Level 3 Says Comcast Wants Fees to Transfer Movies to Users

cables_sampson.jpg Level 3 has accused Comcast of demanding fees to transfer data from Level 3's backbone to Comcast customers. Level 3 describes this as "Internet online movies and other content," which would mean everything, even though it's calling out movies. Level 3 signed a deal on November 11th to act as one of Netflix's primary network providers. In October, Internet monitoring service Sandvine said Netflix streaming represents 20 percent of all U.S. Internet non-mobile bandwidth use during prime-time hours. Far be it from me to defend Comcast's policies, even while I am generally happy with its service. I subscribe to Comcast cable broadband service at home and at work, and it performs quite well in my parts of Seattle. I don't have much choice--Qwest has limited availability of an "up to 20 Mbps" service--so I'm lucky cable performs. And Comcast caps my 15 to 25 Mbps downstream service to 250 GB per month, with no-appeal threats of cutoff after two broken caps in a year. Nonetheless, this may not be quite what it seems. The Internet is a syndicate of different networks that agree to interconnect on various terms. There are quasi-public meet-me network rooms in which providers all pay to connect in and traffic passes among all those present. Networks can also choose to create peering points between each other when traffic demands it.
My understanding of fee-free peering, however, is that the data transferred must be roughly equivalent, whether in a private peering arrangement or one conducted in meet-me rooms. If the traffic becomes highly asymmetric, the party doing the heavy lifting may complain, because it's bearing the cost of carrying another network's traffic, even though that may be what its users are demanding. It's possible that Level 3 is feeding such an enormous amount of data to Comcast in return for receiving relatively little that Comcast wants to leverage this into Level 3 paying for access to its network. If that turns out to be the complaint, it's problematic. Network neutrality argues for treating all network traffic from any source the same: no throttling, no filtering, no blocking. Exceptions may be made when a network's performance degrades because of incoming traffic, but that's an infrastructure issue rather than precisely a political one. Comcast might be taking the tack of complaining about an unequal peering relationship that Level 3's customers should be paying for without highlighting differentiated traffic. That's harder to defend against, because that would require the FCC stating that network and Internet providers cannot establish peering relationships on terms that they choose. In effect, Comcast could filter without basing it on packets. Comcast hasn't responded at this writing, and I'm curious to see its explanation and the FCC's response. Update: Comcast told the Washington Post: "This has nothing to do with Level 3's desire to distribute different types of network traffic. Comcast has long established and mutually acceptable commercial arrangements with Level 3's Content Delivery Network (CDN) competitors in delivering the same types of traffic to our customers." Not particularly clear, but "mutually acceptable commercial arrangements" would seem to indicate peering contracts. Update 2: Commenters indicate that a bit of clarification is needed here. I didn't properly distinguish between Comcast's handling of packets that originate from Level 3 and then pass over any path to reach Comcast, and Comcast's direct interchange with Level 3 (which some commenters argue is not properly called a peering point, although I disagree). Comcast cannot be denied to have the business basis to determine with which firms it directly contracts and to which it opens specific point-to-point pipelines for network interchange. That may be the issue at hand. Where network neutrality intrudes is if Comcast is threatening to degrade or block all Level 3 traffic on any Internet route to Comcast. While no laws or regulation specifically prohibit that, that's a different kettle of fish than wanting to collect fees for a direct network connection with Level 3. Photo by Adrian Sampson used via Creative Commons.


  1. Glen – like yourself, I’m stuck with comcast if I want decent service here in the emerald city. It’s demoralizing to me: each month I pay for cable channels I do not want, and pony up for broadband that’s decent enough, but, as in this case, is used to fuel the fight against net neutrality. I wish there were better options here. If you come across any, please, share!

  2. But Comcast is already getting paid by their customers who are requesting the content.

    Do telephone companies charge the people you call in addition to what they’re charging you for making the call?

