Level 3 vs. Comcast Tale Gets Even More Interesting

We reported yesterday that Internet backbone company Level 3 brought a dispute with Comcast public, claiming that the company was going against net neutrality principles by charging Level 3 extra for video streaming traffic. Since then, Comcast has spoken up about the situation, while Level 3 seems to have toned itself down.

Once the news broke of this dispute, the FCC got involved to get to the bottom of the situation. It contacted Comcast to see what was going on, and it replied stating that Level 3 was doing nothing more than trying to get a better deal, while raising the business costs for Comcast. The company claims that this is not a net neutrality issue at all, but rather a request from Level 3 for Comcast to open up more of its resources – for free.

Knowing this, it’s hard to attack Comcast for anything, because the story it tells sounds reasonable. In essence, Comcast would have to dedicate more expensive servers specifically for Level 3 traffic for free, but does the story end there? Hardly… it only gets more confusing.

There are a million different opinions on this matter, and it’s impossible to know the full story until we reach a conclusion, but who’s side to take is up in the air. Level 3 solidified a deal with Netflix in recent weeks to become its exclusive content deliverer, and what that means is that Level 3 has to have more streaming capacity in order to deliver all of the content to Comcast’s subscribers. But at the same time, it’d be Comcast which would have to amp up its own resources – essentially, costs would be on its dime.

Some argue that it should be on Comcast’s dime, however, because its customers are paying it to deliver Internet traffic, and if the Internet traffic they are requesting is Netflix, then it should reallocate those resources accordingly. As it is, Netflix content is already being streamed through Comcast’s servers, so what’s wrong with a reallocation? Nothing, it would seem, but it wants to charge Level 3 for the increased capabilities.

One thing Comcast stresses is that this isn’t a net neutrality issue, because the issue at hand isn’t specific data being transferred, but rather the fact that many more resources need to be put in place for that traffic to be dealt with. This is turning out to be a very interesting story to follow, and I only wish I could begin to understand who was right and who was wrong in this case. Unless you truly understand how the Internet works, it’s a difficult case to decipher.

Why take the risk? In Comcast’s view, Level 3 may be in over its head with its new agreement to deliver all of the Netflix streaming video traffic. The argument is that Level 3 won the Netflix contract away from other CDN providers by providing a surprisingly low bid, one that it now has to back up with a good deal from the major US Internet providers.