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Level 3, Cogent Kiss & Peer Up

Level 3 Communications Inc. (Nasdaq: LVLT) and Cogent Communications Group Inc. (Amex: COI) have ironed out their peering differences and will continue to exchange Internet traffic on a settlement-free basis, the companies said Friday.

The modified agreement contains new commitments from each party with respect to the “characteristics and volume of traffic to be exchanged,” the statement says. (See Level 3, Cogent Make Up .)

“The agreement calls for the equitable exchange of traffic, and if it becomes disproportionate, there is a penalty if it’s not remedied,” Cogent CEO Dave Schaeffer told Light Reading today. (See Internet Peering on Thin Ice? )

The two wouldn’t disclose specific traffic metrics requirements in the agreement. Level 3's original complaint, which led to the well publicized October 5 de-peering, was that Cogent was sending a disproportionate amount of Internet traffic over its network, costing Level 3 money.

The renewed agreement also contains commitments from both companies to give each other, and their respective customers, a notice period “of finite length” before de-peering in the future.

Level 3's action on October 5 left millions of users on both networks without access to the full Internet. (See Level 3 Tweaks Cogent.) Shortly afterward, Level 3 turned the connection back on and set a November 9 deadline for the two operators to reach terms, or for Cogent to find another peering arrangement elsewhere. (See Cogent: King of Ports .)

The two sides blamed each other for the meltdown at the time, but cooler heads have prevailed, and Level 3 CEO Jim Crowe even apologized to customers of both companies during his company's earnings call last week.

“During the quarter, we modified the nature of a number of relationships with the goal of making sure that the agreement remained equitable to both sides; we remain committed to this goal,” Crowe said. “In one instance this quarter, a number of Level 3 customers and Cogent customers were hurt as we pursued this strategy.

“I apologize to both sets of customers. In addition to achieving the contractual goal with interconnecting carriers, we recognize that we have an obligation to customers of the Internet, and in this instance we contributed to letting them down.”

Crowe’s comments were a departure from Level 3’s earlier, somewhat more defiant tone. Meanwhile, as the information rolled out about how one of the biggest disruptions in the history of the Internet actually occurred, some were surprised and alarmed that it could happen so easily.

“If Crowe knew what was going on behind the closed peering doors, and what the fallout could potentially have been, it would not have gone down that way,” says Hunter Newby of telx.

“CEOs don’t like to apologize," Newby says. "Good for him for doing so, but it could have been avoided.”

“I hope that any other major provider will take a long, hard look at what happened and really think before disrupting the Internet in any way,” Cogent’s Schaeffer says. (See Slowdowns Smack Level 3, Verio.)

— Mark Sullivan, Reporter, Light Reading

pnni-1 12/5/2012 | 2:55:47 AM
re: Level 3, Cogent Kiss & Peer Up In your article you wonder how the situation could have happened so easily? Well, Cogent had plenty of time to correct there traffic situation with L3 but did NOTHING! Cogent should also apologize and tell what they are going to do in the future to stop this from happening again.
mrmojorisin 12/5/2012 | 2:55:47 AM
re: Level 3, Cogent Kiss & Peer Up Reading between the lines it seems that Level 3 have now forced Cogent to agree to a new contractual agreement . This will likely state that if Cogent traffic patterns deviate by more than some specified amount then the peering terms move from settlement free to some form of paid for peering.

The initial disconnection of Cogent was a shot across the bows intended to achieve renegotiation and succeeded. My guess is that unless Cogent can reroute some traffic to networks that multihome on Level 3 an other ISP via those other ISP then the terms of new contract will kick in (quietly as far as Cogent is concerned) and Cogent will start paying.

Overall Level 3 actions are probably a good thing for the economics of the Internet in the long run. The industry has spent the last five years trashing prices. Economic re-engineering is now necessary. It will be painful for some but a good thing for the industry as a whole in the final analysis.
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