In Re Applications filed by Global Crossing Limited and Level 3 Communications, Inc. for Consent to Transfer Control, Memorandum Opinion and Order and Declaratory Ruling, IB Docket 11-78 (Sept. 29, 2011) (merger approved without conditions on Internet backbones, over objection of XO)
Para 16: "We conclude that the proposed merger is unlikely to result in public interest harms in the provision of transport by Internet service providers (ISPs). We also conclude that, while the merger will result in the loss of one Tier 1 ISP, the record does not support a finding that the merger is likely to result in “tipping” of the Internet backbone market, an increase in prices to supra-competitive levels, or lower service quality.
FN 58: We recognize that there have been changes in how Internet traffic is transported. See Level 3/GCL Reply at 8–11 (arguing that Tier 1 ISPs are subject to new sources of competition). In analyzing the potential public interest harms, however, we have assumed, without defining a relevant market, a “worst-case scenario” in which the transport services offered by Tier 1 ISPs are a distinct category of service."
Level3 acquired a contract from Netflix to deliver Netflix
content. Comcast claimed that this was a change, that Level3
had become the CDN of Netflix, and attempted to impose a
surcharge.
Letter to FCC Chairman Julius Genachowski, From John M. Ryan, Level 3, Feb. 17, 2011~ (responding to Ch. Genachowski's statements during Congressional Hearing, "We also assume that you did not intend to construe the Open Internet Order so as to render it essentially meaningless as a tool to assure continued subscriber access to independent content and applications. As we explained in our letter to you yesterday morning (which you may not have had the chance to read before your testimony), interpreting the Open Internet Order to eliminate Commission review if a dispute is over any service, simply because it is arbitrarily labeled a “backbone service,” creates a gaping hole in the Commission’s ability to preserve openness in the Internet.")
Letter to FCC Chairman Julius Genachowski, From John M. Ryan, Level 3, Feb. 16, 2011 ("Unlike Internet backbone services, which are highly competitive and do not need regulation, ISPs tend to have monopolies on both sides of the equation. On one side, most residential customers have only one or two ways to access high-speed broadband (often only through their cable TV provider). On the other side, content owners have no way to deliver content requested by a consumer other than through the consumer’s ISP. Recognizing this bottleneck and lack of competition, the Commission prohibited ISPs from blocking or placing discriminatory charges on the delivery of content that goes through the ISP to its customers")
Sena Fitzmaurice, Comcast Responds to Level 3's FCC Filing, Comcast Voices (Dec. 17, 2010) ("Level 3 proposes mandatory settlement-free peering for even radically unbalanced traffic -- not only 3:1 or 5:1, but also presumably even 100:1. In other words, to preserve its own business model which may be failing in the marketplace, Level 3 contends that it is perfectly fair to shift all the going-forward costs of sustaining exploding Internet growth onto one network in a two-network arrangement.")~
John Schanz, Comcast Continues Discussions with Level 3 -- Offers to Trail New Solutions, Comcast Voices (Dec. 17, 2010) ("We proposed a mutual and relatively modest investment that would allow us both to better understand the traffic, routing, and economic considerations. We also offered to keep the economics of the existing newly executed agreement at "no cost" until we mutually learned the actual costs of the new approach during this trial.") ~
Level 3, Press
Release, Level 3 Releases Statement to Clarify Issues
in Comcast/Level3 Interconnection Dispute (Dec. 3,
2010)~ ("Comcast has said repeatedly that “this is just a good old fashioned peering dispute” and that Level 3 is just trying to gain “an unfair advantage over its competitors by gaining enormous capacity at no cost to itself.” Comcast’s characterization could not be more misleading. What is truly at stake is whether consumers should have unfettered access to all the content on the Internet without regard to whether that content happens to be owned or packaged by Comcast.")
Level 3 Communications Issues Response to Comcast Statement, Level 3 (Nov. 30, 2010) ~ ("the fundamental issue is whether Comcast, as the largest cable company in the country with absolute control over access to its cable TV and broadband access subscribers, has the right to unilaterally set a ‘price’ for that access that effectively discriminates against competitors of Comcast’s cable and Xfinity content.")
Level 3, Press Release, Level
3 Communications Issues Statement Concerning Comcast's
Actions (Nov. 29, 2010) ("On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider. On November 22, after being informed by Comcast that its demand for payment was ‘take it or leave it,’ Level 3 agreed to the terms, under protest, in order to ensure customers did not experience any disruptions.
