The big headlines about the dispute between Level 3 Communications and Comcast over the latter's access charges may have subsided, but don't let that fool you. Like so many telecom wars, this one has migrated to the antechambers of the Federal Communications Commission. There, both sides are battling over whether the feud comes under the FCC's authority via its still-unofficial net neutrality rules.

"It would be ironic and unfortunate if, as we begin the era of growing broadband connectivity and use, the Commission effectively abdicated jurisdiction over broadband Internet services in a way that reduces choice and openness for the American consumer," Level 3 is warning the agency.

*Au contraire, *insists Comcast. "This has been, is, and will remain a dispute about the terms of an existing arrangement for network interconnection. It is not properly before this Commission."

Is not? Is too? Let's recap this story and see how the behind-the-scenes slugfest is going.

Continue reading ...

As we've reported, back in late November, Internet backbone and content delivery network runner Level 3 ripped off a press release making some pretty serious charges against Comcast. They boil down to an accusation that once Level 3 signed a contract to deliver video content for Netflix, Comcast jacked up charges for access to its subscribers.

That's a foul, Level 3 cries. Comcast pushes back that Level 3's move unbalanced their formerly symmetrical peering arrangement, in which both backbones exchanged roughly equal amounts of traffic.

The heck it did, replied Level 3. "Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network," the company declared, "enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content."

As the opening words in this skirmish raced across telecom-land, the FCC voted to approve its new net neutrality rules, which have yet to be made official by being published in the Federal Register. This did not stop Verizon and MetroPCS from suing to stop them in a federal appeals court several weeks later.

Which gets us to February 14, when AT&T and the National Cable and Telecommunications Association wrote a letter to the FCC regarding the Comcast/Level 3 affair. The missive expressed alarm that Level 3 has been "attempting to convince the Commission that its newly announced net neutrality rules do, in fact, apply to Level 3's dispute with Comcast over the terms of the parties' peering arrangement."

They don't, the filing continued. The FCC's open Internet rules cover user retail access to the Internet, but not the Internet itself. That was the intention, AT&T/NCTA insisted. Nondiscriminatory last-mile access was always the issue—not the resolution of backbone peering/transit disputes.

"Thus, consistent with the Commission’s commitment that its net neutrality rules would 'increase certainty for all Internet stakeholders'," the letter concluded, "we urge the Commission to promptly and publicly affirm that Internet peering and other Internet backbone services, including the backbone arrangements described by Level 3 and Comcast, are not subject to those rules."

But Level 3 didn't let much time go by before responding to this demand. This is not a backbone peering/transit issue, the company reiterated on February 16. This is about an ISP charging more money to Level 3 to deliver movies to Comcast customers who have asked for them.

"The flaw in AT&T’s and the NCTA’s logic is clear," Level 3's Chief Legal Office John Ryan wrote to the FCC. But with it, any ISP could conjure up a "contrived 'backbone' service as a ruse to evade the clear intent of the Open Internet Order and extract a toll for delivery of content to the ISP's customers."

On that same day, FCC Chair Julius Genachowski appeared before the House Committee on Energy and Commerce's subcommittee on telecommunications. He didn't say anything about the Level 3/Comcast war in his prepared remarks, but was asked about its applicability to the agency's new rules by net neutrality "vampire" foe Rep. Marsha Blackburn (R-TN).

The FCC's open Internet order "doesn't change anything to existing peering arrangements," Cecelia Kang of *The Washington Post *quoted Genachowski as responding, adding that he hoped the parties "settle and resolve" the matter. The Post ran the story under the headline "FCC defends net neutrality to lawmakers, says Level 3-Comcast not covered by rules."

It appears that Level 3 quickly contacted Kang, disputing this representation of Genachowski's comments. About nine hours later, she updated the story with a quote from Level 3 vice president Robert Yates.

"It would be inaccurate to take Chairman Genachowski's statement that the open Internet order is unrelated to peering agreements and turn it into an implication by Chairman Genachowski that the open Internet order does not relate to the Comcast/Level 3 dispute," Yates explained.

