Policy

Net Connection Spat Plays On

12/13/2010 12:01 AM Eastern

Who should pay the freight for Internet-delivered
video: Last-mile broadband providers or content owners?

That’s the question at the heart of the simmering dispute
between Comcast and Level 3 Communications over
interconnection fees.

Internet-services provider Level 3 stirred up the fracas
two weeks ago, griping in a Nov. 29 press release that
Comcast was erecting a “toll booth” on the Internet by
demanding payment to deliver
additional traffic, after Level
3 landed a contract to be a primary-
content delivery network
for Netflix. Level 3 accused
Comcast of violating networkneutrality
principles.

In response, the cable operator
said Level 3 was asking to
dump twice the amount of traffic on its network without paying
customary CDN fees.

Level 3 president and chief operating officer Jeff Storey
explained that the company objected to Comcast’s
effectively asking for payment for local interconnections
to the MSO’s network — which he said was different from
backbone-peering relationships.

The crux of the dispute is that Comcast now wants to
charge for access at the local-network level, according to
Storey, who spoke at the UBS Global Media & Communications
conference.

“If I were handing traffic to Comcast in New York for delivery
in San Diego, I would expect to pay for that,” Storey
said. “But that’s not what we’re doing … We spent billions
of dollars to get in [the CDN] business and expect to use
that infrastructure in an efficient way.”

Level 3 said it has offered and continues to offer to use
its own network backbone to carry content to the edge of
Comcast’s local Internet-access markets, but that the MSO
has refused the offer.

According to Comcast ,
though, the central issue is
the enormous disparity in the
amount of traffic exchanged between
the two companies. Level
3 now expects to deliver five
times as much traffic to Comcast
— to a total of 500 Gigabits
per second — as the MSO sends
to Level 3.

“In some situations, Comcast
has content and CDN customers sending traffic requested
by Level 3 customers, and in some cases, the situation
is reversed,” Joe Waz, Comcast senior vice president for
external affairs and public-policy counsel, wrote in a blog
post. “We’ll say it again: So long as the traffic is in rough
balance, this is not an issue; where it is significantly out of
balance, settlement-free peering is not appropriate.”

Industry analysts have sided with Comcast’s version of
the dispute as revolving around business terms, not network-
neutrality issues.

“In our view, Comcast
is not discriminating
against this type of traffic;
rather, it is simply requiring
Level 3 adhere to the
same type of commercial
arrangement as the other
CDNs it works with,”
Citadel Securities analyst
Vijay Jayant wrote in a research
note.