    1. Do telephone companies charge the people you call in addition to what they’re charging you for making the call?

      No, because telephone companies are legally obligated not to. ISPs are trying to claim they’re NOT common carriers because, well, it would prevent them from double dipping like this.

    2. Ever used a mobile phone? Then you’re getting charged for making the call, and the person you’re calling is being charged for receiving it. It’s even worse with text messages, where you’re charged a usurious price for sending and the recipient pays the same to receive it.

  3. This is exactly why people are fighting for net neutrality. I pay my ISP, Netflix pays their ISP, now there are mobsters cropping up in between telling me that I sure have some nice looking packets here, it’d be a shame if anything… happened… to ’em.

    1. ISPs are already double-dipping, charging both ends of the connection. Triple-dipping seems like a reasonable extension of revenue to them. In a few years they’ll want to charge by protocol, then by packet length, then by time of day, then by…

  4. Level 3 can stop sending data to Comcast, or throttle it to balance the data transfer from Comcast.

    Either way Comcast customers will complain (to Comcast obviously) about the poor service, and those that have the option will leave to another ISP.

    Problem solved.

    Or Comcast could recognize that its customers are demanding this traffic, and update their peering arrangements, like a real ISP.

    1. You haven’t thought your cunning plan all the way through.

      Comcast has a lot of exclusive areas where people DON’T have a choice to move ISPs

    2. Comcast could recognize that its customers are demanding this traffic, and update their peering arrangements, like a real ISP.

      Sounds like that’s exactly what they are doing. Given an extremely high disparity between the traffic in each direction, going from a peering to a transit model is not inherently unreasonable. It depends on the details.

      1. Comcast’s traffic is always going to be highly asymmetric – that’s the characteristics of their customer base, as is evident in the asymmetric plans they sell to them.

  5. From the minimal data I have seen on this event, it looks like Comcast has changed the peering arrangement with Level3. Peering arrangements come about when two parties agree that there will be one-way or bi-lateral benefit in exchanging traffic. Typically a one-way benefit will come with some exchange in money to off-set the uni-lateral transit benefits. I expect that Comcast does not see the benefit in settlement free peering with Level3.

    Comcast has been changing their peering arrangements for a number of years now since they have built out their own nation-wide transit network and not just solely depend on AT&T’s transit or the many transit arrangements it had with the various regional Comcast networks.

    Additionally, Comcast has eyeballs. Typically, ISPs that serve large sets of end users like AT&T and Comcast can end up demanding fees to peering to these networks.

    I agree with Glenn that this isn’t a network neutrality issue as much as if Comcast was charging differently their peers or end users for certain types of traffic such as VoIP over other types of traffic such as web or mail.

    1. Tim, I suspect it’s that Comcast is primarily an end-user network while Level 3’s primarily a transit and content-provider network. So Comcast generates relatively little outbound traffic (HTTP requests typically aren’t big) and receives a lot of inbound traffic (Web pages and media content contain a lot of bytes). Comcast may have a big transit network, but it doesn’t connect directly to the content providers it’s users want to see content from so it’s still dependent on peering with networks like Level 3. Level 3 has a point: why should Level 3 be paying Comcast for traffic it’s carrying only because Comcast’s customers are asking for it? In any sensible world it’d be Comcast paying Level 3 and charging it’s customers enough to cover the transit costs they’re incurring.

  6. Ok, I have a question about this:
    “If the traffic becomes highly asymmetric, the party doing the heavy lifting may complain, because it’s bearing the cost of carrying another network’s traffic,…”

    Once the network is established, does it cost more for more data to flow over the existing wires? Apparently it does, but what gets more expensive? I would think it would cost the same to operate a switch whether it was running full tilt or whether barely anyone was using it. Or, is it just in keeping up with demand that more/better switches need to be purchased? What am I missing?

  7. It’s just Kabletown’s way of ensuring their revenue stream as more people opt for Netflix over paying Kabletown $5 each time they want to watch a recently released movie.

