Level 3 outbid Akamai on Netflix by reselling stolen bandwidth

http://www.digitalsociety.org/2010/11/level-3-outbid-akamai-on-netflix-by-reselling-stolen-bandwidth/

by chaostheory • 16 years ago

89 52 16 years ago

jws3• 16 years ago

I still fail to see why a leaf node internet provider thinks they should be paid for receiving the data their customers have requested.

Paying for transits is easy to understand, and in a complicated topology paying for bytes-in as a peer makes sense because they may be transits.

For a leaf node network like Comcast, whose customers pay to receive bytes and pay to have their connections installed to then demand payment from producers for supplying those bytes seems unjustified.

The author tries to hang this on the relatively higher build out cost per customer Mbps of residential nodes compared large commercial drops, but that is just different businesses. The residential providers already charge many multiples higher for bandwidth, this is just haggling about the multiplier.

cynicalkane2• 16 years ago

? Just because an agreement doesn't make 100% sense to you doesn't mean it can be unilaterally broken!

jws3• 16 years ago

Above, I'm not speaking of any particular agreement. For the current Level3-Comcast issue, as I read that "article" they didn't break it, but Level 3 would cause operating conditions that made the existing Comcast contract no longer applicable, so they needed a new agreement of some sort.

tbrownaw2• 16 years ago

I have an internet connection from Comcast. If I only ever connect to other Comcast customers, I should get my connection for free?

jordan0day5• 16 years ago

I'm not sure that's at all the argument jws was making. From the customer's point of view, why should they be able to download 100 gigabytes (through Comcast's infrastructure) from an endpoint also within Comcast's network with no problem, but now they can't get any data at all from a level3 endpoint? They're taking up 100 gigs of bandwidth on Comcast's network regardless. Why does level3 have to pay extra to send that customer the bits they've requested?

lawfulfalafel• 16 years ago

I still find the fact that level 3 decided to pay comcast the most disturbing. I do not understand the long-term financial benefit of that decision in any way.

ynniv• 16 years ago

They can still send packets to Comcast through a transit provider without paying Comcast. What they can't do is start sending 5 times as much data through their free peering agreement, and the renegotiation involves Level(3) paying Comcast. Obviously they will be paying Comcast less money than they would pay a 3rd party transit provider.

dedward• 16 years ago

Normally, a retailer pays a wholesaler or producer money to get goods, then re-sells them to end users.

Produces set the price, and retail outlets, with a markup, come up with a business strategy ot move that inventory to their customers.

Now - look at Wal-mart. They're big enough that they can go back to the producers and say "Hey, by the way, you're going to knock 1% off the price this year or we're going to drop you - and we can say that because YOU need US."

Same deal here.

amalcon• 16 years ago

Nothing about internet routing, including the cost structure, has anything to do with any sort of practicality. It's all politics and bureaucracy. Comcast and Level 3 are basically in the middle of a bureaucratic skirmish; there's nothing more sinister or unusual going on here.

extension2• 16 years ago

Rarely is there a clear rationale for who a middleman should extract their fee from. In practice, it comes down to who is willing to pay to be part of the transaction.

Comcast customers pay for internet access, but I doubt that agreement specifies anything about network topology. If L3 wants a special connection, and it's worth more to them than it is to Comcast, then I don't see what's wrong, in principle, with charging for it.

Regardless, the net neutrality thing certainly seems bogus. On the other hand, if L3 didn't go on the offensive with PR, they probably would have taken a larger share of the blame from users than they deserve.

Aron• 16 years ago

It does sound a bit like Kroger charging Kraft to carry their cheese in the stores.. although there have been arrangements like that to improve product placement on shelves (I think).

