The Mere Threat Of Real Neutrality Rules Appears To Have Helped Calm Verizon, Level 3, Cogent Interconnection Feud

from the funny-how-that-works dept

A little over a year ago, Level 3 was busy accusing Verizon of intentionally letting its peering points get congested in order to degrade Netflix streaming performance, by proxy forcing Netflix to pay Verizon for direct interconnection if it wanted to remedy the situation. According to arguments by Netflix, Level3 and Cogent, big ISPs like Verizon, Comcast and AT&T decided to move the net neutrality debate out to the edge of the network, obtaining their pound of flesh by eliminating settlement-free peering and demanding new charges just to access last mile customers.

To hear AT&T, Verizon, and Comcast tell it, the fight was all just a big misunderstanding, and what was occurring was just run of the mill peering disputes. Meanwhile, their army of fauxcademics, astroturfers, lobbyists, consultants and think tankers were busy telling anyone who'd listen that Netflix was trying to destroy the Internet.

But in a series of blog posts from last year, Level 3 content and media VP Mark Taylor continued to argue that there was a major anti-competitive cabal afoot, with only the biggest ISPs holding network performance (and their own users) for ransom in a quest for more revenue:
"All of the networks have ample capacity and congestion only occurs in a small number of locations, locations where networks interconnect with some last mile ISPs like Verizon. The cost of removing that congestion is absolutely trivial. It takes two parties to remove congestion at an interconnect point. I can confirm that Level 3 is not the party refusing to add that capacity. In fact, Level 3 has asked Verizon for a long time to add interconnection capacity and to deliver the traffic its customers are requesting from our customers, but Verizon refuses."
The problem, as we noted at the time, is that with peering arrangements entirely confidential, it was impossible for any researcher to fully prove incumbent ISPs were up to no good, even if the context of thirty years of anti-competitive behavior -- and scattered glimpses of limited data sets -- suggested the Netflix and Level 3 narrative might just be true. As such, the FCC announced it would begin collecting internal company data on interconnection to determine who, exactly, was telling the truth.

Fast forward a year, and all the companies involved in this fight now face being governed by new net neutrality rules that include a mechanism for complaints over interconnection shenanigans. With this new threat of regulatory intervention looming, lo and behold Verizon and Level 3 quickly appear to have struck a new interconnection deal. Verizon and Cogent also say they've managed to strike a new deal that appears to make both sides happy. Gone completely is the hostile rhetoric from all companies involved.

Even Cogent founder and CEO Dave Schaeffer, one of the most vocal executives in regards to these interconnection feuds, seems happy to have struck a no-payment deal with Verizon. According to Schaeffer, the FCC's new neutrality rules helped bring Verizon to the table, since Level 3 and Cogent had hinted they might complain to the FCC:
"Schaeffer told Ars that it did not have to pay Verizon to get the deal signed. "We have never paid for peering, and we continue to never pay for peering," he said today. Schaeffer said the FCC's rules "probably influenced the timing" of the agreement. He believes Verizon was also motivated to settle because Verizon's own EdgeCast content delivery network will benefit from distributing traffic through Cogent's network. But there is still work to do to make sure performance improves. "The degradation exists right now, the ports are massively oversubscribed and our initial fix is going to dramatically increase the connectivity," Schaeffer said. "The parties agreed to make sure this doesn’t become a problem going forward."
While the net neutrality rules don't technically take effect until June 13, apparently the mere threat of a regulator actually doing its job was enough to bring Verizon to the negotiations table. That's not to say there won't be problems going forward; there needs to be much more transparency surrounding interconnection agreements to protect consumers and competitors alike. Schaeffer is quick to highlight continued problems with AT&T, Time Warner Cable and CenturyLink (though he also points out that Comcast has suddenly become more amicable as well). Meanwhile, the FCC's neutrality rules obviously will need to withstand the full frontal legal assault of the entire broadband industry to remain useful.

Still, if you were paying attention, you might actually start to doubt the claims on several fronts that Title II will destroy the internet as we know it. Comcast's busy deploying two gigabit fiber to 18 million homes despite claiming Title II would demolish sector investment. Executives from Frontier, Cablevision, Sprint, Sonic and even Verizon have all publicly admitted Title II doesn't really hurt them in the slightest. And now Verizon, Level 3 and Cogent appear to have settled their differences thanks, in part, to the mere threat of actual FCC anti-competitive policing. Yeah, so far our new net neutrality rules seem like a real disaster for consumers and internet health alike.

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  • identicon
    Lord Binky, 6 May 2015 @ 10:45am

    The FCC can still request any documented interactions over these disputes and agreements if they decide to investigate anyways can't they? So even if Verizon had a change of heart, if the final agreement reached is similar to the initially proposed one, it would still show a poor intent by Verizon's counter offers and refusals. Maybe the dealings up to that point will just disappear before the FCC moves on that though...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 May 2015 @ 12:21pm

    so what happened to the 'big ISPs' suing the FCC? if that actually goes ahead, would it not have been more sensible for Verizon to wait? it could now be in the position of having agreed to do something positive, something to make the customers experience an experience when they needent have done a thing, as is the usual case?
    when oh when will Congress ever accept the total screw up they made by removing not just the broadband competition from the whole of the USA but they slowed almost to a stop the progress that could have been made instead of making the USA one of the worst nations in that area. oh, so stupid behaviour from those who are supposed to be so intelligent!!

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 May 2015 @ 8:58pm


      If Verizon didn't settle things in a consumer friendly fashion ahead of their upcoming lawsuits, their intransigence would be pointed to as justification for net neutrality in court. Settling now lets them dismiss such accusations as mere speculation.

      reply to this | link to this | view in chronology ]

    • icon
      Karl Bode (profile), 7 May 2015 @ 7:16am


      Verizon has a live IP video service they're planning to launch sometime later this year, so that adds an additional incentive to get these issues sorted out....

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 May 2015 @ 12:24pm

    > ... since Level 3 and Cogent had hinted they might complain to the FCC...

    Does it still count as hinting if you show them a draft of the complaint you're planning to send?

    reply to this | link to this | view in chronology ]

  • icon
    Dave Cortright (profile), 6 May 2015 @ 11:17pm

    Condition conducive to "fuckery"

    Reading this article, I just realized the insidious condition that makes this sort of "fuckery" possible: network speeds are an area where—similar to transistor density on chips—the status quo requires continual significant improvement.

    For most things, if you pay $X for product Y or service Z today, that's still a fairly reasonable deal next month, next year, and heck even several years from now given inflation. But for things like networking service, a good deal today is a marginal deal next year, and complete extortion several years from now.

    They don't need to do anything actively nefarious. They can be passive, do nothing, and by doing so anchor their offering to today's standard while the rising tide submerges them and their value.

    reply to this | link to this | view in chronology ]

    • icon
      Jeremy Lyman (profile), 8 May 2015 @ 5:35am

      Re: Condition conducive to "fuckery"

      Dude, I just got a sick deal on a new PC from Comcast's hardware division! It's a 100MHz with 12 MB of Ram and a 15 inch CRT, all for only $4,000!

      reply to this | link to this | view in chronology ]

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