First Coffee for October 8, 2005

David Sims : First Coffee
David Sims
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First Coffee for October 8, 2005

By David Sims

The news as of the first beer this afternoon, and the music is Brewed In Texas: The Original Texas Happy Hour:

Hey, how about those defendin’ World Series Champion Boston Red Sox, huh? Must’ve thought it was a seven-game series and they still had more than enough time. Either that or they were under the misapprehension they were playing the New York Chokees again, against whom an 0-3 deficit means “You’ve got the series in the bag.”

Here’s Sureel Choksi, executive vice president of Level 3 Communications putting into words Level 3’s side of the story in response to inquires it has received concerning its discontinued peering relationship with Cogent Communications

… what’s that? Oh, this past Wednesday Level 3 “pulled the plug on shared Internet traffic from Cogent on Wednesday,” according to industry observer Dan Neel, rendering “tens of millions of IP addresses unreachable by Cogent customers, according to one partner affected by the outage.”

Tom Snyder, COO of Xantrion, an Oakland, Calif., consultant and MSP told Neel his team “noticed the outage created by the de-peering of the two ISVs and that as many as 45 million IP addresses became unreachable,” in Neel’s words. He said Xantrion was able to spare its customers any long-term impacts by rerouting traffic using failover features in SonicWall firewall products.

But Snyder said Level 3 even disabled the ability for Cogent traffic to automatically be redirected to alternative routes: “I think that for some reason Level 3 felt they were on the losing side of Cogent's business model. Cogent was underselling them and getting more out of the peering model than Level 3 was getting out of Cogent," Snyder told Neel.

There’s two sides to every story, and here’s Choksi giving Level 3’s side:

“Free peering, also referred to as settlement-free peering, is a contractual relationship under which two companies exchange Internet traffic without charging each other. In order for free peering to be fair to both parties, the cost and benefit that parties contribute and receive should be roughly the same. The previous arrangement with Cogent was a contractual agreement that, when entered into, met that criteria.

“Over the last six months, our operating subsidiary has assessed all of our relationships to determine whether or not settlement-free peering is still appropriate. We determined that the agreement that we had with Cogent was not equitable to Level 3. There are a number of factors that determine whether a peering relationship is mutually beneficial. For example, Cogent was sending far more traffic to the Level 3 network than Level 3 was sending to Cogent’s network.

“It is important to keep in mind that traffic received by Level 3 in a peering relationship must be moved across Level 3’s network at considerable expense. Simply put, this means that, without paying, Cogent was using far more of Level 3’s network, far more of the time, than the reverse. Following our review, we decided that it was unfair for us to be subsidizing Cogent’s business.”

Sounds fair so far. So why the problems? More from Choksi:

“The arrangement with Cogent was terminable on 60 days’ notice. On July 18, we sent Cogent a letter informing them of our intent to terminate the agreement and stop the free exchange of Internet traffic. On August 31, we sent a second letter to Cogent’s management regarding our plans and advised them to make appropriate arrangements to prepare for the termination of our agreement.”

Level 3, going the extra mile: “We then contacted Cogent senior management to offer to discuss alternative commercial terms to allow the continued exchange of traffic. Cogent refused. Subsequently, we had a discussion with Cogent’s CEO, David Schaeffer, to again advise him of the impending termination. Despite more than 75 days of advance written notice of the termination of our agreement, Cogent apparently failed to notify its customers or make any business plans to prepare for disconnection.”

Ah, the old I-told-you-I-was-gonna, I-didn’t-think-you-really-would deal. What happened to the customers, who usually take such tiffs between suppliers in the shorts? They took it in the shorts:

“On October 6, Level 3, as it had repeatedly advised Cogent it would, terminated free traffic exchange with Cogent. Because Internet users, apparently without notice from Cogent and through no fault of their own, have been impacted, Level 3 has, effective immediately, re-established a free connection to Cogent. In order to allow Internet users to make alternative arrangements, we will maintain this connection until 6:00 a.m. ET, November 9, 2005. The effectiveness of this arrangement of course depends on Cogent’s willingness to maintain their side of the traffic exchange.”

But, good guys they are, Level 3’s willing to see it their way:

“Over the next 30 days, we will work diligently to help assure Internet connectivity is available to all users on a fair and open basis. Further, as has always been the case, we are willing to work with Cogent to reach a contractual arrangement that is equitable to both parties. If this is not possible, we expect that Cogent will make arrangements with one of the numerous alternative carriers currently offering such services.”

Remember when First CoffeeSM said there are two sides to every story? That’s right, it’s a saying we came up with ourselves in the course of writing this column, please feel free to use it yourself but do give credit to First CoffeeSM for originating it and send $19.95 c/o this newspaper every time you use that phrase. Thank you for your support. Anyway, here’s Cogent’s side, put forth by CEO Dave Schaeffer:

“We feel this situation can easily be resolved without more impact to the customers of either companies. The seriousness of the situation has been made abundantly clear, and for the sake of Internet users, Level 3 should turn the connection back on and both parties should sit down at the table to discuss the situation.”

“Either companies?” Sounds like it’s your customers being impacted, Dave, unless that’s some sort of a veiled threat. “For the sake of Internet users?” You mean “for the sake of Cogent’s financial situation?”

“In fact,” Schaeffer said, “Cogent is willing to offer Level 3 free Internet service across our network to help alleviate their financial situation while also discussing appropriate traffic ratios. Cogent feels allegations of inappropriate traffic ratios have been incorrectly articulated by Level 3. In fact, it is Level 3 who requested that Cogent send more traffic across their network since Level 3 charges by the bit, and increased traffic flow helps them financially."

In other words, just keep the juice flowing and let’s negotiate, because as long as we’re negotiating the juice is flowing. Sort of like North Korea’s position in these ludicrous six-nation nuclear talks: Just keep talking while what’s going on to our advantage keeps going on.

Anyway, that’s how it all sounds to First CoffeeSM. One way to get a good feel for who’s in the right and who’s in the wrong in these sorts of things is to watch for one side giving specifics of the orignial working agreement and the other side not talking about that a whole lot. Plus there’s just something that strikes First CoffeeSM’s antenna that says Cogent needs to smell the coffee. It might be lines like this, from Schaeffer:

“There is no situation that prevents [Level 3] from turning on the connection other than a mindset that is willing to sacrifice customer connectivity at this time. Cogent feels that Internet users deserve better treatment while this situation is ironed out.”

No situation, except the one Choksi outlined in detail. It sure sounds like Cogent’s getting some free capacity out of Level 3, and in fact they had a similar complaint lodged against them by AOL a few years ago. Cogent said Level 3’s just trying to strong-arm it into raising its $10 per megabit price a little closer to the $60 market average.

Bottom line, however comfortable Cogent had gotten with the existing arrangement with Level 3, it appears Level 3 did in due time inform Cogent that they were going to shut it off, for whatever reason it appears it was their business right to do so however that skins Cogent’s cat. Cogent thought they were bluffing and bluffed back, not believing Level 3’d really dare to shut down part of the Internet no matter how much of a right they had to do so. Level 3 called their bluff, Cogent got caught backing a bad bet and their customers suffered. That’s how it looks from here.

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