?Comcast Corporation (NASDAQ:CMCSA)? has responded to Level 3’s claims that Comcast is imposing a “toll” on them. Comcast had asked Level 3 to pay them a recurring fee when Comcast subscribers request content such as movies through Level 3’s facilities. Level 3 is one of the CDN companies that streams Netflix movies. Level 3 had agreed to the fees in protest. Here’s Comcast’s side of the story.
Comcast said that Level 3 inaccurately portrayed the commercial negotiations that were made between the two companies. It appears that Level 3 wants to pay the same costs that Comcast charges other CDNs but will end up consuming more bandwidth. If these extra costs get passed on to me as a Comcast customer, I would not be too thrilled.
Below is a blog post that Comcast SVP of External Affairs and Public Policy Counsel Joe Waz wrote:
Level 3 has inaccurately portrayed the commercial negotiations between it and Comcast. These discussions have 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. Comcast offered Level 3 the same terms it offers to Level 3’s CDN competitors for the same traffic. But Level 3 is trying to gain an unfair business advantage over its CDN competitors by claiming it’s entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers.
To quantify this, what Level 3 wants is to pressure Comcast into accepting more than a twofold increase in the amount of traffic Level 3 delivers onto Comcast’s network — for free. In other words, Level 3 wants to compete with other CDNs, but pass all the costs of that business onto Comcast and Comcast’s customers, instead of Level 3 and its customers.
Level 3’s position is simply duplicitous. When another network provider tried to pass traffic onto Level 3 this way, Level 3 said this is not the way settlement-free peering works in the Internet world. When traffic is way out of balance, Level 3 said, it will insist on a commercially negotiated solution.
Now, Level 3 proposes to send traffic to Comcast at a 5:1 ratio over what Comcast sends to Level 3, so Comcast is proposing the same type of commercial solution endorsed by Level 3. Comcast is meeting with Level 3 later this week for that purpose. We are happy to maintain a balanced, no-cost traffic exchange with Level 3. 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. To use Level 3’s own words:
“To be lasting, business relationships should be mutually beneficial. In cases where the benefit we receive is in line with the benefit we deliver, we will exchange traffic on a settlement-free basis. Contrary to [other ISPs] public statements, reasonable, balanced, and mutually beneficial agreements for the exchange of traffic do not represent a threat to the Internet. They don’t represent a threat to anyone other than those trying to get a free ride on someone else’s network.”