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Schaeffer’s ‘Cogent’ Argument

6/29/2015 8:00 AM Eastern

Cogent CEO Dave Schaeffer’s message to Internet-service providers is clear: Deal with them on interconnections, and get a backbone — literally. He talked with Multichannel News Washington bureau chief John Eggerton about that new, Federal Communications Commission-supplied negotiating leverage.

 

MCN: You have been critical of some ISPs over interconnection issues. Have you filed any complaint yet under the new rules?

 

Dave Schaeffer: No, we have not and I sincerely hope we don’t have to. We hope that all the parties will adhere to the open Internet order and the principles in them and enter into negotiated agreements.

 

MCN: How long will you give them before you go to the FCC?

 

DS: I can’t answer that question. It is all relative to how the discussions are going. It is inappropriate to set a deadline.

 

MCN: What are your issues with interconnection?

 

DS: We operate a global network. We only sell Internet services. For 24 years, the commercial Internet has practiced a bill-and-keep model. It is only over the past couple of years that some terminating IPSs that have a monopoly or duopoly position have tried to alter that model and tried to get payments both from their customers and from parties wishing to reach their customers. We are the ones who are doing more bit miles for less revenue.

 

MCN: Do you have numbers to back that up?

 

DS: We carry bits for about 1/100th of the amount of revenue per bit mile as Comcast does. They have used their market power to try to extract tolls from us and their customers and I think what the new rules have done is create a dynamic where they need to behave and be a market participant.

 

MCN: What do you define as “behaving? What do they need to do to keep you from filing a complaint?

 

DS: It depends on the company. … In the case of Comcast and Time Warner, those two companies have used their current market size to get a free ride, to force us and other backbones to connect to them without building a global backbone. * So I think they should be required to do one of two things: build a backbone and then interconnect with other networks and therefore get a free ride, or they should be forced to buy transit from a backbone if they choose not to build it.

 

In fact, all of their smaller peer group, Charter, Cox, Cablevision, have been great actors. They have had sufficient interconnection capacity and they have chosen not to build a backbone but to buy transit from me and my competitors.

 

MCN: Did you say that negotiations were going well since the FCC rules came out?

 

DS: No, I have just said there are ongoing negotiations and the pace of those and quality of them have improved. I did not characterize them as going well. Just going better than they were.

 

MCN: The FCC has historically taken its time to resolve complaints. Are you confident the FCC will move quickly on any complaints?

 

MCN: I am. There is some precedent in the enforcement bureau of these complaints being adjudicated within 150 days. The type of complaint process would be similar to ones involving license transfers, and they typically have been concluded within that time frame.

 

[*Time Warner Cable declined comment on that characterization, but a Comcast spokesperson said: “The market for transit services is incredibly robust and the cost of transit has gone down by more than 99% in the past decade. Comcast has invested in an advanced network backbone to serve customers across the country. One of the many functions of the backbone is to interconnect with other networks that deliver Internet traffic. Our interconnection practices are fair, public, transparent, and consistent with industry norms. We find mutually acceptable solutions with interconnect partners through a variety of contractual relationships.”]

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