There are currently ten recognized Tier 1 networks:
AT&T, Global Crossing, L3, NTT, Qwest, Sprint, Tata, Verizon, Savvis, and TeleSonera.
A Tier 1 network is a network that can reach any place on the Internet without having to pay for transit rights. In other words, all Tier 1 providers are fully peered with all other Tier 1 providers.
The next level down, sometimes called Tier 2 networks, are providers that have peering arrangements with some Tier 1 providers, but pay for transit with some of the others. So they can’t reach the entire Internet through peering alone.
And the next level are networks that pay for transit on one or more networks and don’t have peering arrangements with anybody.
Most small ISPs are Tier 3 networks. A few really big ISPs are Tier 2 networks. The Tier 1 networks are not in the business of selling Internet service retail. (Even Verizon’s DSL operation is a customer of their Tier 1 network, which is operated by a different subsidiary.)