These companies are swapping services. They both benefit from that. If one company thinks they have the power to do so, they can also extract additional payment. It's just a matter of the details on who has that power. Level3 can choose to pay transit providers (which Comcast can underbid), or they can cut off the Netflix streams (which likely pisses off Netflix quite a bit, and certainly cuts their own revenue). I suspect Comcast wins here unless the PR kerfuffle gambit works.

oogali• 16 years ago

utterly stupid.

comcast is a customer of level3, not a peer. even though marketing has blurred the lines (i blame overly ambitious hosting companies), there is a very large difference between peering and being a transit customer.

what applies here is a transit agreement, even though george ou completely skips over that in his analysis by assuming comcast is not a customer.

to be redundant: this is not a peering spat, because comcast and level3 DO NOT PEER, comcast is a level3 customer.

customer.

pilom3• 16 years ago

Right, where comcast pays L3 to deliver what comcast has to send. L3 still needs to pay someone (either comcast or someone else) to take the what they have to offer. No one wants traffic, thats why L3 has to pay to send Netflix to customers.

wmf2• 16 years ago

Usually in a transit relationship the customer pays for the whole pipe; there isn't accounting of incoming vs. outgoing.

tbrownaw2• 16 years ago

> comcast is a customer of level3

It sounds to me like they used to be equals, and now Level3 is the customer.

andrewvc• 16 years ago

The article does a decent job of introducing the concepts of peering and transit. However, it's pretty long winded and goes through a number of tortured justifications. Here's a much simpler explanation:

Comcast is charging Level 3 because they can.

extension2• 16 years ago

Sure, but what I am trying to figure out, as a relative layperson on this topic, is this: Is either party making some outrageous and unprecedented demand that will bring about the end of the internet as we know it? Or is this just business as usual?

blueben2• 16 years ago

It's not business as usual, which is why it's a big deal. Comcast is trying to do something new. They used to get a cut of revenue from Netflix traffic because it was on Akamai, who pay to sit in Comcast's datacenters. Now that traffic is going to come from a peer. It's the same traffic, but Comcast isn't getting the revenue, and they're pissed.

pilom3• 16 years ago

Lots of people seem to be forgetting that content providers want to connect to customers just as much as the customers want the content.

Comcast:"L3 you want to connect to all my cable customers fast and you don't want to pay even more to get to me through AT&T so lets make a deal."

It makes perfect sense that Comcast should be paid for access to their customers.

anonymous246• 16 years ago

Even though Comcast customers already pay Comcast to receive those bytes? As others have pointed out above.

spindritf• 16 years ago

Paid magazines often still sell advertising space, same is true for paid cable channels, so it's not unheard of to charge both the "broadcaster" and the "receiver".

jordan0day5• 16 years ago

"It makes perfect sense that Comcast should be paid for access to their customers." I disagree, heartily. Comcast's customers are paying Comcast for access to the entire internet, not just to the little segment of the network that Comcast owns.

boredguy8• 16 years ago

Exactly this, especially in markets where there isn't consumer choice (which is something I don't see anyone talking about on HN).

Conceivably an ISP could charge customers for a connection AND charge providers for access to that base. For instance, magazines charge for both the subscription and the advertisements.

However, I can decide if I want Harper's or US Weekly. If one provides value and the other doesn't, I get to pick. With ISPs, the same feature isn't at play: I either use Road Runner or I don't get high-speed bandwidth. At that point, ISPs have a larger obligation to protect the customers by not doing things like what Comcast is doing.

brown9-22• 16 years ago

And the bullshit part about this is that most of Comcast's customers have little choice in being a customer. They're trapped and have no ability to choose.

ck2• 16 years ago

How exactly could an ISP ever match the upload volume of a downstream contract?

It's technically impossible.

Even without netflix, the download to upload ratio is huge.

EdwardMSmith• 16 years ago

Many (most?) large cable providers, such as Comcast, have co-location and hosting businesses. After all, they have significant server facilities and a serious traffic deficit to make up.

rbranson• 16 years ago

They can't, which why this article is bullshit. Settlement-free peering agreements exist because they are mutually beneficial, not to directly generate revenue. Both benefit from cost savings and Level3 can deliver better service quality, which is a big competitive advantage in their business.

rburhum• 16 years ago

Personally, I would take three extra network hops and a slower internet if it meant Comcast got screwed. Having been practically forced numerous times to use Comcast as a home internet provider because there were no other options, spent days (when you add it all up) on their stupid support line and having been bit by not calling after 3 or 6 months "trial" (or actually them putting you on hold enough - like 1+ hour), I dont care. This article is asking me to be worried/sorry about the equivalent of a child molester of ISPs. Sorry. NO

brown9-22• 16 years ago

The discussion of this article over on reddit has uncovered some interesting past articles by the same author, and it seems he has a strong bias on this topic

http://www.reddit.com/r/technology/comments/edxjp/level_3_ou...

