Comcast-Level 3 Net Neutrality Dispute Escalates

The war of words is ramping up between the country's biggest cable operator and Internet backbone operator Level 3, with a fight over network exchange fees carrying major political overtones.

By Kenneth Corbin | Posted Nov 30, 2010
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The public sparring between Comcast and Level 3 Communications continued on Tuesday, as the Internet backbone provider renewed allegations that the cable giant is jacking up the fees it charges to relay video content that competes with its own Xfinity service, escalating a corporate spat that has opened a new front in the war over net neutrality.

On Monday, Comcast Senior Vice President Joe Waz countered Level 3's initial accusation, saying the company "inaccurately portrayed the commercial negotiations between it and Comcast."

Then today, Level 3 shot back, arguing that Comcast's pricing stance was patently anti-competitive, accusing the nation's biggest cable broadband provider of using its market power to unfairly disadvantage rival content providers.

"The fundamental issue is whether Comcast, as the largest cable company in the country with absolute control over access to its cable TV and broadband access subscribers, has the right to unilaterally set a 'price' for that access that effectively discriminates against competitors of Comcast's cable and Xfinity content," John Ryan, Level 3's assistant chief legal officer, said in a statement.

At issue are the network exchange rates and terms service providers settle on in their traffic-peering agreements. Comcast explained that it has comparable pricing agreements with Level 3's competitors in the content delivery network (CDN) market. Comcast further claimed that Level 3 is seeking to offload much of the strain on its own network caused by the exploding demand for Internet video in an arrangement that would send five times more traffic to Comcast's network than Comcast sends to Level 3.

"We are happy to maintain a balanced, no-cost traffic exchange with Level 3," Waz said. "However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair."

Level 3, meanwhile, is asking federal regulators to intervene, claiming that Comcast is violating the spirit of the open Internet by using its market power to play favorites with the content it delivers to consumers.

"While the network neutrality debate in Washington has focused on what actions a broadband access provider might take to filter, prioritize or manage content requested by its subscribers, Comcast's decision goes well beyond this," Thomas Stortz, Level 3's chief legal officer, said Monday when the company went public with the dispute.

"With this action, Comcast is preventing competing content from ever being delivered to Comcast's subscribers at all, unless Comcast's unilaterally-determined toll is paid -- even though Comcast's subscribers requested the content. With this action, Comcast demonstrates the risk of a 'closed' Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content."

The public war of words comes at a politically sensitive time for Comcast, as it finds itself at once fighting against rigid net neutrality rules while trying to ameliorate the concerns of regulators at the Department of Justice and Federal Communications Commission, who are both reviewing the proposed merger with NBC.

Separately, Zoom Telephonics, a Boston-based provider of cable modems, filed a complaint with the FCC on Monday alleging that Comcast violates commission regulations with an overly complicated testing procedure meant to keep competing modems from connecting to its network.

For net neutrality advocates, many of whom are also campaigning to oppose the NBC deal, the recent flare-ups with Level 3 and Zoom have been red meat, sparking calls for the FCC to begin writing neutrality rules at its meeting next month, a controversial move that has been widely rumored as the agency looks to clarify its oversight authority over network management after a court ruling earlier this year.

An FCC source told InternetNews.com that the tentative agenda for next month's meeting would likely be circulated Tuesday afternoon or Wednesday.

While advocacy groups like Free Press and Public Knowledge have cited Comcast's recent disputes with Level 3 and Zoom as evidence of tangible harm in the absence of binding neutrality rules, and an indication of the dangerous incentives that would be created by pairing online content with distribution, as the NBC merger would do, the head of the cable lobby has weighed in on behalf of the biggest player in the industry.

In a blog post, Kyle McSlarrow, the president and CEO of the National Cable and Telecommunications Association, dismissed Level 3's allegations as "nothing more than one party to a commercial negotiation trying to use the regulatory process to gain negotiating leverage."

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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