Cogent Gearing for Another Peering Battle
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