A tiff over a peering agreement last week between Level 3 Communications Inc. (Nasdaq: LVLT) and rival ISP Cogent Communications Group Inc. (Amex: COI) has left some people -- especially customers of the two -- marveling at how fragile a thing the public Internet can be and how easily it can be compromised. (See Level 3 Tweaks Cogent and Cogent Tweaks Level 3.)



Level 3 interrupted a free, or "settlement free," peering connection with Cogent last Wednesday, which resulted in tens of millions of IP addresses effectively vanishing for many enterprises using either Level 3 or Cogent for Internet access.

How could that happen? Hunter Newby of telx Group Inc. says part of the answer is the way the Internet is set up. He notes that the Internet comprises ISP (and other non-commercial) networks that are loosely stitched together on handshake deals among a very select group known as "peering managers."

"IP peering is an interesting and delicate business,” Newby says. “It is made up of people and relationships that are rarely documented and have no remedy provisions, no real definition of breach, no damages provisions, etc."

In other words, it's business done on a handshake, with little legal documentation. That makes it easier to clip a peering connection, even if consumers will be negatively affected.

“How L3 peering managers can make a decision like that and just de-peer a network as large as Cogent is amazing,” Newby observes. He characterizes Level 3’s action as one of the biggest disruptions in the history of the Internet.

Of course, Level 3 doesn’t see it quite like that. “I completely take exception to that characterization,” says Level 3 COO Kevin O’Hara, adding that his company has de-peered many other networks in the past with “little or no” disruption in Internet service. (See EarthLink Uses Level 3.)

“Our goal all along has been to make sure no consumer or user of the Internet is impacted by the commercial issues happening deep within the bowels of our network,” he says.

But there could be a lesson here: Enterprises might want to investigate whether their ISPs have contingency plans in place so that access to the Internet is never put in jeopardy.

Who is really to blame for the events last week is now mostly lost in a fog of claims and counterclaims. Level 3 says Cogent has been sending more traffic over Level 3's network than they've been sending in the other direction, and that they should therefore pay a tariff. Cogent, meanwhile, insists that it has satisfied all of the various traffic volume and bandwidth metrics in Level 3’s peering requirements, and should be allowed to continue peering with Level 3 at no cost.

Cogent CEO Dave Schaeffer told Light Reading Wednesday that the real reason Level 3 clipped the peering connection last week is because it believes Cogent is pricing its Internet service at “below cost,” making it hard for Level 3 to compete.

"In mid-September I got a phone call from a very senior person at Level 3, and in that telephone call they said, 'We’re going to cut you off if you guys don’t either pay us or reconsider your pricing strategy and raise prices,' ” Schaeffer says. (See Cogent: King of Ports .)

Cogent sells Internet access for around $10 per megabyte, according to the company, while the Level 3 rate is somewhere between $25 and $60 per megabyte. (See Cogent Revenues Jump in Q2.)

Level 3’s O’Hara strongly denies Schaeffer’s claim. “I have heard this allegation before and we take it very seriously, and to my knowledge nobody from this organization has made that request of Cogent, and that’s as far as I’m going to go with that,” O’Hara told Light Reading Thursday.

O’Hara says after Cogent didn’t respond to several notifications that de-peering was imminent, his company assumed Cogent had made a comparable peering arrangement elsewhere.

When it became apparent that Cogent had not, and that many users were effectively cut off from large portions of the Internet, Level 3 reversed itself. Two days after the de-peering, the connection between the two networks was restored, and Level 3 says it will remain so until November 9.

In the meantime, Cogent must either strike a deal with Level 3 or find a comparable peering arrangement elsewhere. As of Thursday, the two companies hadn't talked.

Historically, the U.S. Congress and Federal Communications Commission (FCC) have left it to the network operators to work out their peering arrangements. But some worry that if peering disputes between IP networks become more common, Congress and the FCC may be compelled to act.

“When Congress sees something like this happening and it looks as if consumers are the ones suffering, they naturally want to jump in and solve the problem,” says Staci Pies of the Voice On the Net (VON) Coalition. “The question is, whether jumping in and solving the Level 3/Cogent problem, if in fact there is a problem that needs to be solved, does damage elsewhere.

“We are very much in favor of Net neutrality principles,” Pies adds, “But we are not in favor of interconnection obligations and standards for IP-to-IP networks.”

Former FCC chief of staff and current Legg Mason Inc.analyst Blair Levin agrees with Pies that it would take far more than just one peering dispute to push Congress or the FCC to act. But Levin also points out that the current atmosphere of consolidation and convergence in IT and telecom may increase the risk of such disagreements in the future.

— Mark Sullivan, Reporter, Light Reading