Since November 30th, Level 3 has made five filings in the FCC’s Open Internet Proceeding in which it raised “net neutrality” concerns about the agreement it had previously reached to purchase connectivity from Comcast.  Yesterday, Level 3’s CEO sent another letter to the FCC and the Department of Justice in which he urged the FCC to consider regulating broadband Internet access providers generally to deal with its concerns. The fact that Level 3 did not file its latest letter in the Open Internet docket (such a filing would be prohibited under the FCC’s sunshine rules) may indicate that Level 3 has abandoned its frivolous net neutrality claims.

In any case, this is a pretty remarkable call for regulation of Internet interconnection arrangements that have worked remarkably well without regulation. To try to justify this unprecedented regulatory intervention, Level 3 says that, absent regulation, ISPs can “coerce payments from broadband backbone and independent content providers” thanks to their “dominant control over access to their subscriber’s eyes and ears.”

Wait a minute. Up until now, last-mile ISPs have mostly been buyers rather than sellers of Internet interconnection services. If you ask me, there’s not much crazier in business than buying something that you could, according to Level 3, be selling. Apparently, ISPs have run up billions of dollars in unnecessary expenses that, in fact, could have been revenue. I understand how the buy/build dilemma works, but buy/sell seems like a no-brainer.

Unless, just maybe, Level 3 has left something out. What could it be? Here’s a thought. Perhaps Level 3 doesn’t think Comcast should be able to decide for itself, as every ISP always has, how to provision its transit needs. Up until now, the Internet has been a best effort environment, where no provider can guarantee performance on another provider’s network. Could it be that Level 3 has made a service level commitment to a customer (like Netflix) on the assumption that it could procure, at no charge, however much connectivity it might need from every ISP in the country to deliver on that commitment?

If that’s what’s going on here, Level 3 should come right out and say so. Without some explanation of why Level 3 does not simply require Comcast to access this content through Comcast’s transit arrangements, this controversy doesn’t make sense. And if Level 3 does need this connectivity to deliver on a commitment to its customer, why is it good public policy for the government to coerce other ISPs into providing it for free?

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