  8. I think the “cost of carrying another network’s traffic” really only applies if a 3rd network is carrying packets moving between the first two – but really a TCP connection has two ends, and has people already paying their respective networks to carry packets for both ends.

    If I’m talking from a Comcast network to/from Netflix’s the packets transiting to me from Netflix don’t belong to Netflix they belong to both of us – and I bet I’m paying more per packet to Comcast to move those packets than Netflix does for their packets on their network.

    Really this is double dipping because Comcast sees the writing on the wall, things are changing (again) and in the future they wont be monopolizing the gateway for television to people’s eyeballs and Comcast is scared

  9. To IckesTheSane…

    Peering is typically settlement free where both sides do about the same amount of traffic to each other. If one side has to move
    more of its traffic over to a paid peering (aka paid transit), then the benefits of the peering arrangement has been canceled for one
    of the parties.

  10. This is not an unexpected reaction from Comcast. They are losing huge amounts of cable business because their TV plan rates are horribly overpriced in comparison to other services (netflix, hulu, blockbuster, amazon, etc.) They are a business so they are going to try to make it up somewhere.

    What’s the solution? Call your Congressman and Senators and tell them to support public, FREE, high-speed internet for all.

  11. Netflix should send an email to all of their customers who are on comcast stating that they should complain to comcast to prevent this or they could face an “isp” surcharge.

    netflix has changed how people get movies, if comcast doesn’t want to be in the internet delivery business they should get out of it.

  12. I’m impressed. For the first time, a big ISP has been able to articulate coherently the REAL issue they have with bandwidth-intensive services, which has so far been argued in terms of net neutrality. It doesn’t eliminate the fact that their business model is to blame – they are selling oversubscribed lines to customers to give them access to the content they want. Since they are doing so with such massive profitability, they should probably back down. But then they might have to upgrade their network and would probably charge customers more. I have to say though, I’m not really all that much against tiered pricing for internet access. Then again, I already pay more for a faster connection, so I kind of expect watching Netflix to be included.

    1. For the first time, a big ISP has been able to articulate coherently the REAL issue they have with bandwidth-intensive services, which has so far been argued in terms of net neutrality. It doesn’t eliminate the fact that their business model is to blame – they are selling oversubscribed lines to customers to give them access to the content they want.

      This is precisely what I was trying to express — but not as well as you did.

  13. I’d tend to say Comcast’s payment demands of Level3 are fairly absurd, and counter to how most internet transit and peering works. The traffic on internet can be oversimplified to 2 main groups: content generators and content consumers. A good example of the generators would be, youtube, google, netflix, microsoft(patches). The consumer end is the ISP networks delivering the last mile service to all the people in their homes and offices who devour this bandwidth rich traffic.
    A good amount of transit (for example through level3) is needed to haul traffic across the internet, but peering (public or private) is a symbiotic relationship that greatly benefits both of these 2 groups while reducing transit requirements. In many cases such peering can be quite asymmetric and acceptable to both sides.
    Imagine this scenario:
    You are a content generator. You have some bandwidth intensive service such as video, that everyone wants to view from the comfort of their own home. Normally you would have to pay a transit provider to carry this traffic from your network to the rest of the world. Your friend is an ISP. Normally they have to pay a transit provider to uplink their network to the rest of the world as their end users consume content. Both of you happen to be in a collocation facility that has a public peering network. By peering directly, it is in the content generator’s best interest to dump as much data to the ISP as possible, while it is in the ISPs best interest to receive as much of this traffic as possible in this manner. Both of them bypass having to pay transit providers who are normally middle men.

