There has been much in the news this week concerning the clash between Level 3 and Comcast regarding Level 3's new position as the content delivery network (CDN) for Netflix. While the disagreement itself isn't a terribly disruptive ordeal (to date, there has been no interruption of service) it marks an important point in the ongoing evolution of the Internet.
Last month, Level 3 became a primary CDN for Netflix. This is interesting in itself as Level 3 has traditionally stuck to tier one transit services, but has recently entered the CDN industry. To put into perspective the sheer volume of traffic generated by Netflix, Level 3 says it will add 2.9 Tbps of additional CDN capacity. Naturally, Level 3 set about increasing its peering capacities with other networks to handle this new load.
This is where the dispute with Comcast arose. A letter from Comcast to the FCC (see the PDF for the full version) says that as part of their upgrades, Level 3 "demanded 27 to 30 new interconnection ports" be added to the existing settlement-free peering between the two networks. Prior to the additional connections, the traffic exchange ratio was reportedly around 2:1, with Level 3 sending about twice as much traffic as it was receiving from Comcast, which is generally considered to be acceptable for free peering. Comcast claims that increasing the peering capacity as requested "would result in a traffic imbalance that could be in the range of about 5:1." Comcast responded by demanding that Level 3 begin paying an undisclosed fee for the increased traffic flow.
If Comcast were charging Level 3 for transit service, this would be business as usual, not even worth commenting on. But this situation is markedly different as Comcast is demanding payment for traffic terminating on its own network. The traffic in question ultimately must traverse Comcast's infrastructure, regardless of who the immediate peer is. Comcast effectively is charging two parties for a single service: it wants Level 3 to pay for sending data, and its own subscribers to pay for receiving that same data.
In an ideal economy, Comcast should be able to charge what it likes. And Level 3 should be able to decline. And Comcast subscribers should be able to switch to another provider if they want to watch Netflix. Sadly, this is not the situation of Internet access in the US. For millions of residents, Comcast is their only choice for broadband Internet access. Terminating peering with Comcast would mean an inability to deliver Netflix to those millions of potential customers, and Comcast knows it.
For now, Level 3 has agreed "under protest" to pay the fees demanded by Comcast to avoid interrupting service to end users.
The Bigger Issue
Comcast is primarily a residential service provider. Generally, it will receive more traffic from peers than it sends, as is the nature of the end user as a content consumer rather than a content generator. Following the logic employed in its decision to charge Level 3 for asymmetric peering, what is to deter Comcast from charging other peering networks as well? The structure of the Internet provides no mechanism to prevent Comcast from holding hostage its millions of subscribers so long as it maintains a monopoly over their Internet service.
The bottom line is that Level 3 needs Comcast to reach the users who pay Comcast for Internet service. Likewise, Comcast relies on Level 3 to make its share of the Internet (e.g. Netflix) available to subscribers. When one side attempts to tip the scales, the stability of the public Internet is damaged.
- Comcast's letter to the FCC (PDF)
- Level 3 vs. Comcast: More Than A Peering Spat? - Data Center Knowledge
- How Comcast became a toll-collecting, nuke-wielding hydra - Ars Technica
- Internet peering disputes: follow the money - Ivan Pepelnjak
- UPDATED: Statement from Level 3