Verizon: Level 3's Net-Neutrality Charge Against Comcast Is Specious

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Verizon Communications is siding with Comcast in urging the Federal Communications Commission stay out of the MSO's dispute with Level 3 Communications over Internet interconnection fees, saying the standoff is decidedly not about network-neutrality issues.

"The Commission should reject Level 3's efforts to upset the well-functioning and pro-consumer marketplace that exists today by interjecting regulatory involvement in place of true, market-based negotiations for interconnection of networks," Ian Dillner, Verizon's vice president of federal regulatory affairs, wrote said in an ex parte filing Thursday with the FCC.

Level 3 has argued that the FCC's Open Internet Order, adopted by the agency Dec. 21, forbids Comcast and other retail broadband providers from charging a fee to deliver content to their customers. Level 3, which picked its fight with Comcast after landing a contract as one of Netflix's primary content delivery network providers, is considering challenging Comcast on network-neutrality grounds.

Comcast has rejected Level 3's position as a disingenuous ploy to avoid paying interconnection fees under long-established rules of the road among ISPs -- and Verizon, a fierce cable competitor, agrees.

"[A]ll of the information disclosed publicly by the parties suggests this involves a run-of-the-mill commercial negotiation over the terms of a peering arrangement in which one party now seeks to obtain a negotiating advantage by converting the negotiation into a regulatory dispute," Dillner said.

In addition, Verizon said, "Level 3 has endeavored to convert its dispute with Comcast into a net neutrality issue even after the Commission concluded that 'content delivery network services,... hosting or data storage services, or Internet backbone services,' among other things, are outside of the scope of its new rules."

But Level 3 has countered that any fees Comcast assesses on Level 3 or other independent backbone carriers are effectively the same thing as charging content companies for reaching consumers, which the FCC's network-neutrality rules explicitly prohibit.

"A toll on independent content levied on a ‘backbone carrier' presents exactly the same discrimination or gate-keeping issues as a direct toll on the edge providers themselves," Level 3 executive vice president and assistant chief legal officer John Ryan said in a Jan. 1 filing with the FCC. "It is precisely this interconnection arrangement that Comcast seeks to use as its tool to extract a toll. And it is this interconnection which Level 3 must exclusively obtain from Comcast since there is no way to bypass or ‘route' around Comcast, or otherwise reach Comcast's consumer customers."

Level 3 has cited the FCC order itself, which says: "To the extent that a content, application, or service provider could avoid being blocked only by paying a fee, charging such a fee would not be permissible under these rules."

However, according to Comcast, the cable operator is not discriminating or seeking to charge based on the type of content Level 3 is delivering -- calling Level 3's "professed concern" for the rights of video distributors "disingenuous" in a Dec. 29 ex parte filing. Rather, the company said, Comcast is looking to fairly splits the costs of given a highly asymmetrical traffic load, in accordance with Internet peering conventions.

Verizon's Dillner pointed out that Internet networks generally enter into settlement-free arrangements only when the traffic flows between the networks are roughly in balance: "Where the traffic ratios are significantly asymmetrical, it is common for one provider to pay for the exchange of traffic, either through paid peering or transit, or some other exchange of value."

Indeed, Dillner alluded to similar disagreement between Level 3 and network provider Cogent Communications in October 2005, in which Level 3 cut off its connectivity to Cogent because of an imbalance of traffic. At the time, Level 3 accused Cogent of "trying to get a free ride on someone else's network."

Level 3 itself previously complained about announced that it would discontinue a settlement-free peering arrangement with Cogent where Level 3 found that the relative exchange of value did not justify such an arrangement, Dillner said..

"If Level 3 were successful in its attempt to obtain artificial advantages for itself, it would severely undermine the current regime that has ensured that the Internet continues to operate efficiently and respond to the continuing growth in demand," Dillner wrote.

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