, you’re usually getting global reach with fewer hops and better routing.

What Is a Tier 2 ISP?

A Tier 2 ISP buys IP transit from one or more upstream providers (often Tier 1s) but also peers directly with other networks.

Key traits of Tier 2 providers:

Pay for upstream transit
Peer where possible to reduce costs
Often serve regional or national markets
Offer competitive pricing and better support than Tier 1s

Most internet transit providers today are Tier 2. They make up the bulk of the internet’s infrastructure.

Tier 1 vs Tier 2 ISP: Side-by-Side

Feature	Tier 1 ISP	Tier 2 ISP
Pays for transit	No	Yes
Peering	With other Tier 1s only	With many networks (and upstreams)
Global reach	Yes, full internet routing	Yes, via transit + peering
Target market	Large-scale networks, carriers	Enterprises, hosting providers, regional ISPs
Pricing	Higher per Mbps	More competitive
Support	Lower-touch	Often better responsiveness

Which Should You Choose?

If you’re a typical enterprise, ISP, or hosting provider, buying IP transit from a Tier 2 internet provider makes more sense. Here’s why:

Better pricing – Tier 2s compete hard on rates.
Flexible routing – Many have multiple upstreams and peers.
Support – Tier 2s are often more responsive.

Going with a Tier 1 ISP can make sense if you need the fewest network hops or want to reduce dependency on third parties—but you'll likely pay more and get less flexibility.

Common Myths

Myth 1: Tier 1 always means better performance.
Not always. Some Tier 2s offer better latency and routing thanks to smart peering.

Myth 2: You need Tier 1 IP transit to be a serious provider.
Wrong. Most large hosting companies and CDNs buy from Tier 2 providers with excellent peering.

Myth 3: Tier 2s are small.
Nope. Some Tier 2 ISPs operate global networks and have massive capacity.

Final Note

Understanding the difference between Tier 2 and Tier 1 ISPs helps you make smarter network decisions. Unless you’re building a global backbone yourself, a well-connected Tier 2 provider with solid peering and support is usually the better bet.

Shift Hosting offers affordable high-performance IP transit
Plans start at $200 per Gbps — view details or email Sales@Shifthosting.com for a quote.

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