Results tagged “Level 3”

March 5, 2014 2:50 PM

CDN-ISP Agreements Fuel Content Delivery Competition

Last week began with news that Netflix had decided to improve its long-languishing service for customers of Comcast's ISP by directly interconnecting with Comcast, cutting out Internet transit provider Cogent Communications.  The Cogent-Comcast "peering" dispute had been a long-standing topic of media speculation.

Prior to the announcement of the direct interconnection agreement, many media sources had wished to present this dispute as just another iteration of ISPs attempting to "extort" money from sources of competing content.  Netflix's decision to solve the problem itself had pretty much eliminated the "poor Cogent" articles by the end of the week--after Dan Rayburn's detailed explanation of the deal.

Knowing what we have learned in the past week, it would seem that Netflix's "ISP Speed Index" is more likely a fairer representation of the performance of Netflix's CDN versus that of its third party transit providers.  The Netflix ISP Speed Index is obviously not attempting to measure "true" ISP speeds, because even gigabit provider Google Fiber hovered around 3.5 Mbps for most of last year.

The ISPs to which Netflix connects with its own CDN generally see speeds in the 2.3 Mbps-2.9 Mbps range.  For the customers of ISPs served by a third party transit provider, speeds are often much lower.  But how bad is too bad? 

The "Mendoza Line" for Poor Streaming Transit Performance  

Within the past day, Verizon's CEO has said that their FiOS ISP is close to a direct interconnection agreement with Netflix.  Recall, that Cogent also had issues with refusing to augment inbound capacity to Verizon.   

In fairness to Cogent, it does not claim to offer CDN service.  Still, you have to wonder, where is Netflix likely to switch away from "plain old transit" service next? 

Luckily, Netflix kind of tells us (and its transit/CDN vendors) the levels of service deterioration at which they can expect the "Never mind, I'll do it my damn self" call from Reid Hastings.  Here is the performance of several ISPs who offer broadband access at speeds well above 5 Mbps for the last 4 months, as reported by Netflix's ISP Speed Index.
Netflix CDN Chart-2.jpg

I looked at the Netflix ISP Speed Index for the last 12 months, and, traffic delivery at anywhere between 2-3 Mbps seems to be acceptable.  If you're reading about customer service complaints, it's safe to assume that speeds have dropped below 2 Mbps for the ISP in question. 

For both Comcast and Verizon customers, Netflix's transit/CDN vendor(s) performed well for most of the year--only deteriorating significantly over the last several months.  Like in baseball, though, there is a Mendoza Line for competent transit service, and it seems to be around 2 Mbps.  So . . . if you're a Mediacom customer, you probably don't have much longer to wait.

Netflix's traffic is certainly growing very quickly.  But, asymmetric, end-user-destined video traffic is growing very quickly for all ISPs, everywhere.  Sandvine's second half 2013 traffic report shows that for the largest Internet consumers (North America and Asia) peak hour video consumption may be as high as 70% for the average North American user, and 75% for the average Asian consumer (I got that by adding the "real time entertainment" and "P2P" categories for both continents).  You'd think this would be a good thing for a content delivery network, no?

Is "Peering" Net Neutrality Redux?

Level 3 explains in this recent ex parte, that all is not rosy in the world of the CDN--despite Level 3's own recognized success in the market--because of the nettlesome costs that some ISPs believe should be paid by the party getting paid to carry the traffic to the ISP (namely, Level 3).  BTW, this is completely the same issue as the Netflix carrier-v.-every-ISP-in-the-graph issue.

But, Level 3 characterizes what some would call the costs of providing CDN service, as "tolls" that unfairly target large CDNs distributing disproportionately-downstream, bandwidth-intensive traffic.  Level 3 tells the FCC, "ISP tolls that facially apply equally to all traffic are effectively tolls on the most bandwidth-intensive services - video services that compete with the ISP's own video services." (ex parte at 8/8).  

What types of Level 3 traffic are ISPs targeting?  Well, sometimes it looks like this:


You see, HBO Go is an online service that HBO (not the subscription TV provider) offers its customers that already buy HBO's premium subscription TV channel.  Since HBO, like almost every any other provider of streaming video service, lacks the demand to justify the hassle/cost of direct interconnection with the ISP, it uses the highly-competitive CDN market to deliver its service. 

Level 3 is one of HBO Go's CDN partners, for certain Apple devices.  As Level 3 notes, the end-user is often buying a TV service from their ISP.  But, poor quality delivery from the TV channel's online content devalues the TV product the ISP is selling.  Thus, it isn't clear why the ISP has an incentive to degrade Level 3's traffic, when the ISP knows that some significant portion of Level 3's traffic is a complement to the ISP's subscription TV service.  