")
Press Release, Netflix Signs Multi Year Deal with Level 3 for Streaming Services, Level 3 (Nov. 11, 2010) ("Level 3 Communications, Inc. (NASDAQ: LVLT) today announced that it has been selected to serve as a primary content delivery network (CDN) provider for Netflix, Inc. to support the company’s streaming functionality and to support storage for the entire Netflix library of content. As a result of the deal, Level 3 has accelerated plans to further invest in its CDN capacity. Level 3 will double its storage capacity and add 2.9 Terabits per second (Tbps) of globally available CDN capacity, which is in addition to the 1.65 Tbps that was deployed in the third quarter of 2010.")
Global Crossing FCC Exparte Filing, Presering the Open Internet, GN Docket 09-191 (Feb. 4, 2011) ("We began by addressing Verizon’s characterization of the Internet in its letter of January 13, 2011 to the Commission, noting that the Internet that Verizon describes is at least five years out of date. Verizon is correct that the Internet worked well up until recently precisely because it was comprised of a “network of networks,” each functionally segregated with different carriers performing different functions that when taken together formed the Internet. Today, however, carriers have integrated last-mile access, content, backbone networks, and content distribution networks or some combination thereof....f such practices continue unchecked, the Internet will experience significant disruption as carriers seek to leverage their respective positions in the Internet ecosystem in order to gain advantages over their competitors. The ultimate result would be to skew the development of broadband competition while undermining the interests of consumers in obtaining the Internet content that they want, when they want it.")
AT&T and NCTA Ex Parte Letter, GN Docket 09-191 (Jan. 14, 2011) ("As the Commission’s approach to Internet policy has evolved over the last eighteen months – from a proposed rulemaking on net neutrality, to an inquiry on reclassification, to a net neutrality order – it has consistently emphasized at each step along the way that it has no intention of regulating the highly competitive market for Internet peering and other Internet backbone services.1 Despite the Commission’s repeated and unequivocal pronouncements, Level 3 has been attempting to convince the Commission that its newly announced net neutrality rules do, in fact, apply to Level 3’s dispute with Comcast over the terms of the parties’ peering arrangement.")
Verizon Ex Parte Letter, GN Docket 09-191 (Jan. 13, 2011) ("all of the information disclosed publicly by the parties suggests this involves a run-of-the-mill commercial negotiation over the terms of a peering arrangement in which one party now seeks to obtain a negotiating advantage by converting the negotiation into a regulatory dispute. In any event, it is not a net neutrality issue, and the Commission should decline to inject itself into a business issue that is properly resolved through commercial negotiations.")
Ex Parte Filing of Bradley Bopp, NationalNet, Adam Davenport, Choopa, Randy Epstein, Broadband One, Anton Kapela, CTO, Five Nines Data, Christian Koch, Meebo, Nathan Patrick, Sonic, Phillip Rosenthal, ISPrime, Adam Rothschild, Voxel dot Net, Steve Rubin, Layer 42, Warren T Sands, Rackspace Hosting, Dan Spataro, Net Access Corporation, Richard Steenbergen, nLayer Communications, Kevin Loch, Carpathia Hosting, Mike Leber, Hurricane Electric, Karl Zimmerman, Steadfast, to Chairman Genachowski, GN Docket 09-191 (Dec. 20, 2010) ("Traffic ratios were commonly considered by networks seeking interconnection in the late 1990s, where much of the traffic exchanged was subsequently hauled large distances, with disparities in route-miles traveled and associated costs. In contrast, today, large access and content networks interconnect at a number of carrier-neutral collocation facilities around the country, where technical practices are employed to ensure that data is transmitted to an access network at the location closest to its requesting “eyeballs”. Whether an access network receives traffic at these locations by way of a peering, transit, or customer connection, Comcast’s costs and infrastructure requirements for hauling this traffic back to a subscriber’s residence remain the same.
Indeed, with the exception of Comcast, every major cable telecommunications provider in the United States has established peering relationships with large content sources, predicated on mutual benefit – such as improved reachability and direct capacity, where monetary settlement is not demanded by either party.")
Mrs. {Blackburn.} Excellent. Thank you. Okay. Let us talk about peering and interconnectivity. We know that these arrangements have never been regulated, and the FCC net neutrality order says that the rules do not cover peering. So Mr. Chairman, do you believe the Commission's new net neutrality order and its underlying rules govern the level 3 Comcast dispute?
