& cplSiteName &

Cogent Gearing for Another Peering Battle

Carol Wilson
2/20/2014
50%
50%

Dave Schaeffer knows he has a reputation in the telecom industry as a fighter. The Cogent CEO is not one to back down.

He and his company have taken on some global giants: Deutsche Telekom AG (NYSE: DT), Level 3 Communications Inc. (NYSE: LVLT), AOL Inc. (NYSE: AOL), and several more, in a battle to maintain its status as an Internet service provider, worthy of swapping Internet traffic as peers without additional charges. (See The Great Peering War Rages Again.)

Schaeffer is now ready for Cogent Communications Holdings Inc. (Nasdaq: CCOI) to engage in this familiar battle with Verizon Communications Inc. (NYSE: VZ) on behalf of its customer, Netflix Inc. (Nasdaq: NFLX), which this week is talking about what it says is a 14% drop in delivery speed of its video services over Verizon's FiOS network.

The issue is whether Verizon is being reasonable in refusing to upgrade the quality of the peering connection it makes with Cogent -- the primary but not exclusive Internet backbone provider for Netflix -- unless it receives more money for the higher and very asymmetrical traffic load the video service generates.

Schaeffer insists he doesn't like to fight, but, in an interview with Light Reading, he doesn't hesitate to offer what he considers a strong case for Cogent and Netflix to get better delivery from Verizon. Here are the highlights:

On why Cogent gets into all of these Internet battles:
"We have had more peering disputes than anyone," Schaeffer admits. "But that is because we have only one business, the Internet. Everybody else has multiple tiers of influence -- voice, wavelength services, private line, or even their own content. We are very one-dimensional; we are all about the Internet. I don't like to fight, but we fought when others didn't care that much. And we have prevailed every time. "

On how the process works:
A Verizon FiOS customer requests a movie, generating a data message Schaeffer agrees is quite small in terms of bits. That message is directed to Cogent's network to reach Netflix, which responds by directing transmission of the video content from one of its 13 global server farms over Cogent's Internet backbone, an average of 2,400 network miles to a connection point with Verizon, probably at a carrier hotel or similar interconnection site. From there, Schaeffer says, it travels an average 300 network miles over Verizon's facilities to the end customer's device. So from Schaeffer's perspective, Cogent is carrying eight times the amount of "bit miles" of traffic to deliver Netflix videos than Verizon, and Verizon is being paid for its 300 miles of video delivery by the end customer.

On the asymmetric nature of the traffic exchange:
Schaeffer admits his company is handing off a much higher volume of traffic -- all the bits needed to deliver a movie -- than Verizon sends over its facilities. "The nature of the customer bases and the products the two different companies sell creates an inherent traffic imbalance," he admits.

That isn't true with all of Cogent's operations. Cogent connects with more than 5,000 other networks that pay Schaeffer and crew to carry their traffic and with 50 network peers, such as Verizon, in operating 81,000 fiber miles of network.

What Verizon could do to address this issue:
The reported Netflix data proves that the latency is occurring in the peering router, where congestion has reached the point that dropped packets now represent 7% to 8% of the overall traffic, Schaeffer says. That degrades not just Netflix traffic but all traffic traversing those congested areas.

Normally, when a peering point approves 50% to 60% congestion, the peers agree to upgrade their equipment at that point to handle the higher volume, and each company incurs the same expense to do that, he adds, with the companies alternating turns paying the cross-connect vendor, often someone like Equinix, to handle that part of the connection. Verizon is refusing to do that upgrade, Schaeffer says, without higher fees.

The Cogent CEO insists Verizon could make the whole problem disappear at very low cost: one-thousandth of a cent per customer.

On why peering is still the best Internet model:
Schaeffer is willing to wade into the technical weeds, unlike many of his fellow CEOs, and he says continuing to let big networks share traffic as peers, so that the Internet continues to be able to route traffic over the best available path, is what works for everyone, not just Cogent. He also argues that, unlike other networks that treat traffic like "hot potatoes" and pass it off to other networks as soon as possible, Cogent takes a "cold potato" approach and carries that traffic as far as possible for its customers. Thus, Cogent, on average, carries eight times the "bit miles" of Netflix traffic than Verizon does, because that is the business for which it is being paid.

On this battle:
Netflix and Cogent will take their fight anywhere necessary, including the Federal Communications Commission (FCC) , other federal regulators, and state attorneys general, Schaeffer says. He does expect the FCC to consider peering issues as part of the next round of open Internet rules and discussions that the agency this week said it will undertake.