RockyMcNuts2• 16 years ago

true! every one of those 'Digital Society' paid promo links on memeorandum has the strong whiff of incumbent telecom corporate shilling. I have never seen one get popular there, and am quite surprised to see it #1 here.

The key to this argument is whether Level 3 will have the same the same terms that Akamai and other CDNs do for non-Netflix content. Comcast claims that is the case, but I am not particularly inclined to believe them.

wmf2• 16 years ago

My understanding is that Level 3 (and Akamai and Limelight and soon everyone) has to pay Comcast for all traffic.

akamaka2• 16 years ago

In case you're wondering who wrote this, they are closely connected to Comcast.

From digitalsociety.org: "Digital Society is an independent 501(c)3 non-profit organization, funded by donations from Jon Henke and from Arts+Labs."

From artsandlabs.com: "Arts+Labs partners include entertainment companies, software providers, telecommunications providers, artists and creators committed to delivering innovative and creative digital products to consumers." (including NBC Universal)

From Wikipedia: "As of August 2010, Comcast's proposed acquisition of a majority stake in NBC Universal is pending government approval."

RockyMcNuts2• 16 years ago

Comcast statement - http://blog.comcast.com/2010/11/comcast-comments-on-level-3....

(also crap IMHO - I am not particularly inclined to believe their claim that Level 3 got same terms as Akamai and other CDNs for non-Netflix content)

akamaka2• 16 years ago

Thanks for the link. I see that the official statement is using much more measured language.

I'm pretty amused by this quote: "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."

Isn't Comcast paying Level 3 to deliver traffic to them? If Comcast is not happy with the price Level 3 charges them, can't they switch to a different tier 1 network?

inafewwords• 16 years ago

I'm waiting on Level 3 to call out Comcast on that specifically. That would make the argument of Level 3's accusation against Comcast.

grav1tas3• 16 years ago

In case your wondering, a funding paper trail for a non-profit doesn't entail bias in a writer for (or employed by) said organization. Bias in a writer doesn't entail factually incorrect information or invalidate a writer's arguments.

This statement does not contradict anything explicitly stated by the OP, in case you're wondering.

tzs• 16 years ago

So by "closely connected" you mean a non-profit that received some funding from an organization that has partnered with many companies, one of which Comcast may buy some stock of?

ashbrahma• 16 years ago

Level 3 found itself in Comcast's shoes back in 2005. They felt that Cogent Communications unfairly taxed its network and made the exact same argument that Comcast is making today, and even temporarily pulled the plug on its connection to Cogent, cutting off some parts of the Internet for millions of Cogent customers.

nikcub• 16 years ago

"Now it makes perfect sense how Level 3 managed to outbid Akamai since no CDN provider operating legally could outbid hot goods."

I think he means contractually rather than legally, very big difference and suggests that this story is a beat-up. There is no way in the world that Comcast (a dedicated end user provider) was almost equal with L3 (almost dedicated to providing first-tier backbone to private networks and colo)

Peering is interesting in that you can get a lot of free hosting if you find a company that does a lot of inbound but no outbound. We hosted all of the OpenBSD, FreeBSD and 100+ other projects au mirrors for 10+ years for free hitting peaks of gbits+ because of the provider having to make up peering arrangements. I imagine Comcast would be the same (we did it with a similar company - home broadband provider)

This is definitely a case of Comcast attempting to double-dip and feeding a story to a journalist to get their side of the argument out (the journalist even put a hit on one of his competing publications for 'getting it wrong')

netc• 16 years ago

The article talks about 5 times increase in volume of the traffic. Wouldn't it mean Comcast gets to make extra bucks even though number of Comcast customers who access Netflix will not increase that much? Right or wrong, Comcast wants a cut every time Netflix (or any one else) changes CDN provider.

Level 3 outbid Akamai on Netflix by reselling stolen bandwidth

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