Global Crossing: FCC Should Regulate Internet Interconnection Fees

2/07/2011 4:10 PM Eastern

Global Crossing urged the Federal Communications Commission to regulate interconnection pricing of last-mile Internet service providers, saying the dispute between Comcast and Level 3 Communications shows broadband ISPs are "distorting" the economics of traditional peering relationships.

Level 3, after winning a content delivery network contract with Netflix to stream video to subscribers, in November accused Comcast of erecting a "toll booth" on the Internet after the MSO requested payment to handle the increased bandwidth load. The Comcast fees violate the FCC's Open Internet rules, Level 3 argues.

Comcast has characterized the standoff as a run-of-the-mill business negotiation. It said the new interconnection fees were appropriate because Level 3 was suddenly dumping a disproportionate amount of traffic onto the cable operator's network.

Now network services provider Global Crossing -- which like Level 3 serves business Internet customers and not residential subscribers -- has officially weighed in on Level 3's side of the dispute.

Broadband ISPs such as Comcast are "distorting the economics of the historical peering relationships that existed between carriers, citing concerns about traffic 'balance' in order to justify the creation of what amounts to a new access charge regime for the Internet," Paul Kouroupas, vice president of regulatory affairs for Global Crossing North America, wrote in a letter Friday to the FCC.

The FCC should intervene in the Comcast/Level 3 matter and ensure that similar disputes do not arise in the future, Global Crossing said, by regulating the ability of last-mile providers to charge for use of their networks in the same way the agency regulates call-termination fees charged by competitive local exchange carriers (CLECs) and wireless carriers.

"If such practices continue unchecked, the Internet will experience significant disruption as carriers seek to leverage their respective positions in the Internet ecosystem in order to gain advantages over their competitors," Kouroupas wrote. "The ultimate result would be to skew the development of broadband competition while undermining the interests of consumers in obtaining the Internet content that they want, when they want it."

Comcast declined to comment on the Global Crossing filing.

A move by the FCC to broadly regulate Internet connectivity pricing likely would be challenged by cable and telco providers. Indeed, Verizon is contesting the agency's network neutrality rules on the grounds that the FCC is overstepping its statutory authority.

According to Global Crossing, broadband providers have a "termination monopoly" for their customers, just like CLECs and wireless carriers. That means content owners or network providers sending traffic to end users on those networks have no alternative but to deliver it through the chosen broadband provider.

"The predicament faced by parties that send traffic to a broadband ISP's subscribers today is substantially similar to those which the Commission has not hesitated to remedy in the past," Kouroupas said.

Global Crossing also addressed Verizon's characterization of the Internet in January comments to the FCC. Verizon sided with Comcast in arguing that traditional Internet peering relationships have worked to date, and that Level 3 was seeking to disrupt a "well-functioning and pro-consumer marketplace."

Kouroupas countered that "the historical cooperative practices that formed the Internet are breaking down and being replaced with more commercially driven tactics such as charging for access to last-mile facilities."

Whereas the Internet was a "network of networks" several years ago, with different providers performing different functions, today several large carriers have integrated end-to-end networks that span last-mile access, backbone and CDN services, Kouroupas said.

Global Crossing's letter summarized a Feb. 3 meeting between company executives and FCC staff members from the Wireline Competition Bureau and Office of Strategic Policy. The filing is available here:

Bermuda-based Global Crossing provides data and voice services to corporations and 700 telcos, mobile operators and ISPs in more than 700 cities worldwide.