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Backbone Policy

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DARPA built the 1st backbone: The ARPANet.
NSF built the 2nd backbone: The NSFNet.

While there is no direct regulation of the Internet backbone by the Federal Communications Commission, the issue of the Internet Backbone has been an issue is several proceedings before the FCC.  Internet backbone policy issues include

  • Market consolidation - an issue considered in the merger proceedings
  • Peering and transit
    • Whether dominant providers have the power to exclude smaller players from peering, forcing them into transit arrangements,
    • Whether telecommunications settlement regimes should be imposed on Internet peering (this is also known as the ICAIS debate
    • Internet backbone bandwidth investment, and
    • Quality of Service arrangements where major providers attempt to keep you on their network by guaranteeing QoS on-network but no such guarantees if you leave the network.  Backbone providers may have the incentive to improve their facilities on their own networks but neglect the border facilities that interconnect them to tier 2 or tier 3 networks.  If the border routers are neglected, the quality of service when traffic leaves the backbone is further deteriorated.  This leads to a consideration where these tensions could lead to a balkanization of the backbones into several islands of high quality of service on-network but low service quality otherwise.

The most significant FCC proceedings to date to address backbones have been merger proceedings where approvals of mergers have been conditioned on carriers divesting themselves of some portions of the Internet backbone. 

  • This issue originally came to a head was the MCI Worldcom merger proceeding where MCI was required to divest itself of its Internet backbone - Worldcom retained its Internet backbone services administered through its subsidiary UUNet.  The MCI backbone facilities were sold off to Cable and Wireless.
  • In 2000, the MCI Worldcom Sprint merger application was withdrawn by WCOM when the US Dept of Justice decided that it would seek to block that merger.  The Dept of Justice stated:

    WorldCom's wholly owned subsidiary, UUNET, is by far the largest Tier 1 IBP by any relevant measure and is already approaching a dominant position in the Internet backbone market. Based upon a study conducted in February 2000, UUNET's share of all Internet traffic sent to or received from the customers of the 15 largest Internet backbones in the United States was 37%, more than twice the share of Sprint, the next-largest Tier 1 IBP, which had a 16% share. These 15 backbones represent approximately 95% of all U.S. dedicated Internet access revenues. UUNET's and Sprint's 53% combined share of Internet traffic is at least five times larger than that of the next-largest IBP. The Herfindahl-Hirschman Index ("HHI"), the standard measure of market concentration (defined and explained in Appendix A), indicates that this market is highly concentrated. The HHI in terms of traffic is approximately 1850; post-merger, the HHI will rise approximately 1150 points to approximately 3000. (Note: Throughout the Complaint, market share percentages have been rounded to the nearest whole number, but HHIs have been estimated using unrounded percentages in order to accurately reflect the concentration of the various markets.)

DOJ Complaint ¶ 32.  More Info. 

  • The Bell Atlantic GTE merger proceeding (2000) was approved by the FCC on the condition that GTE spin off its Internet backbone service which is now known as Genuity.  This divestiture was required in order for Bell Atlantic to remain in compliance with Sec. 271 obligations.  Bell Atlantic / GTE now do business as Verizon. More Info.
  • 2006: AT&T/BellSouth Merger: as a condition for the approval of the merger, the firms pledged to "maintain at least as many discrete settlement-free peering arrangements for Internet backbone services with domestic operating entities within the United States as they did on the Merger Closing Date"

The FCC's Network Reliability and Interoperability Council (NRIC) expanded the scope of its work with NRIC V to include packet based telecommunications.  Study Group IV of NRIC V addresses interconnection and peering.  In June of 2001, this study group recommended to NRIC that Internet backbones should publish their peering policies.  Statement of NRIC V FG4 on Internet Peering. June 2001 Letter from FG4 to Jim Crowe, Chair of NRIC June 21, 2001.  While this is merely a recommendation letter of the advisory group, it is noteworthy that the subject matter is considered properly within the scope of an FCC advisory council.

Incumbent Local Telephone Companies (Incumbent Local Exchange Service or ILECs) have also tried to raise the issue of the Internet Backbone in their arguments before the FCC.  The Telecommunications Act of 1996 sets for the policy goal of introducing competition into the local telephone market.  The problem was how to persuade the local telephone monopoly to give up its grip on the market.  The solution created by the 1996 Act was a carrot - the ILECs were be permitted to enter the lucrative long distance telephone market only when their local markets were opened up to competition.  The ILECs have argued vehemently against this restraint. 

