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AT&T Applies Peering Pressure

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Friends can sometimes be found in the most unexpected places.

AT&T Inc. (NYSE: T) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) may be bitter rivals when it comes to serving residential subscribers and, increasingly, to business customers, but the telco is clearly (and, okay, not entirely unexpectedly) on Comcast's side in its ongoing dispute with Level 3 Communications Inc. (NYSE: LVLT). (See Level 3: This Is Not a Peering Dispute, Did Level 3 Know What It Was Getting Into?, and Level 3: Comcast Erected Web Video 'Toll Booth' .)

The debate "is just a peering dispute no matter how loudly Level 3 and Free Press shout 'net neutrality violation'," AT&T SVP-federal regulatory and chief privacy officer Bob Quinn proclaimed in a Nigel Tufnel-channeling blog post titled: "It's Not Really Louder Just Because it Goes to Eleven."

"Comcast simply wants to be compensated for the additional volume of traffic that Level 3 is delivering to Comcast, which Comcast has to deliver to its customers," Quinn noted, sounding a bit like a spokesman for the MSO. "Comcast doesn't care whether that traffic is video or music or email or web pages."

He then goes on to cite the Level 3-Cogent Communications peering battle of 2005, noting that Level 3's position then seemingly contradicts its position today as it looks to become a significant content delivery network (CDN) now that it has a deal with Netflix Inc. (Nasdaq: NFLX) in tow. As a refresh, Level 3 claimed Cogent was violating a settlement-free peering deal because Cogent was starting to send more traffic to Level 3 than vice versa.

"Level 3 has apparently changed its tune on the importance of balance in exchanging traffic (as did Cogent in the other direction when it de-peered Limelight in 2007 -- are you keeping track of all this?)," Quinn wrote.

He also expressed confidence that the CDN providers Level 3 won its Netflix business from "had been paying Comcast to deliver this same content to Comcast's customers" -- something that multiple CDN industry sources have indeed told Light Reading Cable.

Quinn also acknowledges that AT&T currently has a "relatively small number of providers with whom we have settlement-free arrangements," with most involving some sort of paid peering/transiting deal.

And he thinks Level 3 should do its part in footing the bill for that tsunami of Netflix-born traffic. Quinn added that Comcast's broadband subs could help pay the freight in the form of higher access rates, but "that model is not necessarily consumer friendly," he said.

Quinn also suggests that a Comcast win in this imbroglio would certainly change things not just for Level 3, but also for Netflix and other over-the-top video service providers, since they'll presumably have to swallow more infrastructure costs and pass them on to their own customers.

Level 3: You're missing the point
Since every action in this debate has elicited a quick reaction, it should be no surprise that Level 3 did counter Quinn's assessment of the debate, claiming it "has missed the point completely."

More specifically, Level 3 again bristled at the suggestion that it did an about-face on the issue at hand, noting that its "current position on IP backbone interconnection is essentially the same as it was in 2005…"

And it reiterated its net neutrality and Web video "tollbooth" position, and its view on the traffic relationship it has with Comcast, claiming that if it refused the MSO's "take it or leave it" offer it could have impaired service for Level 3's content customers.

"In fact, Level 3 has and continues to offer to use its own IP backbone to carry content right to the edge of the Comcast local Internet access markets where the substantial majority of Comcast's customers reside," the company said. "This offer should end any debate about whether or not this is 'just an IP backbone peering' debate."

And Level 3 still insists that this particular debate should not be framed on backbone peering, but on interconnections to local access networks.

Level 3 president Jeff Storey, speaking at a UBS AG investor conference Wednesday, said his company would expect to pay if it was "handing off traffic to Comcast in New York and expecting them [Comcast] to deliver it to San Diego. But that's not what we're doing," he said, noting later that Level 3 has spent about US$14 million to add storage and capacity for the Netflix deal.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:16:08 PM
re: AT&T Applies Peering Pressure

Anyone wonder if Bob Quinn's going to be on Comcast's Xmas card list this year?

In the latest tit-for-tat on this whole thing, Quinn posted another blog today after Level 3 issued its own statement that Quinn's earlier blog missed the point.  Again, it's all about how each side is defining peering and how it should be applied to this debate  Here's Quinn's definition:

Peering works between networks that are of similar size and scope and have similar traffic characteristics.  Such networks are able to assess whether in exchanging traffic on behalf of their users, they obtain equivalent value to what they provide. Such a determination is much more difficult, if not impossible, for networks of different size and scope that have different traffic characteristics.

Traffic ratios are one indicator of whether two networks are sufficiently similar to peer equitably with each other.  A ratio that is significantly out of balance is an important signal that, in fact, the two networks are not sufficiently similar.  Said differently – they are not peers.

Sooo... we're guessing that Level 3's reaction  to this post should be arriving... Right. About. Now. JB

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