Level 3 Communications, the content delivery network (CDN) that Netflix uses to stream video to its customers, has accused Comcast of charging a new fee to connect to its users. Level 3 alleges the new fee puts it at a disadvantage relative to Comcast’s own cable television services. Level 3 charges Comcast with threatening the open internet and says it will seek government intervention.
“By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content,” said Thomas Stortz, Level 3’s chief legal officer, in a media release. “This action by Comcast threatens the open internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider. ... Level 3 believes Comcast’s current position violates the spirit and letter of the FCC’s proposed internet policy principles and other regulations and statutes, as well as Comcast’s previous public statements about favoring an open Internet.”
Comcast denied its new fee has anything to do with on open internet or network neutrality—the principle that all internet traffic is treated equally, without regard to type, source, or destination—calling it “a simple commercial dispute,” according to Brian Stelter, writing for the New York Times. Stelter reports Joe Waz, a Comcast senior vice president, told him that the cable company “has had a peering agreement with Level 3 to swap traffic fairly evenly. Now Level 3 is sharply increasing its traffic, he said, while resisting a commercial agreement to pay for that.”
Peering agreements are struck between separate providers to exchange traffic between customers of each network through a physical interconnection. These agreements are generally “settlement-free,” meaning that neither provider pays the other; instead, both providers receive revenue from their respective customers.
Comcast’s timing is interesting. It comes one week after Level 3 announced a multiyear contract to be Netflix’s primary content delivery network (CDN) for the latter’s streaming video service.
And that’s where things get a little interesting. Internet service providers generally don’t enter into “settlement-free” peering agreements with content delivery networks, only with other service providers. And only then if the benefit outweighs the cost. Joe Waz, the Comcast senior vice president, writing in the comcastvoices blog, argues that Level 3 has inaccurately portrayed the negotiations as having to do with different types of network traffic. Waz insists that Comcast offered Level 3 the same terms it offers other CDNs (presumably Aakmai or Limelight, for example). “Level 3 wants to compete with other CDNs, but pass all the costs of that business onto Comcast and Comcast’s customers, instead of Level 3 and its customers,” writes Waz.
Stacy Higginbotham, writing for GigaOM, states the Comcast position more bluntly: “In short Level 3 was calling itself a CDN to its customers and a backbone provider to Comcast.” Higginbotham reports that Level 3 was increasing its network traffic by more than double, reaching a 5:1 ratio to Comcast’s network traffic. For Comcast, the cost of that 5:1 ratio outweighed the benefit of getting Level 3’s traffic (Netflix’s streaming video) to Comcast’s broadband customers. Higginbotham’s analysis concludes that Comcast’s “take it or leave it” offer to Level 3 exposes the real problem of how uncompetitive broadband internet service really is in the US.
What Waz conveniently leaves out is that Level 3 isn’t “pushing” that 5:1 ratio of traffic onto Comcast’s network; Comcast’s customers are requesting it. And those Comcast customers have already paid the cable giant quite handsomely to deliver the information they’ve requested.
Stelter cites a recent study finding that Netflix represents a full 20 percent of internet traffic at peak times, making it “a de facto competitor for incumbent distributors like Comcast and Time Warner Cable which are eager to protect both the subscription television business and the emerging video-on-demand business.”
This isn’t Comcast’s first brush with attempting to subvert network neutrality. In October 2007, Comcast blocked BitTorrent activity on its network by sending forged reset packets (TCP RST) that effectively told the receiving computer to drop the connection.
Stelter notes the US Federal Communications Commission (FCC) may attach a condition to Comcast’s proposed acquisition of NBC-Universal from General Electric “that would aim to keep Comcast’s internet network open to competitors, according to public filings this month.”
As Higgenbotham writes, “This is a problem the Congress and regulators cannot ignore. ... these rumblings between giant companies leaves consumers in the lurch, even though they actually have paid for access to the internet—that is, the whole internet, not one that is approved by Comcast or some other company. The problem of course is lack of competition in broadband markets.”
Harold Field, legal director of Public Knowledge, a public interest group calls the Level 3 charges a “third strike” against Comcast in a media release. “On its face, this is the sort of toll booth between residential subscribers and the content of their choice that a net neutrality rule is supposed to prohibit,” said Field in the release. “In addition, this is exactly the sort of anticompetitive harm that opponents of Comcast’s merger with NBC-Universal have warned would happen —- that Comcast would leverage its network to harm distribution of competitive video services, while raising prices on its own customers.”
President Obama campaigned quite hard on an open internet and network neutrality.
Update: Tuesday, 30 November 2010 8:15PM: Nate Anderson, writing for Ars Technica, has an absolutely stunning analysis of the dispute between Comcast and Level 3. He quotes Dave Burstein as saying, “As far as I know, no primary backbone provider like Level 3 has ever been required to pay to deliver traffic to another major carrier.” Burstein suggests Comcast’s move is an attempt to move broadband internet connectivity away from “settlement-free” peering agreements to a world in which every bit is paid for three times: Once by the creator; once by the distributor; and again by the customer. A world in which the big last-mile internet service providers—Comcast, AT&T, Verizon, and the rest—would be able to set unreasonably high peering rates, raising their own profits while simultaneously blocking competitors. “Why bother to block traffic, which would raise an outcry, when you can simply tax it to death in private?” writes Anderson.
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