level3Level3 says Verizon could fix the congestion problems the companies have been arguing over by spending “a few thousand dollars” per 10 Gbps of traffic from Level3.The comment came in a blog post from Level3 Vice President of Content and Media Mark Taylor in a blog post penned in response to a Verizon blog post saying Level3’s network was the congested one, not Verizon’s.

The Verizon post was made in response to accusations by Netflix that congestion on the Verizon network were degrading the quality of Netflix content streamed to Verizon broadband customers. Netflix uses Level3 and at least one other network operator to deliver its content to Verizon and other broadband providers.

Verizon’s post included a diagram showing its Los Angeles area network and indicating that traffic levels were well below 100% everywhere in that network but showing that the connection to that network from Level3 was at 100% at peak times.

Taylor argued that Level3’s network is just as uncongested as Verizon’s. “The bit that is congested is the place where the Level3 and Verizon networks interconnect,” he said.

Based on what is portrayed in the diagram, Taylor said, “Verizon has freely admitted that it has the ability to deliver lots of Netflix streams to broadband customers requesting them, at no extra cost. But, for some reason, Verizon has decided that it prefers not to deliver these streams, even though its subscribers have paid it to do so.”

Taylor’s argument about the few thousand dollars seems oversimplistic. If capacity at the exchange point is increased, more traffic will flow onto Verizon’s Los Angeles network, which means capacity would need to be increased throughout that network.

Of course, that’s the solution that’s ultimately needed to ensure that Verizon broadband customers who use Netflix have a quality experience on streaming content. Verizon says Netflix or Level3 should pay interconnection fees because they send more traffic to Verizon than they receive from it. Those fees would help cover the infrastructure upgrade costs and are in keeping with standard industry practices, Verizon says.

The Peering Dispute
Level3 argues that because it has incurred the expense of bringing traffic from Netflix to Verizon’s network, Verizon should cover the cost of delivering traffic from the interconnection point to its broadband customers.Level3 says that’s what other broadband providers do and that it pays almost no interconnection fees. The company has suggested that Verizon and other broadband providers are demanding interconnection fees because they are looking to protect their own pay TV businesses.

What complicates matters is that Netflix isn’t a typical traffic source. Numerous studies have shown that it comprises a huge proportion of total Internet traffic. Should Verizon upgrade ports to support one Netflix transport provider when Netflix could switch to a different one tomorrow? And assuming network costs ultimately are passed on to customers, should Verizon customers that don’t use Netflix be forced to pay those extra costs when they don’t use Netflix?

Also complicating matters is the fact that Verizon is both a broadband provider and an Internet backbone operator. Do backbone operator traditions about traffic exchange apply when traffic is not exchanged deep in the network but instead is delivered to the backbone operator/ broadband provider’s local network?

These are tough questions and although IP interconnection issues typically have been resolved among industry stakeholders, those stakeholders increasingly are looking to the FCC for answers. So far the commission has said its plan is to examine existing contracts. Level3, however, has asked the FCC to put rules in place about when network operators can and cannot charge interconnection fees.

Imposing such rules would be a really big move that also could set a precedent that could impact VoIP traffic exchange – another thorny issue that will have to be addressed as part of the planned TDM-to-IP transition.

Like it or not, Level3 and Verizon have become the standards-bearers on these issues – and undoubtedly we have not heard the last from either of them on this topic.

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One thought on “Peering Dispute: Level3 Says Fix Would Cost Verizon A Few Grand Per 10G

  1. Your own arguments are disingenuous when you consider that the incremental interconnection costs are pennies per subscriber ONE TIME (at most maybe a dime and that would be high) whereas Verizon and other edge access providers charge $40-70 MONTHLY for access that has been driven by demand from the edge for this content from the core. So that's $500-$900 ANNUALLY PER SUBSCRIBER compared with A DIME ONE TIME.

    Let's start having some objective analysis and reporting please. But please let me know what your analysis says if mine is incorrect.

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