Mr. {Genachowski.} Well, you said the order says that it doesn't change anything with respect to existing peering arrangements. It applies to Internet access service provided to consumers and small businesses. You are referring to a dispute that is occurring outside the Commission, a commercial dispute. I hope those parties settle it and resolve it but it is not something that we have facts and data on. I do think the order speaks for itself in the way that you suggest.
Mrs. {Blackburn.} All right. Commissioner McDowell, do you believe the FCC has the authority it is claim to govern interconnectivity agreements?
Mr. {McDowell.} Peering?
Mrs. {Blackburn.} Yes.
Mr. {McDowell.} No, ma'am.
Papers
Daniel L. Brenner and Winston Maxwell, The Network
Neutrality and the Netflix Dispute: Upcoming Challenges
for Content Providers in Europe and the United States ,
23 INTELL. PROP. & TECH. L.J. 3 (March 2011).
Adam Rothchild, Peering Disputes: Comcast, Level 3 and You, Voxel (Dec. 2, 2010) (“In the other corner, we have the financially-challenged Level 3, who’s re-invented itself once again (as seems to happen once a year), shifting a lot of sales focus from wholesale IP transit and infrastructure to CDN. ”)
Susan Crawford, Bad Timing: Comcast, Netflix, NN, Cable Modems, and NBCU, Susan Crawford The Blog (Nov. 29, 2010) ("The takeaway from today: No market forces are constraining Comcast – or any of the other major cable distributors, none of which compete with each other. ")
July 18: Level 3 sends letter to Cogent of its intent to terminate the peering relationship [L3 PR Oct 7 2005]
August 31: Level 3 sends second letter to Cogent with its intention to terminate the peering relationship [L3 PR Oct 7 2005]
Oct. 5: Level 3 terminated its peering connection with Cogent [L3 PR Oct 7 2005]
Oct 7: Level 3 reestablishes peering connection with Cogent, with notice that it will terminate the connection in 30 days [L3 PR Oct 7 2005]
Oct. 28: Networks agree to new interconnection agreement
Nov 9: Day Level 3 planned to depeer with Cogent if negotiation did not succeed
Level 3 and Cogent Reach Agreement on Equitable Peering Terms, PR Newswire (Oct. 28, 2005) ("Level
3 Communications (Nasdaq: LVLT) and Cogent Communications (Amex: COI) today
announced that the companies have agreed on terms to continue to exchange
Internet traffic under a modified version of their original peering agreement.
The modified peering arrangement allows for the continued exchange of traffic
between the two companies' networks, and includes commitments from each party
with respect to the characteristics and volume of traffic to be exchanged.
Under the terms of the agreement, the companies have agreed to the
settlement-free exchange of traffic subject to specific payments if certain
obligations are not met.") See Copy at Cogentco.
Cogent's Standing Offer to Level 3: Turn the Connection Back On, Then Negotiate, Cogent Communications (Oct. 7, 2005) ("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.")
Level 3 Issues Statement Concerning Internet Peering and Cogent Communications, Oct. 7, 2005, PR Newswire ("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.")
Kevin Werbach, The Centripetal Network: How the Internet Holds Itself Together, and Forces Tearing It Apart, 42 U.C. Davis L. Rev. 343, 370 (2008) ("The Cogent-Level 3 dispute was an isolated occurrence affecting a small subset of Internet users. Changes in the backbone market, however, could break down the traditional peering equilibrium. The centripetal dynamics at the physical layer of the Internet operate effectively because there has been no truly dominant backbone. However, the possibilities for new arrangements are more acute today.")
James Crowe, Regulation and Free Martkets Redux: Additional Insights on Regulating the Telecommunications Industry in the New Economy, 5 J. On Telecomm. & High Tech L. 487 (2007) (""We had our brush with a limited form of net neutrality when we attempted to de-peer a company called Cogent about six months ago. Perhaps you read about it and perhaps nopt, all I can tell you is that if you mess around with net neutrality you are going to get in trouble. We folded like wet cardboard and turned the connection up twelve seconds after I started getting calls from governors and congressmen who could not access the Internet.")
James Crowe, Regulation and Free Markets: How to Regulate the Telecommunica- tions Industry in the New Economy, 2 J. ON TELECOMM. & HIGH TECH. L. 429 (2003).
,
(Nov. 30, 2010)~