Updated: A Play by Play on the Comcast & Level 3 Spat

Updated: A fight between Comcast, the nation’s largest ISP, and Level 3 (s lvlt), the nation’s largest broadband backbone provider, is portrayed as a simple commercial disagreement over how much traffic Level 3 plans to send Comcast (s cmcsa) after Level 3 signed an agreement to act as the content delivery network for Netflix. But many believe it has the potential to change the way the web works. Over the next few hours and days, many people will weigh in on the issue and many new insights will be shared. We’ll document them here so our readers can see the story as it emerges, so check back for updates and insights as they hit our inboxes.

Nov. 29:

Level 3 issues a statement claiming Comcast is charging it for delivering movies and video content to Comcast subscribers, a fee that Level 3 likened to placing a toll bridge on the Internet. Comcast later came out and said that Level 3 was trying to take advantage of its peering agreement with Comcast to undercut other CDNs and that the dispute was essentially a commercial one. Netflix and the Federal Communications Commission are silent on the issue.

Nov. 30:

Commentary on the web accelerates with some accepting the commercial disagreement argument, and others seeing in the move a chance to implement a double-sided revenue model for ISPs that would allow ISPs to collect revenue not only from the end consumer of broadband, but also the folks trying to send the traffic over the ISP’s pipes. Meanwhile, Netflix is still silent, but it likely didn’t see this fight coming.

In a press conference the FCC Chairman Julius Genachowski declined to comment on the issue but said, “The staff is looking into it.”

Level 3 Responds to Comcast’s statement with a new statement that scoffs at the idea of this as a peering dispute and portrays it again as Comcast being anticompetitive. The statement reads in part:

The fundamental issue is not whether Comcast sends more traffic to Level 3 or whether Level 3 sends more traffic to Comcast. Both Level 3 and Comcast are responding to the requests of Comcast’s subscribers, who want to be free to see and use the full suite of content and applications that are available on the Internet today and in the future. Level 3 wants to assure that freedom is preserved.

”Instead, the fundamental issue is whether Comcast, as the largest cable company in the country with absolute control over access to its cable TV and broadband access subscribers, has the right to unilaterally set a ‘price’ for that access that effectively discriminates against competitors of Comcast’s cable and Xfinity content.

Update 1: Comcast tries to help its position by posting a video on how peering works. It’s also filed a letter with the FCC defending its position that detailed its past relationship and proposed new relationship with Level 3. According to Comcast, prior to this dispute Comcast provided Level 3 with 27 interconnection ports under its peering agreement. Then, after Level 3 signed its agreement with Netflix, Level 3 asked for more. From the letter (PDF):

The parties’ current interconnection facilities[3] could not begin to support that type of traffic flow. As a result, Level 3 approached Comcast approximately two weeks ago (shortly after reaching their Netflix agreement, we later learned, although they made no mention of it at the time) and demanded 27 to 30 new interconnection ports, which would allow them to send a much greater amount of traffic onto Comcast’s network.[4] To that request, Level 3 added the following twist: it insisted that Comcast should provide it with all those new facilities – and support this vast new influx of traffic – for free.[5]

Comcast was able to scramble and provide Level 3 with six ports (at no charge) that were, by chance, available and not budgeted and forecasted for Comcast’s wholesale commercial customers. The amount of traffic that would be exchanged over these six ports (and the parties’ preexisting ports) was just barely within the generally accepted bounds of a roughly balanced traffic exchange between the parties. Level 3 accepted those ports, and they are using them right now to send traffic to Comcast’s network.

Bravado aside, Comcast is responding to the FCC’s request for information so it’s answers should be taken seriously. Comcast also brought up the point that Netflix also has a deal to deliver its content though Limelight, so even if Comcast blocks Level 3, Comcast’s subscribers will still get Netflix content from Limelight. Comcast ends the letter pointing out that this is a commercial dispute as opposed to one requiring regulatory involvement.

The National Cable and Telecommunications Association weighs in with its take reinforcing the idea that this is a commercial dispute and something unrelated to network neutrality. And for the deeply nerdy, and researchers thinking about peering and the web, there’s this article from the New York Times earlier this year on the topic of public peering stations as opposed to direct peering arrangements to provide some background on the general topic of peering. Meanwhile, Ars Technica interviews a lot of smart people and comes up with a similar conclusion to mine (although without such a dramatic headline). This is a commercial dispute, but it’s also suspiciously like the beginning of a new way for ISPs to make money off of the content flowing through their pipes.

Updated 2: Dec. 3

Level 3 took Comcast’s video post on peering and fired back with an FAQ of things people should know about the dispute, including the lack of competition in last mile services and how that affects the debate between Level 3 the cable ISP. What’s important to note here is that Level 3 is seeking to change this into a debate about interconnection as opposed to one over peering, with the idea that peering agreements are commercial in nature, while the ability to interconnect lies at the heart of how the Internet works. From the FAQ:

A: No. The dispute between Level 3 and Comcast is not a peering dispute, which relates to connection of Internet backbone networks. At issue is a fundamental interconnection disagreement between Comcast, as a provider of local high speed Internet access to consumers who pay Comcast for access to content, and Level 3, which delivers content to residential broadband access providers like Comcast in response to consumer requests. Unlike “peering” in the Internet backbone, where competition abounds and prices have been declining steadily, Internet carriers that have content requested by Comcast subscribers have no choice but to exchange traffic with Comcast. Comcast is using this dominant position to demand payment for traffic delivered at its customers’ requests. You simply cannot “route around” Comcast to provide requested content to Comcast’s subscribers.

Level 3 in its FAQ is arguing what I argued earlier– namely that Comcast is abusing it’s position as a last mile provider to may Level 3 pay Comcast money to deliver content on behalf of Level 3’s customers. Unfortunately, without more information, such as how much Level 3 is paying to Comcast or how much less Akamai (s akam) may be paying to Comcast after losing the Netflix account, it’s hard to get to the actual truth behind this battle of rhetoric. Meanwhile, Comcast, offered a much shorter reply that basically says Level 3 is still wrong and Comcast won’t cut off people’s Netflix. For more on this, check out a Daniel Golding’s guest post for us that lays out some of the issues involved in a peering dispute.

Update 3: Dec. 7
And the sniping continues with Comcast posting its own FAQ’s in response to those LEvel 3 issued on Friday, basically continuing it’s line of reasoning that Level 3 is gaming the system by calling itself a CDN for customers and then trying to arrange for peering with Comcast. The format is exhausting, with Comcast quoting Level 3’s questions and then providing a refutation. However, in this type of he-said-she-said debate it’s the things we don’t yet know that will likely decide this issue, as opposed to either side’s spin.

Check back for more.

Edit Note: This post was originally published on Nov. 30 at 12:40, and has been periodically updated since then with new information.
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