When I read earlier this week that Level 3 was trying to elevate its peering dispute with Comcast into some kind of a major net neutrality gaffe, I immediately typed into my search engine the names Cogent Communications and Level 3 to see if I hadn’t somehow slipped into an alternative universe over the long Thanksgiving weekend.  I was relieved to learn that I was merely back in Washington, D.C. where spin is both King and Queen.  Here is what I found:

Level 3’s Shifting Positions on Peering –

As a Backbone Provider in 2005, Level 3 Said:

There are a number of factors that determine whether a peering relationship is mutually beneficial. For example, Cogent was sending far more traffic to the Level 3 network than Level 3 was sending to Cogent’s network. It is important to keep in mind that traffic received by Level 3 in a peering relationship must be moved across Level 3’s network at considerable expense. Simply put, this means that, without paying, Cogent was using far more of Level 3’s network, far more of the time, than the reverse. Following our review, we decided that it was unfair for us to be subsidizing Cogent’s business.” Level 3 Press Release, Oct. 7, 2005

As a Content Delivery Network Operator in 2010, Level 3 Said:

“It is regrettable that Comcast has sought to portray this simply as a commercial disagreement or a peering dispute. They miss the point and are attempting to distract from the fundamental issue….The fundamental issue is not whether Comcast sends more traffic to Level 3 or whether Level 3 sends more traffic to Comcast. Both Level 3 and Comcast are responding to the requests of Comcast’s subscribers, who want to be free to see and use the full suite of content and applications that are available on the Internet today and in the future. Level 3 wants to assure that freedom is preserved.” Level 3 Press Release, November 29, 2010

Despite all the spin from Level 3 and political organizations like “Free Press,” and at the risk of contradicting one of my old Spinal Tap heroes Nigel Tufnel, I have to conclude that it’s not, in fact, louder just because it “goes to eleven”…this is just a peering dispute no matter how loudly Level 3 and Free Press shout “net neutrality violation.”

In 2005, Level 3 created quite a stir in the Internet infrastructure community when it unilaterally “de-peered” Cogent Communications (i.e., disconnected Cogent from significant parts of the Internet), regrettably without informing any of Level 3’s or Cogent’s customers.

In the interests of understanding this issue (and why it is a classic peering dispute and not a net neutrality issue), let’s spend a minute on peering.  Level 3 and Cogent had a Settlement-Free Peering arrangement that Level 3 felt Cogent was violating. Those types of agreements are generally based on a set of criteria that may include provisions like each party agreeing to maintain a network that is roughly equivalent in size and scope (a party may require a certain number international and/or domestic interconnection points), a commitment to interconnect at a specified bandwidth (AT&T requires OC192), and a commitment to exchange roughly the same volume of traffic (AT&T’s current settlement-free peering ratio is 2:1). There may be other criteria, but those are the big hitters. (I apologize in advance to all the peering geeks out there for the 10,000 foot level characterization that lacks the technical minutiae that you folks adore).

The basic concept behind those requirements is simply that the relationship has to be mutually beneficial to both parties, since no money is exchanging hands.  Companies that do not meet the settlement free peering criteria will generally enter into an agreement for some form of paid peering or transiting arrangement.  AT AT&T, we have a relatively small number of providers with whom we have settlement-free arrangements but many more agreements that are for some form of paid peering/transiting.

Back in 2005, Level 3 explained its actions with Cogent by arguing that Cogent was utilizing “far more of Level 3’s network, far more of the time.” Because Cogent was delivering far more traffic to Level 3 than it was receiving from Level 3, Level 3 asserted that settlement free peering was not appropriate – the arrangement was not mutually beneficial and Level 3 was therefore being asked to “subsidize” Cogent’s business. Thus, Level 3 wanted Cogent to enter into a paid arrangement.  And despite the fact that Level 3, in its own peering policy, continues to adhere to the concept of commercial negotiation of mutually beneficial agreements (their current policy reads: Like any commercially negotiated arrangement, Level 3 believes such arrangements are appropriate when both parties equally benefit from the relationship.”), Level 3 has apparently changed its tune on the importance of balance in exchanging traffic (as did Cogent in the other direction when it de-peered Limelight in 2007 – are you keeping track of all this?).

Comcast asserts that Level 3 has stated its volumes will double in the coming months and its traffic balance ratios will increase from +2:1 to 5:1, similar to Cogent’s increasing traffic imbalance with Level 3 in 2005.  And Comcast has responded by telling Level 3 that it does not qualify for the existing terms of their peering arrangement, just like Level 3 said to Cogent 5 years ago.  So why is the imbalance suddenly increasing?  Earlier this month Level 3 won some of NetFlix’s streaming business which may have something to do with the growing traffic imbalance.  I am confident that the CDN providers Level 3 “won” this business from had been paying Comcast to deliver this same content to Comcast’s customers.

But whatever the reason, balance (or imbalance) in a peering relationship is important for the very same reason Level 3 claimed five years ago. When traffic flows to a broadband provider increase, the provider has to augment its infrastructure and build out more bandwidth to carry that traffic to its customers.  An arrangement where one provider sends far more traffic to another provider than it receives, without some additional compensation, is simply not mutually or “equally” beneficial – instead it’s a subsidy just as Level 3 described it five years ago.

We all know that distributing content costs real money.  In the brick and mortar world, GigaOm estimates that Netflix’s current postal distribution cost exceeds $700 million annually (not an insignificant number for $2.5B revenue business) – a cost that will be avoided (although different other costs will be incurred) if it abandons the snail mail system.  However, there is a significant and growing cost to deliver that high-bandwidth content over broadband networks to consumers too. Ultimately, someone is going to have pay for those costs.

And while Level 3 and perhaps content providers might prefer a model whereby all of Comcast’s broadband subscribers collectively pay for that cost in the form of higher broadband Internet access rates (irrespective of whether they subscribe to Netflix or some other high-bandwidth content service), that model is not necessarily consumer friendly.  If Comcast prevails in this “negotiation” with Level 3 (and apparently now the  NetRoots community), some of those infrastructure costs will be passed onto Level 3 and thus NetFlix who will presumably incorporate those costs into subscription rates for the consumers who actually use its service, just as it does with the +$700M postal distribution costs it incurs today.  Isn’t that a more rational way to approach this?  Seems like common sense to me.

But irrespective of how this dispute ultimately gets resolved, it is decidedly NOT a net neutrality issue.  Comcast simply wants to be compensated for the additional volume of traffic that Level 3 is delivering to Comcast, which Comcast has to deliver to its customers.  Comcast doesn’t care whether that traffic is video or music or email or web pages.  So, this really has nothing at all to do with net neutrality despite the fact that Level 3 and Free Press would like to raise the volume level to eleven.

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