The confidential communication stated that at the time of the disconnection, all access to PSINet's networks would be lost. The memo further stated that the decision to disconnect was unilaterally made by PSINet (PSIX) and against the request of Exodus (EXDS).

Exodus informed its customers that it was working on alternative agreements to maintain connectivity and that it hoped to have a solution in place that would minimize service disruptions.

Ellen Hancock, Exodus chief executive officer, said that the purely private peering agreement with PSINet has successfully been rerouted through Sprint Corp. (FON).

"Thirty-minutes after the lines went down, Exodus traffic was transferred through Sprint," Hancock said.

Hancock added that Exodus was disappointed with PSINet's refusal to transfer traffic at public exchange points when Exodus ordered two additional DS3 lines from the global super carrier.

"We had two lines with PSINet and they refused to bring up two additional lines for us because they did not consider us a Tier One supplier," Hancock said.

"Peering was no longer free with PSINet and they refused to exchange traffic at public access points. It's very unusual for someone to refuse to exchange traffic a public points," Hancock added.

Doug Baj, PSINet spokesperson said it was unfortunate that its was forced to decommission the direct link between PSINet and Exodus. However, Baj said that Exodus decided to terminate the discussions, not PSINet.

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"PSINet has negotiated for several months with Exodus on ways to continue providing service to our customers," Baj said. "However, Exodus has chosen to discontinue the negotiations. PSINet remains ready to reestablish connectivity if a mutually beneficial arrangement can be worked out between our companies. The issue is in Exodus' hands."

Hancock said that Exodus serves up Internet content for nearly 30 percent of the companies that comprise the World Wide Web.

"Exodus provides access to 25 to 30 percent of the content on the Internet," Hancock said. "Fifty of the top sites in the U.S. are housed at Exodus. By terminating peering with Exodus, PSINet shut down its customs quick access to Exodus' customer content."

PSINet's Baj said that PSINet would not decommission links to other content providers and that the issue is purely a business matter between PSINet and Exodus.

"In terms of what customers can expect, since alternative transit routing will take effect immediately, we expect this will alleviate inconveniences that some customers have reported. We don't expect this to have a negative impact on the customers successfully connecting to Exodus," Baj said.

Adam Wegner, Exodus senior vice president and general counsel, said PSINet did not have the capacity to provide Exodus with the additional lines.

Before PSINet cut access with Exodus, we were reaching maximum capacity," Wegner said. "Sprint is providing capacity to PSINet, but PSINet is not providing adequate capacity to Sprint in return."

The Internet is essentially a number of peering arrangements that link many different individual networks together. Network owners and access providers work out peering agreements describing the terms and conditions to which both parties are subject.

The issue between PSINet and Exodus is part of its private peering arrangement whereby they agreed to bypass part of the public backbone network through which most of the Internet traffic passes.

Peering is the arrangement for traffic exchange among Internet service providers. Larger ISPs with their own backbone networks agree to allow traffic from other large ISPs in exchange for traffic traversing over their backbones. Upstream providers also exchange traffic with smaller ISPs so that they can reach regional end points. In essence, peering agreements are the sinews of the Internet that makes many different networks work together.

Peering requires the exchange and updating of router information between both parties, typically using the Border Gateway Protocol (BGP). Peering parties interconnect at network access points (NAPs) and at regional switching points.

A private peering arrangement guarantees superior connectivity because a connection takes fewer hops across the Internet backbone. Fewer hops translates to less packet loss so businesses are assured of packet delivery to nearly any destination.

PSINet offers transit and peering services to the carrier class and ISP market segments. PSINet transit service provides carriers and ISPs with global Internet connectivity for a fee while it offers free private peering for ISPs to promote greater interconnectivity throughout the Internet.

The PSINet, Exodus peering tiff is an issue that begs to revisit the "Peering Wars of 98" when Exodus and former BBN Planet, currently GTE Internetworking, Inc., squabbled over peering agreements at the public exchanges.

Exodus' Hancock said that both the Internet and Exodus have moved on since then.

"The industry has made tremendous moves forward since those days," Hancock said. "Some new procedures concerning peering with content providers were put in place and the Internet is much more sophisticated."

"The PSINet incident is unusual but I don't see the Internet degrading," Hancock added. "Exodus has 200 peering agreements worldwide and 55 private peering arrangements. PSINet is a minor part of our Internet traffic representing about 1.5 percent of our total traffic. We consider anything less than two percent to be in the 'other' category of carrier services."