The CDN business is focused on how to efficiently deliver asymmetric, bandwidth-intensive traffic to the customers of the ISP.  If the ISP had to pay for/build incoming capacity from every CDN to the ISP, then it's good for the CDN, but the ISP can only limit its costs if they CDN traffic stays put.
So, why would Level 3 want the FCC to impose regulations that give an ISP any kind of interest in which CDN provider a content owner would choose?  Maybe, because sometimes those CDN customers decide to build their own CDN, as soon-to-be-former Level 3 customer Apple is reportedly doing.  New CDNs equal new competition for small content owners, and that's not always a great thing . . . for CDN incumbents.  Now I get it.

December 6, 2012 5:31 PM

The FCC's Numbers Racket: S*N*A*F*U* In Progress?

Most of us don't know it, but the phone numbers we get from our wireless, landline, or cable service provider are not actually owned by those companies.  The numbers themselves are a public resource, owned by the member countries of the North American Numbering Plan ("NANP").   

The process of actually distributing numbers to all countries participating in the NANP is handled by the Plan Administrator ("NANPA").   NANPA, however, does not make policy, which is left to each member country.

In 1996, Congress delegated to the FCC jurisdiction over all U.S. phone numbers. 47 U.S.C. 251(e)(1).   In 1997, the FCC, in turn, adopted rules for the distribution of phone numbers.  The FCC elected to make numbers available to all carriers using the PSTN (distinct from the Internet).  At this time, there were no retail providers of voice service over the Internet.

On January 28, 2005, the FCC voted to grant a waiver of its numbering rules to SBC Information Services, Inc. ("SBCIS), (now part of AT&T) so that SBCIS--a VoIP provider interconnected with the PSTN--could directly access numbers from NANPA.  The Commission explained "that good cause exists to grant SBCIS a waiver of [the FCC's rules] until the Commission adopts numbering rules regarding IP enabled services." (emphasis added)  Remember this.  

On March 4, 2005, Vonage, another interconnected VoIP service provider, filed a similar request for the same relief granted to SBCIS one month earlier--a waiver of the FCC's rules so that it could directly access telephone numbers from NANPA.  After six years of inaction by the Commission, on March 8, 2011, Vonage renewed its request for the limited waiver that would allow it to obtain telephone numbers directly from NANPA.  

Situation Normal

Predictably, Vonage's recent petition was opposed by Level 3 (the company that charges Vonage for phone numbers) and competitive carriers that charge other VoIP providers for phone numbers that they (the competitors) can already access directly by way of their pre-existing regulatory status as CLECs.  The initial arguments against Vonage's request were also very typical iterations of such venerable public policy staples as "you'll blow up the network/upset Natural Law" and the "what if everyone did it" argument.  

So far, so good--nothing to look at here, right?  Situation normal, but here's where it gets . . . 


Around August, things take a turn for the "are you kidding me?!" and the "public interest" becomes just about Level 3's self-interest; which is cool, if you're Level 3.  Level 3 files this ex parte, explaining the financial consequences it would face if the FCC granted Vonage's waiver request and eliminated what Level 3 seemingly-concedes is either a regulatory rent, or a means to other rents (intercarrier compensation from IXCs) through its symbiotic relationship with Vonage, whom Level 3 calls its "carrier partner" (instead of the more demeaning "customer" term).  

On its face, the ex parte seems almost rudely self-interested--they don't even pretend to have any public interest arguments.  But, far from being rude, Level 3 explains that it was invited to share its self-interested view at the request of the Wireline Competition Bureau.  At this point, Level 3 is starting to believe its CEO's story that he stole the "number one dime" from Scrooge McDuck.

Scrooge McDuck.jpg

        Level 3 has it now, big boy.

Seriously, this is the point in this Bermuda Triangle of a proceeding where the compass spins out of control and all communication is lost.  As near as I can tell, this is the last rational communication that could be recovered from the record--a Vonage ex parte filed one week earlier.   

From this point on, you're either on Level 3's side, or (pro-wrestler voice) you are wrong, brother!  It seems like every subsequent ex parte from anyone, including--in fact, especially--Vonage discusses whether or not, or to what extent, an FCC grant of the Vonage waiver request would financially harm Level 3 and the other CLEC regulatory merchants to the VoIP providing industry.  

In an ex parte that should make anyone squeamish, Vonage seems to be trying to assure the Commission that by granting its request, Vonage won't become that much more efficient. Vonage also says they'll still be Level 3's friend and will continue to buy from Level 3.  Level 3 says, "nope, not enough."   

Oh, and what does Level 3 want?  They want the FCC to do a general rulemaking, rather than grant a Vonage-specific waiver.  In other words, they want the exact thing that the FCC said--almost 8 years ago--would take too long, and that justified the SBCIS waiver!

Why It's Wrong

Isn't it obvious?  Aside from the prospect that the FCC appears to be seriously re-considering relief that it previously rejected as antithetical to a broadband future, the Wireline Competition Bureau is deeply, and, dare I say it--uncomfortably--concerned about the revenue effects of the Commission's decision on some very specific wireline competitors.  Every other ex parte since mid-August says the Bureau asked for the information.  And, when parties' attorneys feel compelled to include that proviso in front of their naked groveling, then you know it's rough.  These people are lawyers, and they're embarrassed.  Enough said.