Despite the growing controversy over network interconnection points, a senior Level 3 Communications executive believes the peering disputes among content providers, middle-mile network operators, and broadband providers may be well on their way to getting resolved.
Speaking at Light Reading's recent Big Telecom Event (BTE)in Chicago, Bill Wohnoutka, vice president on the solutions architecture team at Level 3 Communications Inc. (NYSE: LVLT), said he believes the peering disputes among content providers, middle-mile network operators, and broadband providers will be much closer to resolution within a year. When asked on what will have changed in the market by June 2015, Wohnoutka said, "We will have progressed significantly on some of the peering capacity issues."
Wohnoutka's optimism comes even as public peering fights, particularly between Netflix Inc. (Nasdaq: NFLX) and ISPs, are heating up. Recently, Netflix agreed to pay both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ) for direct interconnection links to improve the quality of video streaming on their broadband networks. However, the online video giant isn't happy with the situation, and it has publicly scolded ISPs over ongoing video streaming quality issues. (See Verizon Threatens to Sue Netflix.)
Meanwhile, as a middle-mile network provider, Level 3 gets involved in the issue because it helps to carry Netflix traffic to ISPs in some regions. In a blog post in May, Mark Taylor, vice president of content and media for Level 3, laid out in detail how ISPs have allowed some of their own peering points with Level 3 to degrade. According to Level 3, the tactic is a way of putting pressure on Netflix to cut deals directly with last-mile providers… leaving middlemen like Level 3 and Cogent Communications Holdings Inc. (Nasdaq: CCOI) out of the equation.
The Federal Communications Commission (FCC) has tried to stay out of peering disputes, claiming that interconnection deals aren't a network neutrality issue. However, Chairman Tom Wheeler agreed to look at the situation more closely this month after sustained public outcry. (See Net Neutrality Redux? FCC Probes Peering Problems.)
On the BTE panel -- which focused on the topic of multimedia distribution -- Wohnoutka said the FCC must consider peering agreements as a factor in net neutrality. Although Level 3 isn't necessarily seeking new regulations, Wohnoutka said he is hoping the FCC will "bring a rational dialogue to the table," and even mandate collaboration of some sort between middle-mile networks and last-mile providers.
As to why peering points have become a major issue now, Ted Middleton, vice president of product design for Verizon's Digital Media Services business, noted that, "Naturally as service providers bring CDNs in house … that changes the way that they're going to want to manage traffic profiles." In other words, because ISPs such as Comcast and Verizon are creating their own content delivery networks to manage IP traffic, there is a natural tendency to want to monetize those investments. Middleton, who was the panel with Wohnoutka, added that Verizon would like to see the marketplace remain open and encouraging of a fair exchange of traffic between networks.
Wohnoutka explained the peering situation another way. "We haven't evolved our attitudes, and video blew up in the meantime," he said.
According to Wohnoutka, Level 3 is now promoting a two-pronged approach to the peering problem. First, he said, there needs to be an expansion of the number of peering points in the US. There are only six to nine major peering points today, and that leads to serious bottlenecks when network traffic is heavy.
EdgeConneX Inc. Chief Architect Phill Lawson-Shanks, who was also on the BTE panel, agrees wholeheartedly with this point. His startup company is rapidly building out data centers to serve as peering points in dozens of US markets where connectivity is lacking.
Second, middle-mile and last-mile providers need to come up with collaborative caching models that help to spread costs more evenly between the two types of networks. Level 3, for example, has proposed a concept called bit-mile peering, which would calculate the costs involved in traffic exchange based on the combined variables of volume and distance traveled. Such a strategy would create incentives for more local caching because shorter distances would directly reduce costs.
Interestingly, Wohnoutka hinted that Level 3 may be making progress in furthering some of its collaborative ideas. "We're trying to find creative solutions with companies like Verizon and Comcast," he said.
Given Wohnoutka's optimism about peering progress over the next year, it sounds like, at the very least, his company hasn't hit a brick wall. That's good news for everyone -- network operators, content companies, and consumers alike.
— Mari Silbey, special to Light Reading