Level 3 blames Internet slowdowns on ISPs’ refusal to upgrade networks

Recent public battles over how network interconnections affect the quality of streaming video have almost all involved one company: Cogent Communications.

Cogent CEO Dave Schaeffer has claimed that his company is simply the only one willing to put up a public fight. But even though Cogent makes the most noise, it's not the only Internet bandwidth provider battling consumer Internet service providers like Comcast, Verizon, and AT&T. Level 3, another company that has fought consumer ISPs in previous years, has mostly remained quiet lately.

But today, Level 3 decided to voice its displeasure in a blog post by general counsel for regulatory policy Michael Mooney. Additionally, Level 3 recently asked the Federal Communications Commission to regulate the network interconnections known as peering in a possible revision of network neutrality rules.

Like Cogent, Level 3 is one of the Internet bandwidth providers that Netflix and other companies pay to distribute their traffic across the Internet. Both have objected to demands that they pay for the right to peer, or exchange traffic with, last-mile ISPs that serve home broadband users.

Level 3 itself caved in and agreed to pay Comcast after a dispute over Netflix traffic in 2010, and it appears to be troubled that Netflix just recently agreed to pay Comcast as well. Mooney today wrote:

Residential broadband ISPs promise their subscribers access to all of the content on the Internet, not just some of it. They also know full well that, in the Internet as it exists today, much more data will be downloaded by consumers (think of watching an HD Netflix movie) than uploaded (think of clicking your mouse to ask Netflix to send you that movie). As such, all ISPs offer download speeds that are faster than upload speeds.

To honor the promises they make consumers, these ISPs must then connect their networks to the other networks that can supply any Internet content the ISPs cannot provide themselves (which is most of it). It also means that as overall Internet content gets bigger (think of HD movies versus e-mails), all providers must “augment” their networks—making them bigger to accommodate the exponential growth due to the Internet’s success.

Some ISPs, however, have refused to augment their networks UNLESS the content providers they connect to agree to pay them to do so. Viewed in the light most favorable to these ISPs, they want content suppliers to pay not only for their own increased costs of supplying more robust Internet content, but also for any increased network costs of the ISPs too. This is not only unreasonable on its face, but it is entirely inconsistent with published reports indicating that returns on invested capital for ISPs are excellent, and are expected to improve even further, driving considerable additional growth in economic profits. More cynically, these ISPs simply view these arbitrary tolls as new sources of revenue for their last mile bottleneck monopolies or as a way to unfairly discriminate against content that competes with the content the ISPs themselves supply.

So what if content providers refuse to pay? Some ISPs agree to augment capacity on reasonable terms. But other ISPs try to strong arm the content providers into paying by playing a game of “chicken” with the Internet. These ISPs break the Internet by refusing to increase the size of their networks unless their tolls are paid. These ISPs are placing a bet that because content providers have no other way to get their content to the ISPs subscribers, that they will cave in and start paying them.

Mooney said the latest problems aren't new, referencing a previous dispute between Level 3 and AT&T. "These last mile ISPs know full well the consequences of what they are doing. We wrote AT&T about it in February 2011," he wrote. "We have written to other ISPs about it since then. In each of these cases, we offered to sit with the ISP to hammer out a fair, equitable, scalable, and resilient network architecture, but to no avail. We have also advised the FCC of the issue on more than one occasion, beginning in 2013 and as recently as three weeks ago."

Level 3 has proposed that network interconnection agreements between it and consumer ISPs measure traffic via "bit miles," the distance traffic is carried and the number of bits carried, regardless of which direction the traffic flows.

Mooney warned that disputes between ISPs and companies like Level 3 could result in VoIP phone calls being dropped or not connected at all, poor quality for video services like Netflix and Major League Baseball's streaming platform, and general slowdowns and error messages in Web browsing.

Mooney ended his post by expressing general support for network neutrality rules. The FCC's net neutrality rules were recently vacated by a court ruling, but the agency may reinstate them in some form. If the FCC doesn't do so, ISPs will be free to block or degrade services and charge content providers for preferential access on their networks.

Even without such rules, ISPs can charge companies like Netflix for direct connections to their networks as long as they treat all content equally in the "last mile" from consumer ISP networks to broadband subscribers. That's because the FCC's net neutrality rules did not cover paid peering connections like the one Comcast has with Netflix. Like Comcast, Verizon and AT&T each argue that the huge amount of traffic Netflix sends to consumers—above 30 percent of all Internet traffic at peak times—justifies payment demands. Verizon and AT&T are both negotiating with Netflix.

Level 3 has argued that the FCC's next set of network neutrality rules should be expanded to cover peering agreements. Level 3's letter to the FCC on Feb. 21 said that "the Commission’s Open Internet rules, by failing to address peering, had failed to address these serious problems. Increased consumer demand for online video services, the fact that online video services are such a large fraction of online traffic, and the fact that online video services are particularly vulnerable to the effects of congestion mean that there is functionally little difference between the type of 'discrimination' addressed by the Commission’s former rules and the type of behavior actually practiced by some ISPs but arguably permitted under those rules."

ISP abuses should be prevented whether they "come in the form of explicit discrimination or the kind of anticompetitive, monopoly rent-seeking conduct Level 3 has observed," the company said.