    Now to circle back to my original statement regarding Comcast. Although they are a many headed beast, the Comcast referenced in the above article is effectively an ISP. Classically as an ISP you are paying for your incoming (and much less outgoing) bandwidth, and hopefully mitigating a chunk of such costs through peering. You make your money by the end user paying you for access to the rest of the internet whatever traffic it may be. Comcast now apparently believes they can flip this model on its head and charge other content generators for the “privilege” of delivering their data to the end users paying for IP connectivity. More so, this is on top of having put bandwidth caps on on these very same end-users that they are demanding payment to deliver the content to. Also I’d tend to say the fact they also are a conventional TV provider probably plays into this rather heavily.
    This was a fairly oversimplified version of peering, but I think it captures the fundamentals well enough. Lastly I am sure I have a somewhat biased viewpoint given my employment so feel free to take my analysis with a grain of salt.

  14. If the speculation about peering contracts is correct, then this would seem to be a mirror image of the issue a few years ago when Level3 de-peered with Cogent over peering bandwidth issues.

    Thankfully, having a de-peering situation between Level3 and Comcast wouldn’t be likely to cause nearly as many issues.

    I would be a little surprised at a free peering arrangement between these two, simply based on the nature of who they usually cater towards.. I would normally expect the majority of the traffic to Level3 -> Comcast even without the Netflix deal.

    1. It doesn’t make much sense for Comcast to be getting uppity – The end-game is L3 dropping the peering connection, forcing Comcast(AS7922)’s traffic via the links to Global Crossing(AS3549) that Comcast has to pay for. L3 has free peering with GC, as they’re both tier 1 carriers. The downside for L3 is that their customers see a bit more delay getting traffic to Comcast subscribers, but it’s probably not that big a deal in most cases. It’ll make Comcast’s customer’s connections to Netflix seem a bit more unreliable (one extra ISP in the network path), but that’ll just make them call support more, which is a huge cost to an ISP.

  15. Whoa whoa whoa.

    I thought the whole Symetric / Asymetric peering thing was for when you have more than two parties.

    Imagine 4 networks. A, B, C and D

    A connects to B
    B connects to C
    C connects to D

    ie A—B—C—D

    Now, if C is sending a ton of data to A through B, and B is not sending a ton of data through C to D, then B should be paid for it because they are carrying a lot of extra data for C.

    But if C is sending a ton of data to B, they’re both benefiting. C get a destination, B gets a source.

    You don’t get to hold the end-users hostage for a peering agreement.

  16. Remove the legislated monopoly on last mile connectivity. In California I have two choices (ATT / Comcast) and both refuse to let anyone else compete.

  17. This is such a bizarre twisting of the peering policy it’s going to be hard to sum up how wrong Comcast is in this tiny little box but here we go.

    “Peering” is when two carriers agree to exchange transit traffic for free at a 1:1 ratio. That (transit) means the traffic is not DESTINED for their network, it was just passing through it. If one carrier starts sending a lot more and the ratio falls out of balance, then one carrier gets to charge the other, you see he’s determined he’s more important in the relationship and deserves to be paid. He’s saying, hey, wait a minute, all the traffic you send out has to go through ME to get it it’s destination – I must be pretty important to the delivery of your traffic – PAY UP!

    The problem here is that Comcast isn’t a transit provider, they’re the last stop on the train ride. The traffic they’re receiving? Their customers asked for it!

    1. “Peering” is when two carriers agree to exchange transit traffic for free at a 1:1 ratio. That (transit) means the traffic is not DESTINED for their network, it was just passing through it.

      That is a massive misreading of how peering works. Google and Comcast, for instance, have peering agreements to interconnect their networks and bypass public transit points to improve efficiency, regardless of any net neutrality concerns between the two.

      Tim Pozar, who comments above a couple of times, is one of the people involved in creating a rich, expanded layer of network interconnection at peering points–his involvement in such kinds of things dates back to the mid-90s. Read his comments.

  18. I am in the same boat being in Seattle. Since the internet bill is cheaper than gas for commuting I will have to keep it. (gotta love being able to work in your jammies)

    I was looking forward to FiOS years ago (though I hear equally bad things about their customer service) just to not have to deal with Comcast but they never entered the city. I heard that Comcast and Qwest lobbied to keep them out. Hell Qwest is supposed to have faster DSL choices but NOT IN SEATTLE of course so I kinda wish they would quit sending me advertisements about it.

