Level 3 and Comcast neutrality battle heats up

By Geoff Duncan December 3, 2010

Image used with permission by copyright holder

Earlier this week, Internet backbone provider Level 3 Communications accused cable operator Comcast of trying to put up “toll booths” on the Internet by demanding Level 3 pay ongoing charges to send data to Comcast’s network. Comcast characterized Level 3’s accusations as “duplicitous,” saying that while it’s happy to provide free peering services to other networks where traffic to and from those networks is roughly balanced, Level 3’s recent distribution deal with Netflix means Level 3 is sending Comcast about five times as much traffic as it is accepting from Comcast—and that puts Level 3 in the same business as “content delivery networks” like Akamai and Amazon’s CloudFront that pay for interconnection services. But where Comcast is saying Level 3 is now a content delivery network rather than a backbone provider, Level 3 says Comcast isn’t a backbone provider either: it’s just a cable company that controls “local access networks.”

Over the last few days, the rhetoric of the situation has continued to escalate, with the Federal Communications Commission speaking with representatives of both companies about the dispute. In the meantime, the companies have continued to trade barbs: Comcast has posted the full text of its letter to the FCC characterizing the affair as a “peering dispute,” while Level 3 is sidestepping matters of Internet traffic volumes and accuses Comcast of discriminating against competitors of Comcast’s Xfinity and cable service by charging a “price” for competitors to reach Comcast’s Internet subscribers. And, as the largest cable company in the United States, Comcast has lots of Internet subscribers, in no small part because cable companies (and phone companies) network build-outs were protected from competition by exclusive government franchises.

Now, Level 3 has issued a 19-point FAQ document seeking to deflate Comcast’s claims that the matter is an “old-fashioned peering dispute.” Level 3 claims that Comcast wants to get paid twice for delivering the same content—one by subscribers requesting data, and again by Level 3 for delivering that data. Level 3 maintains that Comcast’s fees are all about protecting its own Xfinity and cable operations from Internet video competitors, and Comcast’s efforts to label competitors as something other than “network peers” is all about making those competitors become Comcast customers in order to reach Comcast subscribers.

Comcast claims the fees it’s charging Level 3 for access are “no different” than fees charged to other content delivery networks, but Level 3 asserts that no other “broadband access provider”—note Level 3 doesn’t say “backbone provider”—in the United States levies Level 3 the type of fees Comcast is charging.

“If incumbent owners of dominant local access networks are allowed to unilaterally impose additional ‘tolls’ on content or applications requested by their subscribers,” Level 3 wrote, “it is not the current, established companies who are most at risk but rather the next great ideas which lead to the great companies of tomorrow.”

It’s not clear how the dispute between the two companies can be resolved. For now, Level 3 is paying Comcast’s additional fees so that customers don’t see a disruption in service. However, by going public with its position, Level 3 is hoping to influence public opinion and federal policymakers into mandating “forced interconnection on fair terms”—and notes the FCC has intervened in a case where telephone operators blocked broadband subscribers from accessing VoIP phone services.

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