Award Winning Blog

Monday, November 29, 2010

Comcast’s Demand for a Video Surcharge From its Level 3 “Peer”

According to Level 3, a major long haul Internet Service Provider, Comcast has demanded a “recurring fee” when Level 3 hands off movie and other high capacity video traffic for delivery by Comcast to one of the cable company’s subscribers.  See  This demand warrants scrutiny, perhaps less in the context of Network Neutrality and more in terms of further diversification (unraveling) of the peering process.

I will leave to others the advocacy for and against another Comcast innovation in non-neutrality.  The company must consider its merger with NBC a done deal as it continues to maintain a high profile for provocative actions that raise rates to rivals and subscribers alike.

My interest lies in the evolution of peering, a process that used to be symmetrical and largely uniform between similarly sized ISPs.  Under the old school model, Level 3 would have similar peering agreements with Comcast as with other national cable operators.  Likewise Level 3 would have symmetrical terms for the carriage of its traffic downstream via a “peering partner,” such as Comcast, and for Level 3’s carriage upstream of traffic originated or passed onto Level 3 by Comcast.  So under the old model, if Comcast wants to single out a particular type of traffic for a surcharge payment from Level 3, then all things being equal at least in terms of traffic volume, Level 3 could require a similar payment from Comcast. 
Under the traditional peering model, if traffic volumes are roughly equal, the surcharge Level 3 would have to credit for payment to Comcast would be offset by a roughly equivalent credit to Level 3 for video traffic originated over the Comcast network, or transiting through it. If Comcast unilaterally has demanded and received the right to a video delivery surcharge without a reciprocal payment to Level 3, then Comcast either has eliminated the conventional symmetry in peering, or much more traffic originates or transits through Level 3 networks destined for Comcast subscribers than Comcast hands off to Level 3.  The fact that Level 3 has capitulated to Comcast’s surcharge demand points to a significant imbalance in traffic flow and commensurate negotiating clout.
Much of the Network Neutrality debate has focused on end user access, while peering changes are negotiated agreements about access upstream from end users.  The peering process is obscured by Nondisclosure Agreements and the lack of readily available data on traffic flows.  Comcast may be engaging in a shakedown designed to handicap competitive alternatives to Video on Demand, but the possibility exists that the company is responding to unequal traffic volumes.  We may never know which.

1 comment:

CB said...

If there are unequal traffic volumes I would strongly suggest it is because of their lack of planning, innovation and more importantly follow through with delivering Fiber To The Home (FTTH), something Americans have been promised since the 1990s. ~ FTTH synchronous bandwidth in America today, not tomorrow.

That's okay, Above is a google map showing almost 30 communities that provide FTTH today and have monthly price plans between $28 and $58 dollars for 10Mb/10Mb and 30Mb/30Mb synchronous bandwidth respectively. That's right as much bandwidth (not throttled) upstream as downstream.

Move to one of these communities and it simply does not matter any more what new non net neutrality scheme a provider comes up with in the future...its game over for them and a bright future for you, the smart resident that moved.

When Google adds their five Go Big With a Gig communities, expected in 2011, there will be barely over 30 communities/Cities in the USA where residents can get fiber to and into their home thanks to FTTH!

Any solution other than FTTH is a ponzi shell game and will leave its customer limited, restricted or deprived in some artificial way. American Internet consumers have had enough of that crapola over the last two decades to last a lifetime.

The more important question to ask these anti-business development, un American, bandwidth restricting providers is will your customers forgive you for abusing their TRUST over the last two decades?

Our TRUST was yours to lose, who loses in the long run?