— Carol Wilson, Editor-at-Large, Light Reading

(34)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 4   >   >>
joecook
50%
50%
joecook,
User Rank: Light Beer
2/24/2014 | 12:45:25 PM
Netflix Deal with Comcast
Looks like Netflix finally decided to pay for the bandwidth they are using so much for the position Cogent had.
MarkC73
50%
50%
MarkC73,
User Rank: Light Sabre
2/24/2014 | 11:31:25 AM
Re: NFLX postscript
I just saw the recap on CNBC which makes sense they get the scoops from their parent company.  Vz Deal is probably just around the corner, story also announced on CNBC.  This is a loss for Cogent.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
2/23/2014 | 4:32:29 AM
NFLX postscript
There's a report that NFLX and Comcast have reached some sort of peering agreement. This is the better way for NFLX to go -- through the front door.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
2/23/2014 | 3:23:06 AM
Re: Netflix should choose other suppliers
Cogent/Netflix and Aereo aren't about the same technology issues, but they are linked because in both cases, the real business issue boils down to unfair use of resources. In the Netflix case, operators know they have to be able to support the massive influx of OTT video traffic, no matter the source. But why should NFLX and its ISP get what amounts to a free ride on someone else's investment? With Aereo, retransmission of content without paying a fee (but in turn charging users for that retrans service) seems like outright piracy -- although there's more than an even chance that the Aereo case will pass legal scrutiny. We've seen more than a fair share of disruptive technologies and services in the past two decades, and much of that has been for the better. Business models that hinge on unfair use of resources are not disruptive in a positive sense.
joecook
50%
50%
joecook,
User Rank: Light Beer
2/22/2014 | 10:19:33 PM
Re: Netflix should choose other suppliers
You cannot look at this issue as just the interconnect point, the network is engineered and planned end to end, when the size of the itnerconnect is increased the planning engineer needs to understand where that traffic is going and make sure the whole IP network can handle the extra capacity.  This means everything, the metro ring, the Optical Long Haul Network, the large core IP routers etc.  Historically if you look at the Public IP bandwidth growth it has far outpaced the amount of revenue the carrriers can get in return for their investment.  The original internet was based on best effort and we have come a long way since then but the peering arrangements still require that the major carriers carry large amounts of traffic without any direct compensation.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
2/22/2014 | 5:07:13 PM
Re: Netflix should choose other suppliers
 

joe,

 

I have looked at the high water mark of the queue counters on the internal queues of FiOS Access systems.  The biggest number of items stored in any system at any time on any blade was 2.  That's right 2.

Have you ever actually looked at the queue measurement depth of an in use DSLAM or OLT?

The router network might - might have some congestion.  Of course, that is NOT the Access Network.

seven

 
joecook
50%
50%
joecook,
User Rank: Light Beer
2/22/2014 | 11:16:01 AM
Re: Netflix should choose other suppliers
There are some access network that run fully utilized it really depends on the metro area busy time of the day etc.  The issue here is really one of fair trade, peering is based on trading traffic, basically if I carry 1Gbs of your traffic then you should carry 1Gbs on my traffic not 1Kbs.  The IP backbone capacity and the ability to carry peak traffic load is what cost the big buck that the OTT players do not want to invest in.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
2/22/2014 | 5:24:33 AM
Re: Disengenuous
FakeM -- You seem to know this business better than I do. I'll stand by my semi-informed take that NFLX is taking advantage of outdated arrangements to make its business model work. It's not a situation that any network operator is happy about. Nobody likes freeloaders, especially ones that grab most of the vittles under a warped sense of entitlement.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
2/21/2014 | 5:49:43 PM
Re: Disengenuous
I don't see this as black and white for either side. I think saying Verizon is disingenuous about it is partially true. I also think we have traffic conditions and business models that were not envisioned even 5 years ago. I have a political principle that might apply here. This principle deals with the times when we have actual conflicting rights and it's called "The Principle of Maximum Unhappiness". In this idea if any party is happy then we are probably wrong and end to make sure all sides are somewhat unhappy with how the baby gets split. Making sure everyone is happy seems impossible. Making sure everyone is unhappy seems feasible. Seven
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/21/2014 | 2:49:50 PM
Re: Disengenuous
mendyk -  Netflix support is not a goodwill issue for Verizon. It's a competitive advantage for them.

Or rather it's table stakes. If the carrier does not offer Netflix, customers will take their business elsewhere.
Page 1 / 4   >   >>
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, July 27, 1:00PM EDT
The Changing Face of the Data Center World
Rodney M. Elder, Senior Solutions Architect, Equinix
UPCOMING COURSE SCHEDULE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
in association with:
From The Founder
In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
LRTV Interviews
AT&T Launches Network Functions on Demand

7|17|16   |   05:26   |   (0) comments


Roman Pacewicz, Senior Vice President, Offer Management & Service Integration, AT&T Business Solutions, discusses the operator's launch of its Network Functions on Demand service.
LRTV Interviews
Enterprise Pitch for Ciscosson

7|14|16   |   04:43   |   (0) comments


After seven months of near silence, Cisco and Ericsson executives publicly discussed details on their extensive partnership. Among the tidbits shared by Martin Zander, VP, group strategy programs, Ericsson, and Doug Webster, VP service provider marketing, Cisco: The partnership was initially launched to serve the service provider market, but is already gaining ...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
September 27, 2016, Philadelphia, PA
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Kevin Lo's Move to Facebook: Sign of Things to Come?
Patrick Donegan, Chief Analyst, Heavy Reading, 7/20/2016
Verizon's Next With VNFs
Carol Wilson, Editor-at-large, 7/21/2016
Facebook Gets Its Drone On
Ray Le Maistre, Editor-in-chief, 7/22/2016
Ericsson Ejects CEO Vestberg
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.