Big peering fight between Comcast and Level3.
"On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider." Level3 is calling this a video surcharge So L3 is pulling out the Net Neutrality card.
Meanwhile, Comcast writes that the trouble stems from Level3 sending it 5x the traffic it sends to Level3. If this is the case, then it requires a commercial negotiation. It requires more than peering; it requires the purchase of transit.
Most of the blog post from Comcast sounds a little too much like a former Ma Bell CEO screeching that Google wants it for free. In this case, I guess Level3 wants it for free. Wants what exactly? Well, video traffic. Video traffic on the Internet is increasing steadily. "A recent study found that at peak times, Netflix represented 20 percent of Internet download traffic in the United States," from a NYTimes article. It just so happens that L3 carries a lot of traffic for its partners like Netflix, Google/YouTube, and more: 9 of the top 10 U.S. cable companies.
What Comcast is really saying is that Comcast customers are downloading 5x times the video that they used to. So Comcast's customers are watching way more video, like Netflix and Hulu, and not buying VOD or PPV or premium cable. Comcast is just trying to make up for the revenue.
The major ISP's are all part of the Duopoly. They have to squeeze someone, because they are already squeezing the consumer.
Comcast customers would have a lousy experience if L3 fought this longer, but so too would L3 customers.
Rob Powell says that he saw this coming and it has nothing to do with Net Neutrality. It may not, but the principle is worrisome.
Susan Crawford thinks that it's bad timing for Comcast as the FCC considers its purchase of NBCU.
"Comcast, the largest broadband provider, largest pay-TV company, and third-largest telephone company in the country, distributes communications services to more than a third of the country. Today, Comcast's existing overwhelming market power was on display in major public battles with (1) Level 3 and (2) cable modem manufacturer Zoom," writes Crawford, a law professor and former tech advisor to President Obama.
She missed the carriage dispute with DISH Network, whereby DISH dropped 3 Comcast regional sports networks. Could it be that Comcast is getting "too big to fail"? I'm not anti-business. I'm anti-monopoly.
Certainly content customers have the upper hand. It used to be about eyeballs, but now its about content. The cablecos develop content and have delivery systems in place for that content. Telcos are mainly just dumb pipe. It's going to be a very uneven playing field very soon.
For those interested Rob Friedman goes into the evolution of Peering based on this story.