  19. Seattle is a Sprint 4G territory. I use a Sprint 3g/4g Overdrive at home, then toss it into my bag when I travel. I’m never without a wifi signal, and I was able to shed free of my local cable provider (Time Warner).

    1. How fast is 3G/4G?
      Unless it is in the 10-20Mbs range it isn’t fast enough with the overhead of the vpn to be usable for me.

      1. What in god’s name are you doing with a VPN that requires 10-20 Mpbs performance? (Latency is low on the new 4G networks, including WiMax.)

  20. Except that peering arrangements are generally for packets transiting a network, not terminating within a network.

  21. Peering conflicts go back a long, long ways; I was able to find this account of 7 different battles dating up to only 2001:


    Fights over “imbalanced traffic flows” are very old. Any time a big new source of traffic comes online (e.g. Netflix) expect to see a series of peering battles and network reconfigurations to handle the new flows. Expect also a certain amount of drama as all sides seek to get just enough public opinion on their side to get their own way, without getting too many politicians involved lest the whole peering infrastructure be regulated.

    1. Great idea. How does one do this? I have been working with a particular city to deploy a city-owned last mile fiber infrastructure that will connect buildings back to various data centers. The ideas is that residents can pick their provider such as video, voice and data. It will support the current competition we see for transit providers and hopefully provide another competitor of the last mile.

  22. Not sure why there is a confusion with the difference between peering and transit. Peering traffic (paid or not) is, by definition, traffic for each of the peers and not meant to be transited through another peer.

    In practical use I have seen rare exceptions when some providers move transit traffic through the peering fabric. This is highly discouraged when it happens as it uses considerable resources of the common peering fabric. Typically these companies are kicked off the fabric and told to get a private interconnect (PI).

  23. this:


    makes it sound a lot like comcast WAS going after getting paid for “allowing” access to their end-users.

    granted it’s level 3’s statement on the issue, but this doesn’t sound like it’s just about “peering”; it sounds like comcast was going to deliberately make it harder for their customers to get access to content via level 3, unless level 3 paid up

    & with all due respect to the author of the original article, i do not share his views about the benign nature of comcast, or isp quasi-monopolies in general; large corporations want to get paid every which way they can.

  24. The last spat of this nature in recent memory was when Level3 disconnected Cogent because of.. you guessed it… “imbalanced traffic ratios”. It is amusing to me seeing the tables turned the other way around.

    How does THAT feel, Level3?

    The “tier 1” carriers have been throwing their weight around and refusing to pay for peering and refusing peering in general (instead demanding a customer relationship) for far too long.

    The network effects of the internet kind of break capitalism. Regulation somewhere along the lines of insisting that people that peer in an adequate number of locations can set up settlement-free peering would probably be appropriate. The network effects and natural monopolies effects that exist make such a regulation seem prudent if we are to have proper competition.

    And in this case, Comcast’s argument regarding imbalanced exchange ratios is probably bogus. The scenario under which such an argument is *potentially* valid is when you are peering in not enough places. As an extreme example, take network A which peers only at one location on the west coast with network B. Then imagine that they have significantly unbalanced traffic ratios: network A pretty much exclusively sends traffic to network B. And network B extends all over the country. Network B is bearing the cost of transmitting the data across the entire country, while network A only needs to get it to the right room in the building where they are peering.

    Basically imbalanced ratios come up as a potential concern because one network might have to be hauling an awful lot more data an awful lot further than the other network, and that means they may not be fairly sharing the costs of getting the data where it needs to go.

