It’s been two years since Level 3 and Comcast got into a tussle over Internet traffic exchange — and the matter still has not been resolved. But Level 3 today gained an endorsement of sorts for its peering policy from TW Telecom, which has reached an agreement with Level 3 that will enable the carriers to exchange traffic with one another at no charge. According to Level 3 the agreement is the first the company has made with another network operator under its most recent IP traffic exchange policy.

“Level 3 is in discussions with Comcast towards what we hope is a resolution of our dispute . . . and we are pleased to have announced this morning our ‘bit-mile balanced’ peering contract with TW Telecom Inc.” said Level 3’s general counsel for regulatory policy Michael Mooney in a statement provided in response to an inquiry from Telecompetitor. “We hope this is the first of many such agreements consistent with our IP Traffic Exchange Policy.”

Level 3 carries Internet backbone traffic for numerous companies focused on Internet video streaming, including Netflix, MLB, and Akamai/Limelight. In addition the network operator handles traffic for HBO’s streaming video offering HBO Go. This means Level 3 tends to deliver more content to certain other Internet backbone operators than it receives from them. As Internet video streaming has taken off, residential broadband customers of companies such as Comcast typically receive more traffic from Level 3 than they send to it.

Two years ago, Level 3 accused Comcast of breaking Net Neutrality rules by declining to upgrade the speed at which the companies interconnect to support the increased volume of traffic from Level 3. Companies like Comcast that offer their own paid video services undoubtedly are less than thrilled with customers watching video on the Internet for free, so it’s not surprising that they might not be eager to upgrade their network connections for the purpose of better supporting the shift toward Internet video.

Level 3 now is apparently hoping that its IP Traffic Exchange Policy will address issues such as these. In the policy document, Level 3 says it will consider exchanging Internet traffic at no charge with other network operators only if certain conditions are met. In the statement provided to Telecompetitor, Level 3 emphasized the importance of one particular requirement, which is based on the concept of the “bit mile” – which is the number of air miles each party’s network carries Internet traffic exchanged with one another multiplied by the number of gigabits carried.

“The bit-mile peering approach, which measures both the volume of traffic exchanged and the distance over which that traffic is carried by each network, enables continued growth in the content and applications that consumers and businesses are increasingly relying on by securing equitable and settlement-free IP interconnection arrangements, provided that both networks carry approximately the same bit-miles of data,” said Mooney. “Such a model promotes efficient, high-quality service for customers, while simultaneously ensuring a balanced cost burden across each network.”

Other conditions for free peering detailed in Level 3’s traffic exchange policy include requiring the other party to have a backbone network node in at least six of the nine U.S. Census Bureau divisions in the U.S.; to interconnect at mutually agreeable geographically diverse points in at least five of the Census Bureau divisions including at least one city on the east coast, one in the central region and one on the west coast; to announce only routes for paid traffic exchanged with its customers; to have network management capabilities to enable the balancing of bit miles across the networks and more.

It’s important to note that TW Telecom is a competitive carrier focused primarily on the business market. Accordingly it is unlikely to have the same level of video streaming traffic that a residential broadband provider such as Comcast would have.

I’m sure Telecompetitor won’t be the only one waiting to see if Level 3 announces any settlement-free IP traffic exchange agreements with any residential broadband providers. Clearly there is a lot at stake here and it would be interesting to see what Telecompetitor readers think about this issue.