Tuesday, December 14, 2010

Level 3 vs. Comcast (your update)

Some of you guys have a far better understanding of the dispute between Comcast and Level 3 than I do, so let's go to the phones, to to speak, and hear from you.

First, from Skip Key, who is more willing to dig into documents for a clearer understanding of something than anyone I know:
This wasn't really a surprise, and honestly, even leaving out the whole 'comcast doesn't want competition' angle it was the correct thing for them to do. And in fact, due to antitrust concerns, quite likely didn't have much to do with the competition angle at all.

See, the Internet, as you know, is a series of tubes, and you don't connect a small tube on one end to a big tube on the other...

No, seriously, essentially all of the backbone providers have peering agreements with each other, where they don't charge each other to route traffic to each other. But the base assumption of all of the free peering agreements is that the traffic on both sides needs to be equal in both directions, otherwise one side is leeching from the other. When Level 3 signed a new deal with Netflix, that essentially broke the deal, the traffic was going to be one-sided. So Comcast, as a backbone provider, has to do this - Level 3 does the same thing with other folks who peer with them who become net leeches. Here's an example from 2005:
Level 3 and Cogent

There are probably other examples where Level 3 has done the same thing that I could find if I searched longer.

Other industries do the same thing - consider railroads for example. A railroad company like BNSF does not own all of the tracks that its trains travel across. Nowhere near all, in fact. What the railroad companies do is have peering agreements with each other where they charge basically by the car. But as a general rule things tend to work out with the big companies, they're just about even in terms of traffic with each other, but for a smaller company the charges can become quite significant. This was one of the driving forces behind the railroad consolidations in the early 20th century, I think.

So what's going to happen? Well honestly I expect Netflix will end up signing agreements with most of the backbone providers and just pay them directly. So there'll be a netflix hub on L3, on Comcast, on AT&T, etc. That will help everyone, as the routes will be shorter. but it'll take them awhile to get there, probably a few years.

He also sent in a later update:
Comcast had been allowing a 2-1 ratio without charging, but that L3 wanted to go to 5-1.

Now, as Skip mentioned Cogent, let me now present an alternative view sent in by Garth Pricer:
Cogent wanted to send traffic across Level 3’s network to 3rd parties. That was actual transit data. Level 3, on the other hand, is just delivering data to Comcast’s customers within Comcast’s own network, a service for which Comcast is already being paid.

Lastly, a series of links from Richard Lawler if you want to explore this issue further:
There's been a bit more development since that initial press release:
FCC looking into Comcast / Netflix blocking threat

I've got most of the info there including Comcasts (incredibly specific) letter to the FCC. Of course it all depends on who you believe, but it seems like this is more about Level 3 trying to undercut its competition than ISPs vs Netflix, at least so far. they had one type of agreement, and tried to switch to another without renegotiating first. This is another take on it:
Video – Level 3 versus Comcast peering dispute
vs. a counter opinion
Level 3's Lower Cost Comes From Owning The Network, Not Free Peering
The Real Issue In Comcast's Dispute With Level 3 Is About Power, Not Money

Lots of interesting reading there, if you're so inclined.

Site Meter