And just to make sure Genachowski understood that too, Level 3 sent another letter to the FCC with the full text of his answer to Blackburn.

Well, as you said, the order says that it doesn't change anything with respect to existing peering arrangements. It applies to Internet access service provided to consumers and small businesses. You're referring to a dispute that’s occurring outside the Commission, a commercial dispute. I hope those parties settle it and resolve it, but it's not something that we have facts and data on. I do think the order speaks for itself in the way that you suggest.

Regardless of "the inaccurate press reports of your testimony," explained Level 3's Ryan, "the Commission does not have facts that would permit it to conclude that the Comcast/Level 3 dispute implicates an 'existing peering agreement.' We must advise you that it does not. Rather, the dispute arises out of Comcast's insistence that Level 3 purchase services from Comcast in order to obtain access to Comcast’s local distribution network (and thus obtain access to Comcast’s subscribers)."

And furthermore, "There is no peering arrangement between Level 3 and Comcast," he added.

There was no way that Comcast was going to let this assertion go by unanswered. Of course Comcast and Level 3 are peering, Comcast legal affairs vice president Lynn R. Charytan wrote in two days later. Level 3's assertion "is wrong," Charytan declared:

As Comcast has repeatedly made clear, Level 3 in fact has two peering arrangements with Comcast. One is a pre-existing arrangement for network interconnection, which includes settlement-free interconnection provisions. The other is an incremental arrangement that Level 3 signed this past November under which Comcast agreed to supply additional interconnection ports to Level 3. Both agreements are in effect and enabling a satisfactory and growing exchange of traffic between the companies.

But the letter also acknowledged that this "peering" concept might be open to interpretation. "Under any common understanding of how the Internet works, each of these is a 'peering arrangement'," Charytan added. "But, even if that were not the case, the sweep of the relevant exclusion in the Order is appropriately broad; it exempts any 'existing arrangements for network interconnection'—by whatever name—from the scope of the rules."

Level 3 jumped back into the fight like plastic on twisted copper wire. In fact, it hasn't even asked the FCC to take any action under its net neutrality order, the company wrote to the agency on February 22. The Commission hasn't even made the rules official yet, and it doesn't have all the facts before it in this case.

This whole he-said/she-said started because AT&T and the NCTA wrote to you "requesting that Commission support Comcast's position without any factual or procedural basis," Level 3's letter insisted, and reiterated its earlier characterizations of the dispute.

Bottom line:

If possible, a negotiated settlement between the parties enabling fair and equitable interconnection is preferable to either party being forced to request government intervention. Like Comcast, we remain prepared to pursue a negotiated solution to our dispute. Requesting that the FCC "prejudge" the merits of either Comcast's or Level 3's position without a factual basis to do so will not improve the odds of such a negotiated solution.

So there you have it: the war between Level 3 and Comcast thus far, with the former insisting that it wants to resolve this matter via negotiations, but urging the FCC to see the problem as enforceable via its open Internet rules.

Netflix has not gone unawares of this matter, by the way. On February 18 it issued its annual 10-K report, which offered the following commentary on the dispute.

In late 2010, Comcast informed Level 3 Communications that it would require Level 3 to pay for the ability to access Comcast's network. Given that much of the traffic being requested by Comcast customers is Netflix data stored with Level 3, many commentators have looked to this situation as an example of Comcast either discriminating against Netflix traffic or trying to increase Netflix's operating costs. Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for or prohibit us from being available through these tiers, our business could be negatively impacted.

With all this said, albeit little done, many questions and variables are now at play in this fight. But the most important of them is pretty obvious from this correspondence. Where in cyberspace is the dispute between Comcast and Level 3 located? On the Internet backbone, or at the last mile?

From that question others flow. If Comcast and Level 3 can't privately resolve this matter, will Level 3 take it to the FCC? If the company does, will the agency take it on? And if the FCC does, how will it research, deliberate, and answer that first question?

And if Comcast, which has already successfully sued the agency once in Federal court, thinks that this inquiry isn't going the company's way, what will it do next?

See Also: