Hot-potato routing

In Internet routing between autonomous systems which are interconnected in multiple locations, hot-potato routing is the practice of passing traffic off to another autonomous system as quickly as possible, thus using their network for wide-area transit. Cold-potato routing is the opposite, where the originating autonomous system internally forwards the packet until it is as near to the destination as possible.

Behaviors
Hot-potato routing (or "closest exit routing") is the normal behavior generally employed by most ISPs. Like a hot potato in the hand, the source of the packet tries to hand it off as quickly as possible in order to minimize the burden on its network.

Cold-potato routing (or "best exit routing") on the other hand, requires more work from the source network, but keeps traffic under its control for longer, allowing it to offer a higher end-to-end quality of service to its users. It is prone to misconfiguration as well as poor coordination between two networks, which can result in unnecessarily circuitous paths. NSFNET used cold-potato routing in the 90s.

When a transit network with a hot-potato policy peers with a transit network employing cold-potato routing, traffic ratios between the two networks tend to be symmetric.

Implementation
Routing behavior can be influenced using two BGP "knobs": multi-exit discriminator (MED) and local preference. In hot-potato routing, the MED attached to incoming EBGP-learned routes is discarded, and the IGP cost is used instead. In cold-potato routing, MED or BGP communities are used to signal the cost of the route, which influences IBGP local preference.