This is where the Internet backbone comes in.  ILECs have argued that investment in Internet backbone bandwidth is anemic and that we are on the verge of a bandwidth crisis.  They have also argued that there are vast portions of this country that have no direct access to the Internet backbone (even though the entire country now has direct two-way satellite access to the Internet and, in the rural communities, the only ones complaining about this are the ILECs, not the thousands of other ISPs out there).  The ILECs argue that the restraint on entering long distance service should apply to voice service only, and not long distance data, and if they were allowed to enter long distance data, they would solve the Internet backbone problem.

In the first Sec. 706 Notice of Inquiry, the FCC asked whether there was a need for the FCC to get involved in peering issues.  The comments filed reflected rough consensus that the FCC should let the free market work (one dissenting voice recommending FCC action was Bell Atlantic  - now Verizon). The FCC found that investment in Internet backbone was vigorous.  More facilities are being built and those facilities have greater capacity every day.  Furthermore, the FCC found that bits-is-bits.  Whether its voice or whether its data, its all bits and the ILECs don't get the carrot, access to the long distance market, until they fulfill the obligations of Section 271 and open their markets to competition.

The FCC released its second 706 Notice of Inquiry in April 2000.  Even though the FCC did not place the issue of Internet backbone bandwidth on the table, the ILECs nevertheless came back with arguments about an impending bandwidth shortage in the backbone.  In the summer of 2001 it has been widely discussed that there is glut of bandwidth in the backbone market with tremendous amounts of unused capacity. "We conclude that there has been ample national deployment of backbone and other fiber facilities that provide backbone functionality. There is no indication that specific types of areas have inadequate access to backbone or functionally equivalent facilities."

Subsequent Sec. 706 Reports (Third and Fourth Reports) have made only brief mentions of Internet backbones.

In 2001, the Government Accounting Office released Telecommunications: Characteristics and Competitiveness of the Internet Backbone Market GAO-02-16, November 14., GAO 11/14/01 in which the GAO concluded

  • No publicly available data exist to allow a precise economic evaluation of the competitiveness of the Internet backbone market. However, the industry participants we interviewed generally viewed the backbone market as competitive. Several companies that purchase backbone connectivity stated that the market has become more competitive in the last few years. In particular, they noted that the price of backbone connectivity has declined, and the ability of purchasers to negotiate other favorable contract terms has improved.
  • This report makes a recommendation that the FCC periodically evaluate whether existing data collection efforts are providing needed information on the Internet backbone market and, if deemed appropriate, exercise its authority to establish a more formal data collection program.

New policy deliberations have involved network neutrality, and whether backbone networks can discriminate against particular content, applications, or companies.

Statistics

Market Shares of National Internet Backbones [Economidies p 10]
  1997 1999
MCI WCOM (now Verizon) 43% 38%
GTE-BBN 13% 15%
AT&T 12% 11%
Sprint 12% 9%
Cable & Wireless 9% 6%
All Other 11% 21%

 

WhitePapers

Federal Action

FCC NRIC V Focus Group 4

Links

Traffic Reports

  • Internet Weather Report Matrix.net
  • Internet Traffic Report
  • Internet Health Report Keynote
  • Above.net's Real-time Network Status
  • Boardwatch's Director of ISPs (directory of  North American Backbones)
  • Cable & Wireless Peering Policy
  • Schematic of Internet Backbone
  • Sprint Internet Services
  • Telegeography Internet Exchange Point Directory
  • TCG Cerfnet
  • Backbone Topology (PDF)
  • Exchange Points
  • Listing by PCH.NET
  • Public Network Access Points (NAP Listservs)
  • Nap.net Recently acquired by GTE (Network Exchange Points).
  • ColoSource Internet eXchange Points
  • Exchange Point Information
  • Dallas Fort Worth
  • Equinix Dallas IBX
  • MAE Central (Dallas)
  • PAIX Dallas

    • Books

    Notes

    • Boardwatch magazines' Internet Directory reported in 2001 that there were approximately 35 Internet backbone providers (down 6 from the previous years directory). 

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