    I don’t think it’s entirely the right way to be thinking about this anymore, but it may hold some water in some situations. One of the challenges with continuing to think this way is that, more and more, networks specialize as “sources” and “sinks”. (Comcast: Sink. Youtube: Source.). And they *both* get value from each other, and there is no reason one should be paying the other for access to the others’ network. When you start saying that one should start paying the other you remove the ability for competition to continue to lower the cost of access as the actual cost continues to decrease through technological improvement and/or paydown of capital costs. Once payment gets introduced it becomes impossible for a network to have their costs to go lower than what other networks are requesting (despite the fact that those costs may not at all reflect the *actual* costs of operating the network). And that keeps prices artificially high.

    Which is, of course, what Comcast wants. They don’t actually want pricing to be set in a competitive market. Their entire business model revolves around monopoly pricing power…

    The best way to ensure a competitive market is to insist that people pay their own way. Comcast’s customers pay comcast. NO ONE ELSE.

    Youtube’s customers pay youtube. NO ONE ELSE. (In this particular case, Youtube is its own customer, they operate their own network).

    By insisting that it is only the customers doing the paying, it allows for competition. When you start allowing other payments to be required, that stops being the case.

    1. So Comcast should be forced by legislation and regulation into business relationships with companies that they don’t find advantageous that involve private network operations that Comcast must pay for?

      1. Glenn, I reject the premise that peering agreements should be seen as business relationships. They should simply be viewed as being a necessary activity for an organization that provides internet access. When a customer buys internet access, they are paying you to take care of all that nasty interconnection business. But there is no inherent reason there needs to be a financial aspect to it.

        Of course Comcast would find such a regulation disadvantageous. It is more profitable for them to be allowed to take advantage of market power and make it harder for them to have competition. But that is precisely why we have such a large body of competition laws. For capitalism to work, it is necessary for there to be competition. For competition to work, we must have anti-trust laws.

        I’m not suggesting that we allow other companies to demand Comcast build out their network wherever and whenever they like for interconnect purposes. But it does seem reasonable to be able to demand that Comcast exchange traffic at public peering points, especially when we are talking about competitive networks of non-trivial size. And if there is enough traffic that public peering points don’t have the capacity then clearly the networks have enough traffic exchange going on to justify the costs of connecting directly to one another (with each party paying their own costs of such a connection).

        Remember: Comcast can and should be charging *ITS* customers for the cost of providing service. I am not suggesting Comcast be forced to provide service free of charge. I am simply insisting that they should only be collecting revenue from their own customers.

        Consider what happens when you have a different person paying for things than the person deciding which service to use. The person deciding which service to use has no incentive to choose the more efficient/lower cost option. So there is no benefit to operating more efficiently, and there is thus no incentive for innovation.

        Comcast et all are playing a dangerous game. All this talk about how other companies like Google should be paying them to “use their pipes”. Have they considered that Google could also demand that Comcast pay them for access to Google’s services? How long would you remain a Comcast customer if you couldn’t access Google through the internet connection you are paying for?

        This Google example I think is quite clear. With other content providers like Netflix it is perhaps slightly less clear. And I think that helps illustrate how this is really a question of relative market power. And when you have a situation where market power is the dominant factor in pricing, yes, I do believe regulation may be called for.

  25. in reply to Glenn Fleischman

    no, comcast should be forced to play by the rules.

    whatever else comcast may do on the network, comcast is an Internet Service Provider; it is their JOB to move their customer’s data over the net, both ways.

    if i subscribe to comcast’s isp services, i expect them to connect me to the internet & move my data back & forth as per my requests. that is what i am PAYING THEM for.

    it is OUTRAGEOUS for comcast to seek payment for this same service from the parties that i am connecting with over the internet (unless the other party also happens to be a customer of comcast for isp/hosting/whatever services), it is especially outrageous when comcast threatens these parties with a disruption of the services which i have ALREADY PAID comcast to perform.

    i just want my isp to do its job, without trying to milk (or blackmail) the content hosting service on the other end of MY online transactions.

    comcast’s ONLY involvement in these transaction, as my isp, should be to (shut up &) move all the little 1s & 0s around, as instructed.

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